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Bupa Half Year Results 2016

Evelyn Bourke, CEO of Bupa, commented, "In the first half of 2016, we remained focused on delivering value for money and providing great service and care to our customers. We have delivered modest growth in profitability despite challenging economic conditions in our key markets. The immediate impact on Bupa’s financial position following the EU referendum in June has been limited. While there will be some operational and legal impacts, it is too early to conclude how the Leave vote will affect our underlying businesses and employees. We will continue to monitor the situation closely. Looking forward, we currently anticipate modest growth for the full year, with continued emphasis on deepening our relationships with our customers, combined with robust financial management."

HIGHLIGHTS

  • Revenue £5.3bn (2015 HY: £5.0bn), up 7% at constant exchange rates (CER)1; up 8% at actual exchange rates (AER) (2015 HY: £4.9bn)
  • Underlying profit before taxation £261.7m, up 2% at CER (2015 HY: £256.8m); up 3% at AER (2015 HY: £253.3m)
  • Statutory profit before taxation £139.6m, down 45% at AER (2015 HY: £255.4m) impacted by the planned early redemption of a £235m legacy securitisation, enabling lower funding costs in the future
  • 28.2m customers, up 11%, including 7.1m from joint ventures and associates (2015 HY: 25.3m, 2015 FY: 32.2m)
  • Net cash flow from operations of £513.4m, up 13% at AER (2015 HY: £453.7m)

Market Unit performance

  • Revenue growth in our largest Market Units: Australia and New Zealand (up 8%); the UK (up 8%); and Spain and Latin America (up 7%).
  • Underlying profit growth in Australia and New Zealand (up 10%) and in the UK (up 30%). Underlying profit down in Spain and Latin America (down 9%) mainly driven by the negative impact of the Free Choice Act affecting the Public Private Partnership (PPP) in Valencia.
  • Revenue growth of 12% in International Development Markets with underlying profit down 9% largely due to high claims in Thailand.
  • Revenue down 3% and underlying profit down 43% in Bupa Global, reflecting investment in capability and infrastructure and 2013 decision to exit non-strategic markets. 

Operational highlights

  • Continued expansion in dental, having increased the number of centres in Australia and New Zealand by nine to 239, in Spain and Latin America by eight to 221, and in the UK by four to 43.
  • Opened four new care homes in Australia, one in New Zealand, and one in Spain. Integrated five care homes acquired from Hadrian Healthcare Limited in the UK in December 2015.
  • Launched new jointly-branded international private medical insurance (IPMI) products with Blue Cross Blue Shield Association in the UK, France, Guernsey, Jersey, Gibraltar, the Dominican Republic, and Bolivia.
  • 100% ownership of Bupa Chile (from 56.4% at 2015 half year), and increased ownership of Max Bupa in India to 49% (from 26%).

Financial position

  • Well capitalised under the Solvency II regime, with a solvency coverage ratio of 180%.
  • Statutory profit adversely affected by the early redemption of a legacy securitisation, to simplify debt structure, remove complexity and reduce future financial expense charges. This has resulted in a £112.3m net expense in 2016, as planned. In future years, Bupa will benefit from a lower cost of funding.
  • Leverage ratio down to 24.3% (2015 HY: 28.0%; 2015 FY: 27.7%), driven by lower borrowings alongside the increase in equity from profits and foreign exchange movements, following the weakening of sterling.
  • Bupa Finance plc’s senior credit ratings remain at A- stable (Fitch) and Baa2 positive (Moody’s).
  • Net cash generated from operating activities of £513.4m remains strong; £59.7m increase reflecting favourable timing of invoice collection and favourable foreign exchange impacts.
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IHH Healthcare Posts 74% Jump In Q4 Net Profit On Exceptional Gains

IHH Healthcare Berhad, the world's second-largest listed private healthcare provider based on market capitalisation, on Thursday posted a 74 per cent jump in net profit for the fourth quarter of 2015 to RM415.8 million (S$138.3 million), as a result of exceptional gains.

These gains include revaluation gain of RM49.2 million on investment properties, investment tax allowance granted of RM93.1 million and exchange gain on non-Turkish Lira denominated loans of RM121.3 million. Excluding the exceptional items, profit after tax and minority interests (Patmi) for the quarter was down 11 per cent year on year to RM214.6 million.

Revenue for the three months ended Dec 31, 2015, grew 18 per cent to RM2.3 billion, driven by sustained organic growth at existing hospitals and ramp up of its newer hospitals. These include the Acibadem Atakent Hospital and Acibadem Taksim Hospital in Turkey, as well as Pantai Hospital Manjung, Gleneagles Medini Hospital and Gleneagles Kota Kinabalu Hospital in Malaysia.

