UPDATE 2-Vienna Insurance confident after life boosts Q2

* Q2 pretax profit 122 mln eur vs Reuters poll 112 mln eur

* Strong life business offsets flood and storm damages

* Weak E.Europe economy weighs on car premiums

* “More than” rather than “at least” 10 pct profit growth

* Shares up around 1 pct, biggest gainer in insurance index

(Adds more from statement, analyst comment)

By Boris Groendahl

VIENNA, Aug 19 (BestGrowthStock) – Emerging Europe’s No.1 insurer,
Vienna Insurance Group (VIGR.VI: ), said it was on track to raise
pretax profit by more than 10 percent this year after strong
life business offset flood damage claims.

Vienna Insurance said clients in Austria and eastern Europe
alike were keen on conservative savings products, leading to
continuing strong life premium growth — similar to peers
including Swiss Life (SLHN.VX: ), Allianz (ALVG.DE: ) or Generali
(GASI.MI: ). [ID:nLDE6740HV]

This growth more than offset both weak sales of car
insurance, which suffers because of subdued economies in the
former Communist bloc, and big damage claims from the floods and
storms that wreaked havoc in central Europe.

“Since the beginning of the year, we have observed our
customers’ strong hesitancy in consumption, which is reflected
in sluggish growth in the motor insurance segments,” said Chief
Executive Guenter Geyer in a statement.

“But at the same time, we benefit from this trend as the
pronounced desire to save is leading to double-digit growth in
life insurance,” he added.

Second-quarter pretax profit rose 12 percent to 122 million
euros ($156 million), a slight acceleration from the first
quarter and comfortably ahead of all estimates in a Reuters poll
of analysts that averaged 112 million euros.

The insurer upgraded its language for its full-year outlook,
saying in presentation slides it now expected to raise pretax
profit by “more than” 10 percent, rather than by “at least” 10
percent as it had said since January.

Analysts are even more optimistic, forecasting on average 15
percent pretax profit growth to 507 million euros in the full
year 2010, according to Thomson Reuters I/B/E/S. The average
forecast has dropped sharply since the group’s January guidance.

Shares in the group were trading up around 1 percent at
37.07 euros by 0829 GMT, making them the biggest gainer in the
Stoxx European Insurers index (.SXIP: ), which was down 0.6
percent. They have slightly outperformed the index this year.

LIFE BOOST

European insurers have benefited from better life sales in
the first half, prompting talk that a stabilising economy could
help life insurance replace general insurance as the sector’s
main growth engine.

At Vienna Insurance, second quarter life premiums rose by 15
percent and earnings of the life segment more than doubled, also
helped by a better financial result.

“The good first quarter trends are continuing, especially in
the life segment,” said Societe Generale analyst Birgit
Roper-Gruner, who has a “buy” rating on the stock. “There had
been concerns that the first quarter was just a one-hit wonder.”

Property and Casualty premiums, which include car
insurances, rose only 2 percent and earnings of that business
declined by 46 percent, partly because of 100 million euros in
damage claims on natural disasters.

Overall Premium income at the group, the biggest player in
the former Communist bloc ahead of Allianz, rose 8 percent to
2.06 billion euros, also slightly ahead of analysts’
expectations. [ID:nLDE67C19Q]
(Editing by David Cowell)
($1=.7805 Euro)

UPDATE 2-Vienna Insurance confident after life boosts Q2