W&W Group shows strong profitability again in 2019

• Following three years of transformation, the financial services group posts rising new business and records increasing success with its digital conversion.
• Management will propose to the Annual General Meeting that a dividend be declared in the amount of EUR 0.65 per share, as was the case last year.
• Executive Board Chair Jürgen A. Junker: "The W&W Group has a clear path, and with its resilient structure it is prepared for a turbulent, challenging market environment."

In 2019, the third year of its transformation, the Wüstenrot & Württembergische Group (W&W) once again recorded strong business performance. Consolidated net income for the year after taxes rose by 16% over the prior-year period to EUR 249.1 million, putting it at the upper end of the W&W Group's long-term target corridor of EUR 220 to 250 million. This encouraging income trend was attributable to net underwriting income, which was once again very good and an expression of the Group's conservative risk policy, as well as to an only moderate rise in general administrative expenses and significantly better net financial income. New business developed positively, benefiting ever more strongly from new digital products. Shareholders will participate in the good business performance with a solid dividend.

Jürgen A. Junker, Chair of the Executive Board of W&W AG: "Three years after the W&W Group embarked on its venture into the digital future, our situation is more than encouraging. The W&W Group is enjoying success on the market, acquiring customers and market shares, and creating new room for manoeuvring - and this all through its own efforts and hard work every day. Today, our Group is substantially more efficient, more agile and more customer-focused than at the start of our journey. But despite our satisfaction with all that we have achieved, we have only passed the first mile marker on our path. In a turbulent and challenging environment, which is characterised not only by negative interest rates and greater regulation but now also by the consequences of the coronavirus pandemic, our principles continue to be financial resilience, cost discipline and a healthy dose of pragmatism in order remain on the road to success."

Key Group indicators for 2019

Consolidated net income after taxes stood at EUR 249.1 million, or roughly 16% higher than the prior-year figure of EUR 215.2 million, and was thus at the upper end of the target range, which extends to EUR 250 million. As in previous years, the largest contribution to net income came from the Property/Casualty Insurance segment at EUR 143.6 million (2018: EUR 131.4 million)

The development of the Group's income was driven by:

• Net underwriting income, which improved once again;
• Substantially higher net financial income, with W&W primarily benefiting from improved measurement gains on fixed-income securities and equities as a result of developments on the market; and
• Successful cost management, with general administrative expenses rising by only 0.7%, which was once again lower that the growth rate for new business and below the inflation rate in Germany.

New business in the segments

• In construction financing, new business maintained the high momentum of the previous year and once again posted growth of about 14% to EUR 6.3 billion (including brokering for third parties). In a market environment that remained favourable in view of the housing shortage in urban areas, Wüstenrot Bausparkasse grew at a stronger rate than the industry average and expanded its market share. Numerous product improvements and new service concepts for high-volume construction financing, as well as faster settlement processes, all had a positive effect.
• New home loan savings business (gross) stood at EUR 13.5 billion, which was nearly at the prior-year level of EUR 13.7 billion. If we were to include new business by Aachener Bausparkasse, which was acquired in 2019 and has been consolidated from 1 January 2020, we would even have posted a slight rise. Net new business in 2019 came in at EUR 11.2 billion, which was slightly below the EUR 11.4 billion recorded in the previous year. Here as well, we would have posted a slight increase if Aachener Bausparkasse were included. Wüstenrot remains Germany's second largest home loan and savings bank.
• With regard to the property/casualty insurance of Württembergischen Versicherung AG, gross premiums written rose by 5.8% to EUR 1.95 billion in 2019. Both corporate and retail customers contributed to the increase. Our successful digital brand "Adam Riese" also played a key role in this growth. In particular, we expanded our insurance policy offerings for household contents, residential buildings and glass.
• In the Life and Health Insurance segment, gross premiums written in life insurance rose by 6.7% to EUR 2.37 billion. In health insurance, with its significantly augmented product and rate offerings, gross premiums written increased by 3.7% to EUR 260 million.

Range of digital products further expanded

In 2019 the W&W Group further expanded its digital business models, which are grouped together in brandpool GmbH. For instance, the digital insurer "Adam Riese" now offers six products, which enabled it to gain about 90,000 policies as at the end of 2019, and as of the date of this writing, it has passed the mark of 100,000 policies.

Company participations in the health start-up "Kinderheldin" and the family start-up "familynet" expanded the ecosystem of W&W brandpool. It is now reaching more than 1.3 million end customers, who have enthusiastically embraced "Adam Riese" and other products of the W&W Group.

Outlook for the 2020 financial year

In the current year the W&W Group is again operating in a market environment that is characterised by zero and negative interest rates, economic skid marks in industries that are important for W&W, such as residential housing construction, and political trends toward more state involvement, as well as greater regulation. This is accompanied by the macroeconomic effects of the coronavirus pandemic, whose consequences are difficult to estimate.

The W&W Group essentially stands by its medium- to long-term income corridor of EUR 220 to 250 million. However, in view of the currently acute turmoil on the capital markets, as well as the consequences of the coronavirus crisis, which cannot yet be estimated, it is not possible to make a reliable forecast at this time. Should the coronavirus crisis last considerably longer, a decline in results can be expected in 2020.

All told, we will continue our strategic course and pursue digitalisation with single-minded determination, which will enable us to gain more time for servicing our customers and at the same time to prepare ourselves for more difficult market phases.