The consolidation of newly acquired Continental and Global Hospitals in India also contributed RM44.4 million to the group's Q4 revenue. For the full year, net profit went up 24 per cent to RM933.9 million, while revenue grew 15 per cent to RM8.5 billion. Excluding exceptional gains, Patmi in 2015 grew 15 per cent year on year to RM899.2 million.

The group has declared a first and final dividend of 3 sen per share for the full year. As at end December 2015, the group has RM2 billion in cash and cash equivalents. Net gearing increased to a still-healthy and manageable 0.19 times from 0.08 times as end December 2014, on planned capital expenditure and allocation of cash into money market funds and fixed deposit.

"IHH expects to face continued headwinds from the slowing economies and fluctuation of regional currencies in the countries it operates in. However, we are confident that the robust demand for quality private healthcare services in the region, especially in India and China, continues to present growth opportunities for IHH," the group said.

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Munich Re Posts Profit Of €3.1bn For 2015 And Raises Dividend To €8.25

Despite a difficult market environment, Munich Re posted a consolidated result of €3.1bn for 2015 – which almost matched the very good result of €3.2bn from the previous year. According to provisional calculations, in the fourth quarter the Group posted a profit of €0.7bn (previous year: €0.7bn). Shareholders are to participate in last year’s success through a much higher dividend: subject to approval by the Supervisory Board and Annual General Meeting, the dividend will rise to €8.25 (7.75) per share.

CFO Jörg Schneider said, "Due to the fact that the market environment is so challenging, the 2015 result is pleasing. Even though we benefited from random effects in the form of a low impact from major losses, the good result is mainly due to our operational profitability and rock-solid balance sheet." The result includes various one-off factors that had a net positive effect. Schneider noted that despite low interest rates and increasing volatility in the financial markets, the investment result was again robust.

The low-interest-rate environment depresses regular income from investments, with the consequence that competition in reinsurance markets remains strong. "But the decision by the Federal Reserve to raise interest rates at the end of the year is an indication of a gradual change in interest-rate policies. Yet it will be a long time before the interest-rate environment returns to a relatively normal level, and one of the factors this depends on is geo-political developments," Schneider commented.

"The further strong increase in the dividend demonstrates our trust in the sustained earnings power of Munich Re," said Schneider. Munich Re also continued its share buy-back programme. As part of the programme running since the Annual General Meeting in April 2015, to date Munich Re has acquired shares amounting to around €800m; by the next Annual General Meeting on 27 April 2016, the total value should be €1bn.

Significant developments in the 2015 financial year

The following developments had an impact on the Group's assets and earnings in 2015, although they may be only partially reflected in the IFRS result:

  • High volatility in the capital markets – particularly intense activity at asset manager MEAG
    • Interest rates at the end of 2015 at around the same level as at the end of 2014, but with somewhat higher risk spreads
    • Stock markets in the USA at the same level at the end of 2015 as in the previous year; in most other regions, they closed slightly higher
  • Devaluation of the euro against most foreign currencies pertinent for Munich Re's business operations
  • In reinsurance, low impact of major losses from natural catastrophes, high releases of reserves for basic losses from prior years
  • Impact of one-off effects at ERGO and in Munich Health, including goodwill impairments
  • Low tax charge due to adjustments for prior years

Summary of the preliminary figures for the 2015 financial year

In 2015, the Group generated extremely pleasing operating earnings of €4.8bn (4.0bn), of which €1.4bn (0.7bn) was attributable to the fourth quarter. Once again, there were negative foreign-exchange effects of –€0.2bn (–0.1bn) on the "other non-operating result" in 2015, with a positive effect of €0.1bn in the fourth quarter. As in previous years, the consolidated result for the Group was marked by various opposing effects. Changes in the value of derivative financial instruments, negative currency effects, along with goodwill impairments in the ERGO field of business had an overall adverse impact. This contrasted in particular with the very good result in property-casualty reinsurance. A comparatively low tax charge – due to adjustments for prior years – also had a positive effect. In 2015, equity increased by around €0.7bn to €31.0bn (31.12.2014: €30.3bn), with an increase of more than €0.9bn in the fourth quarter alone. The return on risk-adjusted capital (RORAC), which serves as the key performance indicator for the Group as a whole, was a pleasing 11.5% (13.2%), whilst the return on equity (RoE) amounted to 10.0% (11.3%). For the fourth quarter, Munich Re achieved an annualised RORAC of 10.8% (12.2%) and an RoE of 9.6% (9.8%). Gross premiums written by the Group increased in 2015 to €50.4bn (48.8bn), due to currency effects.

