NÜRNBERGER Euroland A's results this year are riding out the challenging environment; net income rose 63% to €42m and guidance for the full year was upped from €40m to €60m. Against this, the dominant life insurance business faces limited medium-term visibility. At 1.02x conservative HGB book value per share and a dividend yield of 4.6%, the rating is undemanding.
Reasonable Result In Tough Environment
The first half results for 2017 show Nürnberger Beteiligungs confronting a difficult environment, above all in its core life insurance business. Conditions have made their mark notably at the top line, but profitability is holding up reasonably well under the circumstances. Overall total revenue fell by 5.5% to €2.12bn. This was attributable to both a weaker insurance business and lower investment income. Total gross premiums written dropped by 2.3% to €1.7bn and new and additional premiums fell to €233.5m, down 16.9% on the €281.1m recorded in the first half of 2016. This was entirely due to the life segment; the other segments recorded modest progress. Gross investment income dropped by 17.9% to €392m in a difficult investment environment.
Life Insurance Hit By Low Interest Rates And Regulatory Uncertainty
The group’s worst-performing segment was its core life insurance operation. Here new premiums written fell very sharply: 22.9% to €175.8m from €228.1m, as low interest rates combined with regulatory uncertainty to weaken demand. This fed through to a 4.2% drop in total gross premiums from €1.25bn to €1.20bn. The reform of life insurance law continues to put pressure on margins throughout the industry, unsettling demand trends.
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