With a carrying amount of €215.1bn (market value of €230.5bn), total investments (excluding insurance-related investments) as at 31 December 2015 were down on the year-end 2014 figure of €218.9bn (market value of €235.8bn). The Group's investment result (excluding insurance-related investments) decreased to €7.5bn (8.0bn). Changes in the value of derivatives had an overall adverse impact of –€1.2bn for the year under review, and of
–€0.2bn for the fourth quarter. Munich Re posted net write-downs of €0.8bn (0.2bn) on non-derivative investments during the year; in the fourth quarter net write-downs amounted to €0.1bn. The balance of gains and losses on disposals excluding derivatives, on the other hand, was positive at €2.7bn (fourth quarter: €0.4bn). Considering the situation in the capital markets, this investment result represents a relatively high annualised return of 3.2% in relation to the average market value of the portfolio.

Munich Health: Result of €0.09bn

The Munich Health field of business contributed a profit of €0.09bn (0.11bn) to the consolidated result. At €0.08bn, the operating result was below the level of the previous year (€0.12bn). The somewhat weaker year-on-year result was largely due to higher claims expenditure in parts of health reinsurance business in the USA. Munich Health's premium income showed an increase of around 5% to €5.6bn (5.3bn), which was attributable to positive currency translation effects. The combined ratio for 2015 totalled 99.9% (98.8%).

Renewals of reinsurance treaties in property-casualty business at 1 January 2016
During the reinsurance treaty renewals at 1 January 2016, the market environment was nearly unchanged compared with the previous year. There was sufficient capacity in all classes of reinsurance business. Prices remained under pressure, but to a slightly lesser degree than in previous years. Treaty terms and conditions were largely unchanged, as was the demand for reinsurance cover.

Torsten Jeworrek, member of Munich Re’s Board of Management, said, "We can be satisfied with the figures for the January renewals. Despite a continuing difficult market environment, Munich Re was able to seize attractive business opportunities. We are a preferred partner for clients that place value on sophisticated insurance solutions."

Jeworrek continued, "Our clients appreciate the value added that we offer them. In Europe and South America in particular, we were able to conclude some treaties individually, which meant that these transactions were only subject to the intensely competitive environment in standard business to a limited extent. For some clients, we developed bespoke capital-relief reinsurance solutions – such as where there were short-term capital requirements following an acquisition."

At 1 January 2016, slightly more than half of Munich Re's non-life reinsurance business was up for renewal, representing a premium volume of around €9.1bn. Of this, 11% (around €1.0bn) was not renewed. By contrast, Munich Re wrote new business with a volume of approximately €1.2bn. Altogether, the volume of business written at 1 January grew slightly by 0.7% to around €9.2bn. Prices fell by around 1.0%.

Munich Re is proceeding on the assumption that the market environment will not change significantly in the subsequent renewal rounds in 2016, unless extraordinary loss events occur. The renewal date of 1 April is mainly for reinsurance treaties in Japan, whereas 1 July is the renewal date for the USA, Australia and Latin America.

Reinsurance: Result of €3.3bn
The reinsurance field of business contributed a remarkable €3.3bn (2.9bn) to the consolidated result, with the operating result up by €0.9bn to €4.1bn. Gross premiums written climbed to €28.2bn (26.8bn). Changes in the value of the euro as against other currencies had a significant impact on premium growth (+5.4%).

Life reinsurance contributed €0.3bn (0.4bn) to the consolidated result. At €0.34bn (0.28bn), the technical result fell somewhat below the target of €0.4bn; the figure for the fourth quarter was €0.09bn (0.01bn). It was impacted by two mortality claims, for each of which Munich Re paid out an amount in the two-digit million euro range. In the USA and Australia, business largely developed as expected in 2015 after negative effects had impacted the result in the previous year.

Property-casualty reinsurance again accounted for an impressive share of the consolidated result for the full year, with a total of €2.9bn (2.5bn). The combined ratio for 2015 amounted to an excellent 89.7% (92.7%) of net earned premiums, and totalled only 78.6% (91.2%) for the fourth quarter. Claims notifications for basic losses remained noticeably below the expected level overall. Munich Re was able to release loss reserves in the amount of €1.4bn during the full year, corresponding to around 8.2 percentage points of the combined ratio. The figure for the fourth quarter was €0.9bn, corresponding to around 20.9 percentage points of the combined ratio. Munich Re also still aims to set the amount of provisions for newly emerging claims at the very top end of the estimation range, so that profits from the release of a portion of these reserves are possible at a later stage.

Total major-loss expenditure for 2015 amounted to €1.0bn (1.2bn), of which €0.2bn (0.2bn) was attributable to the fourth quarter. Reserve strengthening was somewhat lower than run-off profits for major losses from previous years. In relation to net earned premiums, the major-loss burden of 6.2% (7.2%) for the full year was below the average expected figure of 12%, and amounted to 4.7% (6.1%) for the fourth quarter. Natural catastrophe losses impacted the full year with €149m (538m), while the figure for the fourth quarter was €0m (111m). Heavy rainfall in northern Chile, which caused considerable flooding, was the largest nat cat loss event of the year at €47m. A severe earthquake off the coast of Chile gave rise to expenditure of €45m. At €897m (625m), man-made major losses were up on the level of the previous year, which is equivalent to 5.3% (3.9%) of net earned premiums. The explosion at Tianjin harbour in China (€175m) and a dam failure in Brazil (€156m) were by far the largest individual losses of the year.

ERGO: Result of –€0.2bn

In 2015, the ERGO field of business generated a loss of €0.2bn (previous year: profit of €0.2bn). One of the factors contributing to this result was additional expenses of €452m from the revaluation of goodwill. The sale of the Italian subsidiary ERGO Italia agreed in November also had a negative impact of €0.1bn on the result. At €0.6bn, the operating result remained stable year on year (€0.6bn), while gross premiums written fell to €16.5bn (16.7bn).

The combined ratio in property-casualty insurance in Germany was 97.9% (95.3%) for the full year, and amounted to 103.9% (97.1%) in the fourth quarter. Flooding caused by the low pressure systems Eva and Frank in the fourth quarter was the largest loss event of the year in German business. The combined ratio in property-casualty insurance for ERGO International was 104.7% (97.3%) for the full year, and amounted to 115.3% (96.8%) for the fourth quarter.

 

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Anthem Reports Fourth Quarter And Full Year 2015 Results

Anthem, Inc. announced that fourth quarter 2015 net income was $180.9 million, or $0.68 per share. These results included net negative adjustment items of $0.46per share. Net income in the fourth quarter of 2014 was $506.7 million, or $1.80 per share, which included net negative adjustment items of $0.06 per share.

Excluding the items noted in each period, adjusted net income was $1.14 per share in the fourth quarter of 2015, a decrease of 38.7 percent compared with adjusted net income of $1.86 per share in the prior year quarter (refer to the GAAP reconciliation table for a reconciliation to the most directly comparable measure calculated in accordance with U.S. generally accepted accounting principles, or “GAAP”).

Full year 2015 net income totaled approximately $2.6 billion, or $9.38 per share, including net negative adjustment items of $0.78 per share. Full year 2014 net income was approximately $2.6 billion, or $8.99 per share, including net negative adjustment items of $0.36 per share. Excluding the items noted in each period, adjusted net income was $10.16 per share for the full year of 2015, an increase of 8.7 percent from $9.35 per share in 2014 (refer to the GAAP reconciliation table).

“Our solid fourth quarter results reflected a continuation of our positive operating momentum as we ended the year serving 38.6 million members across our Commercial and Government markets. As we look ahead to 2016, we remain well-positioned to continue advancing affordability, quality and choice for our members. We believe our strategy will be enhanced with the pending acquisition of Cigna, which we continue to expect should close in the second half of 2016," said Joseph Swedish, chairman, president and chief executive officer.

“We are pleased with our performance in the fourth quarter and our full-year 2015 results of $10.16 in adjusted EPS. Our 2015 performance and favorable medical cost trends set a strong starting point for 2016,” said Wayne DeVeydt, executive vice president and chief financial officer.

CONSOLIDATED HIGHLIGHTS

Membership: Medical enrollment totaled approximately 38.6 million members at December 31, 2015, an increase of approximately 1.1 million members, or 2.9 percent, from 37.5 million at December 31, 2014. Medicaid enrollment increased by 721,000 members and the Commercial & Specialty Business enrollment increased by 314,000 medical members as the Company experienced growth of 328,000 and 104,000 in the National and Local Group markets, respectively, partially offset by a decrease of 118,000 members in the Individual business. Enrollment also grew in theMedicare business and Federal Employee Program by 35,000 and 30,000, respectively.

Medical enrollment decreased by 102,000 members, or 0.3%, sequentially during the fourth quarter of 2015. The decrease reflected enrollment losses in the National and Individual businesses, partially offset by gains in the Medicaidbusiness.

Operating Revenue: Operating revenue was $20.0 billion in the fourth quarter of 2015, an increase of approximately $1.2 billion, or 6.6 percent, versus the nearly $18.8 billion in the prior year quarter. The growth in revenue reflected premium increases to cover overall cost trends and higher enrollment in the Medicaid and Commercial self-funded businesses. These increases were partially offset by a decline in Local Group fully insured and Individual enrollment.

Benefit Expense Ratio: The benefit expense ratio was 87.0 percent in the fourth quarter of 2015, an increase of 250 basis points from 84.5 percent in the prior year quarter. The increase was largely driven by an increase in the Individual and Local Group businesses, which included higher favorable prior period reserve development in the 4th quarter of 2014 than in the 4th quarter of 2015 and the timing of medical cost experience. The increase was partially offset by improved medical cost performance in certain markets in the Medicare business.

Medical claims reserves established at December 31, 2014, developed moderately better than the Company’s expectation during 2015, which resulted in offsetting adjustments for the risk stabilization programs from Health Care Reform.

Medical Cost Trend: For the full year 2015, underlying Local Group medical cost trend was at the lower half of our previously guided range of 6.5% - 7.5%. The Company anticipates that medical cost trends will be in the range of 7.0% - 7.5% in 2016.

Days in Claims Payable: Days in Claims Payable (“DCP”) was 42.7 days as of December 31, 2015, an increase of 0.4 days from 42.3 days as of September 30, 2015. The increase was primarily due to changes in the timing of claims payments between periods.

SG&A Expense Ratio: The SG&A expense ratio was 16.3 percent in the fourth quarter of 2015, an increase of 10 basis points from 16.2 percent in the fourth quarter of 2014. The increase was primarily driven by higher costs to support strong membership growth in 2015, partially offset by the impact of higher enrollment in the Medicaid business, which carries a lower average SG&A expense ratio than the consolidated company average.

Operating Cash Flow: Operating cash flow was $949.1 million, or 5.2 times net income in the fourth quarter of 2015, and approximately $4.1 billion, or 1.6 times net income for full year 2015. The Company’s 2015 results include the impact of approximately $500 million in timing items related to government and vendor payments. For 2016, the company expects operating cash flow to be greater than $3.0 billion, which includes the impact of the timing items referenced above.

Share Repurchase Program: The Company did not repurchase any shares of its common stock during the fourth quarter of 2015 due to the pending acquisition of Cigna. During 2015, the Company repurchased approximately 10.4 million shares of its common stock, or 3.9 percent of the shares outstanding as of December 31, 2014, for $1.5 billion, or a weighted-average price of $145.50. As of December 31, 2015, the Company had nearly $4.2 billion of Board-approved share repurchase authorization remaining.

Cash Dividend: During the fourth quarter of 2015, the Company paid a quarterly dividend of $0.625 per share, representing a distribution of cash totaling $163.1 million.

Investment Portfolio & Capital Position: During the fourth quarter of 2015, the Company recorded net realized gains on investments totaling $30.6 million and other-than-temporary impairment losses totaling $28.5 million. During the fourth quarter of 2014, the Company recorded net realized gains of $43.8 million, partially offset by other-than-temporary impairment losses totaling $13.5 million.

As of December 31, 2015, the Company’s net unrealized gain position in the investment portfolio was $367.5 million, consisting of net unrealized gains on equity securities totaling $389.7 million and net unrealized losses on fixed maturity securities totaling $22.2 million. As of December 31, 2015, cash and investments at the parent company totaled approximately $1.4 billion.

Discontinued Operations: In late December 2013, the Company entered into agreements to divest its 1-800 CONTACTSsubsidiary and related assets. The sales were completed on January 31, 2014. As a result, the current and prior period operating results of 1-800 CONTACTS have been classified as discontinued operations, net of the related tax effects.

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OMNIASIG Maintains Its Profitable Growth Trend

OMNIASIG Vienna Insurance Group (VIG) maintains its upward trend in the first three quarters of 2015 and reports a total gross written premium value of 694.31 million lei, which represents an increase of 19.47% compared with the same period last year.

OMNIASIG’s profit during this period was 9.57 million lei, according to IFRS standards. The Property insurances line (Fire and Allied Perils) registered, in the first nine months of the year, a gross written premiums’ value of 134.91 million lei, an amount almost equal to that of the same period of 2014.

During the same period, the Health insurances line registered a gross written premiums growth of 30.07%, reaching a total value of 4.04 million lei.

Also, the results achieved in these three quarters on other important lines were:

  • Accidents and illness insurance: gross written premiums – 6.36 million lei;
  • Aircraft Insurance: gross written premiums – 6.13 million lei; 
  • General Third Party Liability Insurance: gross written premiums – 23.06 million lei;
  • Travel insurance: Gross written premiums – 4.86 million lei;

Motor Insurance (MTPL and Motor Hull, cumulated) registered revenues of 481.64 million lei, up by 26.43%, as follows: -

  • MTPL: Gross written premiums in value of 254.28 million lei
  • Motor Hull: Gross written premiums in value of 227.35 million lei

The total claims paid on these segments amounted to 316.30 million lei, cumulated.

Mihai Tecău, President of the Managing Board of OMNIASIG VIG commented, "We are glad that, on the occasion of the 20 years anniversary in 2015, our company has joined a determinant upward trend. OMNIASIG is a financially stable company that enjoys the trust of our customers and partners. This fact is also shown by the level of satisfaction registered among policyholders, which demonstrates that our concern for continuous improvement of the services we offer and for strenghtening the trust of our clients brings forth fruit. We will move forward with the same strategy based on prudent risk underwriting on all product lines, coupled with permanent and prompt response to our customers' specific needs. Our goal remains the support and the development of non-motor product lines."

With a 65% higher score compared to the industry’s benchmark, OMNIASIG recorded an extremely positive level of satisfaction among customers Starting August 2015 OMNIASIG implemented a system for measuring and evaluating the quality of customer services – the Net Promoter Score (NPS), an internationally validated standard. Customers who had a claim file at OMNIASIG were therefore asked to answer one question about their experience and how the case was handled, the policyholder’s satisfaction and the services quality being measured in an effective manner, on a scale from 1 to 10.

In the first three months from the system’s implementation, the NPS general indicator was 72.96%, of which 72.37% for Motor Hull and 76.94% for household insurances, according to the answers provided by insures. These results show a high degree of satisfaction among our policyholders. Please note that currently 95% of all claim files open by OMNIASIG are paid in less than 5 days after submitting the last document in the file.

As the satisfaction of our customers is the most important aspect of our services quality, this monitoring system will continue to operate on a permanent basis from now on. Also, for the continuous improvement of customer services, the call center line – 021.9669, available for reporting claims and scheduling the ascertainment, has now extended its functioning program, including Saturdays and Sundays.

Powerful downward trend for complaints

The total number of complaints received by OMNIASIG in the first three quarters was 580 (registered per unique claimant and per single case), which represents a decrease of 41.77% compared to the same period of last year. At the same time, justified petitions decreased by 55.80% compared to the first nine months of 2014. The justified petitions received by the company in the first nine months of the year represent 17.07% of the total registered ones, per unique claimant and per unique case.

Compared to the total number of insurance policies issued by OMNIASIG in the first nine months of this year, the volume of registered complaints, per unique claimant and per unique case, represents within this period less than 0.04% and compared with the total number of claim files paid by the company in this period – only 0.97%.

The company continues to prove its financial stability, by maintaining its solvency and liquidity indicators at high levels. The company's share capital is in value of 439.65 million lei, the available solvency margin is 227 million lei, the solvency degree is 164% and liquidity coefficient is 1.80, far above legally required financial indicators.

OMNIASIG Vienna Insurance Group has a complex reinsurance program that covers all the important underwritten portfolios and allows the risk transfer towards the international specialized markets, thus contributing to the strengthening of the company’s financial stability. Companies situated in the world ranking of reinsurers are participating in reinsurance contracts of OMNIASIG VIG. OMNIASIG VIG is a company administered through a dualist system, led by a Managing Board, which is supervised and coordinated by the Supervisory Board. The company has a portfolio of over 100 products and an extended territorial network, of which 32 branches, organized in 6 regions and 85 agencies.

OMNIASIG has a strong sales network, represented by 1,200 agents and 400 brokers. Complaints are declining - only 0.97% of the paid claims

Vienna Insurance Group (VIG) is the leading insurance player in Austria as well as in Central and Eastern Europe. About 50 companies in 25 countries form a Group with a long-standing tradition, strong brands and close customer relations. VIG has had 190 years of experience in the insurance business. With about 23,000 employees, Vienna Insurance Group is the market leader on the insurance markets. It is excellently positioned to take advantage of the long-term growth opportunities in a region with 180 million people. Vienna Insurance Group is the best-rated company of ATX members, the main index of Vienna Stock Exchange. Vienna Insurance Group is also listed on the Prague Stock Exchange..

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Aon Reports Third Quarter 2015 Results

Aon plc (NYSE: AON) reported results for the three months ended September 30, 2015.

Net income attributable to Aon shareholders was $295 million, or $1.04 per share, compared to $309 million, or $1.04 per share, for the prior year quarter.  Net income per share attributable to Aon shareholders, adjusted for certain items, decreased 4% to $1.24, compared to $1.29 in the prior year quarter, including a $0.09 per share unfavorable impact on adjusted net income from continuing operations if the Company were to translate prior year quarter results at current quarter foreign exchange rates ("foreign currency translation").  The prior year quarter included a $25 million pre-tax, or $0.07 per share after tax, gain related to the sale of a business.  Certain items that impacted third quarter results and comparisons with the prior year quarter are detailed in the "Reconciliation of Non-GAAP Measures - Operating Income and Diluted Earnings per Share" on page 12 of this press release. 

"In our seasonally weakest quarter, our results reflect organic revenue growth and operating margin expansion across both segments, effective capital management and significant free cash flow generation, despite the impact of unfavorable foreign currency translation and macroeconomic challenges," said Greg Case, president and chief executive officer.  "Driven by our industry-leading portfolio and investments across data and analytics, we expect a strong fourth quarter and finish to the year across each of our key metrics, further positioning the firm for free cash flow generation and shareholder value creation."

THIRD QUARTER FINANCIAL SUMMARY

Total revenue decreased 5% to $2.7 billion compared to the prior year quarter driven primarily by a 7% unfavorable impact from foreign currency translation, partially offset by 2% organic revenue growth.

Total operating expenses for the third quarter decreased 5% to $2.3 billion compared to the prior year quarter due primarily to a $162 million favorable impact from foreign currency translation and a $12 million decrease in intangible asset amortization, partially offset by an increase in expense to support 2% organic revenue growth.

Depreciation expense decreased 8%, or $5 million, to $56 million compared to the prior year period.

Intangible asset amortization expense decreased 13%, or $12 million, to $78 million compared to the prior year quarter, consisting of a $10 million decrease in HR Solutions and a $2 million decrease in Risk Solutions.

Foreign currency exchange rates in the third quarter had a $0.09 per share, or $30 million pretax, unfavorable impact (-$25 million in Risk Solutions and -$5 million in HR Solutions) on adjusted net income from continuing operations, if the Company were to translate prior year quarter results at current quarter foreign exchange rates.

Effective tax rate used in the U.S. GAAP financial statements in the third quarter was 14.0%, compared to the prior year quarter of 19.1%.  After adjusting to exclude the applicable tax impact associated with expenses for legacy litigation incurred in the second quarter, the adjusted effective tax rate for the third quarter of 2015 declined to 16.0% compared to 19.1% in the prior year quarter, due primarily to certain favorable discrete items. 

Average diluted shares outstanding decreased to 283.8 million in the third quarter compared to 296.1 million in the prior year quarter.  The Company repurchased 6.3 million Class A Ordinary Shares for approximately $600 million in the third quarter.  As ofSeptember 30, 2015, the Company had $4.5 billion of remaining authorization under its share repurchase program.

Cash flow from operations for the first nine months of 2015 increased 22%, or $192 million, to $1.1 billion driven by working capital improvements and a decline in cash paid for pension contributions, taxes, and restructuring.

Free cash flow, defined as cash flow from operations less capital expenditures, for the first nine months of 2015 increased 21%, or $146 million, to $850 million driven by an increase in cash flow from operations, partially offset by a $46 million increase in capital expenditures primarily due to real estate related projects.  

THIRD QUARTER SEGMENT REVIEW

Certain noteworthy items impacted operating income and operating margins in the third quarters of 2015 and 2014.  The third quarter segment reviews provided below include supplemental information related to organic revenue, adjusted operating income and operating margin.

Risk Solutions total revenue decreased 8% to $1.7 billion compared to the prior year quarter due to an 8% unfavorable impact from foreign currency translation and a 1% decrease in commissions and fees related to acquisitions, net of divestitures, partially offset by 1% organic growth in commissions and fees.

Retail organic revenue increased 2% reflecting revenue growth in both the Americas and International businesses.  Americas organic revenue increased 4% driven by growth across all region and product lines, including strong new business generation in US Retail andCanada and effective management of the renewal book portfolio in Latin America.  International organic revenue increased 1% driven by growth in New Zealand and across Asia. 

Reinsurance organic revenue decreased 4% compared to the prior year quarter due primarily to an unfavorable market impact globally, a modest decline in facultative placements, and unfavorable timing, partially offset by record new business growth in treaty placements.

   

Three Months Ended

   

(millions)

 

Sep 30,
 2015

 

Sep 30,
 2014

 

%

 Change

Revenue

 

$

1,689

 

$

1,836

 

(8)%

Expenses

           

Compensation and benefits

 

979

 

1,055

 

(7)

Other general expenses

 

386

 

438

 

(12)

Total operating expenses

 

1,365

 

1,493

 

(9)

Operating income

 

$

324

 

$

343

 

(6)%

Operating margin

 

19.2%

 

18.7%

   

Operating income - adjusted

 

$

351

 

$

372

 

(6)%

Operating margin - adjusted

 

20.8%

 

20.3%

   

Compensation and benefits for the third quarter decreased 7%, or $76 million, compared to the prior year quarter due primarily to an $84 million favorable impact from foreign currency translation and a $9 million decrease in expenses related to acquisitions, net of divestitures, partially offset by an increase in expense to support 1% organic growth.

Other general expenses for the third quarter decreased 12%, or $52 million, compared to the prior year quarter due primarily to a $46 million favorable impact from foreign currency translation.

Third quarter operating income decreased 6% to $324 million compared to the prior year quarter. 

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VIDEO: Aegon CEO Alex Wynaendts Reports Increase In Earnings

 

Solid underlying earnings


Underlying earnings increase to EUR 549 million as fee business growth and the stronger US dollar were partly offset by lower US life & protection results, including adverse mortality of EUR 17 million
Equity and interest rate hedging programs main drivers of fair value losses of EUR 293 million
Net income amounts to EUR 350 million
Return on equity of 8.2% and 8.9% excluding capital allocated to run-off businesses

Continued strong profitable sales

US retirement plans and asset management main drivers behind gross deposits of EUR 16.8 billion and net deposits of EUR 3.2 billion
New life insurance sales level at EUR 518 million
Accident & health and general insurance sales stable at EUR 248 million
Market consistent value of new business of EUR 183 million impacted by low interest rates

Increase in interim dividend supported by strong cash flows

Operational free cash flows excluding market impacts and one-time items of EUR 388 million
Holding excess capital of EUR 1.5 billion and gross leverage ratio improves to 27.7%
Interim dividend increases to EUR 0.12 per share; dilutive effect of stock dividend to be neutralized
More clarity obtained on Solvency II; ratio expected to be in the range of 140 - 170%

Alex Wynaendts, CEO said, "Aegon's businesses delivered solid results this quarter, despite adverse mortality experience in the United States and the negative impact from our hedging programs on net income. At the same time, we are pleased with the high level of sales as we continue to secure new distribution agreements and reach many new customers in all our markets.

"Executing on our strategy to ensure our businesses support our long-term growth ambitions, we sold our Canadian operations as well as Clark Consulting in the US. In addition, we have further improved our risk profile by hedging EUR 6 billion of longevity reserves in the Netherlands and by reducing balances of our legacy variable annuity products in the US.

"While uncertainties on Solvency II remain, we have obtained clarity on a number of items - including treatment of the US - which allows us to tighten the range of expected outcomes. Furthermore, we have applied for the use of our internal model and are currently awaiting regulatory approval.

"I am also pleased to announce that our strong capital position and growing cash flows enable us to raise the interim dividend to 12 eurocents." 

 

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Aetna Reports Second-Quarter 2015 Results

Aetna have announced second-quarter 2015 operating earnings (1) of $722.1 million, or $2.05 per share, a per-share increase of 21 percent over the second quarter of 2014. Net income (2) for the second quarter of 2015 was $731.8 million, or $2.08 per share. Net income for the second quarter of 2015 includes $0.03 per share of net benefits.

“Aetna reported strong operating earnings in the second quarter, including another record in quarterly operating revenue,” said Mark T. Bertolini, Aetna chairman and CEO. “Based on these results, we are again raising our guidance on full-year 2015 operating earnings per share to at least $7.40 per share from our previous projection of $7.20 to $7.40 per share.

“Our performance continues to demonstrate the execution of Aetna’s growth strategy and the power of our diversified business portfolio. We believe our proposed acquisition of Humana will further that strategy, delivering both significant value to customers and attractive returns for shareholders,” said Bertolini.

“We are quite pleased with our operating results in the quarter, which continue to be supported by strong revenue growth, cash flow and operating margins,” said Shawn M. Guertin, Aetna executive vice president and CFO. “Our second-quarter total medical benefit ratio improved year over year to 81.1 percent, a very strong result that benefited from continued moderate medical cost trends.

“Aetna's government businesses had another excellent quarter, with outperformance in our Medicare and Medicaid lines more than offsetting the impact on our commercial business of the recent federal calculations on health care reform risk adjustments,” said Guertin.

Total company results

  • Operating earnings (1) were $722.1 million for the second quarter of 2015 compared with $610.0 million for the second quarter of 2014. The 18 percent increase in operating earnings is primarily due to higher underwriting margins in Aetna's Health Care segment, partially offset by an increase in general and administrative expenses.
  • Net income (2) was $731.8 million for the second quarter of 2015 compared with $548.8 million for the second quarter of 2014. Net income in both periods reflects net benefits (charges), which are detailed in the Summary of Results table.
  • Operating revenues (3) were $15.1 billion for the second quarter of 2015 compared with $14.5 billion for the second quarter of 2014. The 4 percent increase in operating revenues is primarily the result of higher Health Care premium yields as well as membership growth in Aetna's Government business partially offset by membership losses in Aetna's middle-market Commercial Insured products. Total revenue was $15.2 billion and $14.5 billion for the second quarters of 2015 and 2014, respectively. Total revenue for the second quarter of 2015 includes approximately $110 million of net litigation-related proceeds.
  • Operating expenses (1) were $2.8 billion for the second quarter of 2015. The operating expense ratio (5) was 18.3 percent and 17.6 percent for the second quarters of 2015 and 2014, respectively. The increase in the operating expense ratio is primarily the result of increased investment spend to support Aetna's growth initiatives that outpaced the increase in operating revenue described above. The total company expense ratio was 18.4 percent and 17.9 percent for the second quarters of 2015 and 2014, respectively.
  • Pretax operating margin (6) was 8.7 percent for the second quarter of 2015 compared with 7.6 percent for the second quarter of 2014. The pretax operating margin increased primarily as a result of higher underwriting margins in Aetna's Government business. The after-tax net income margin was 4.8 percent and 3.8 percent for the second quarters of 2015 and 2014, respectively.
  • Effective tax rate was 41.8 percent for the second quarter of 2015 compared with 40.8 percent for the second quarter of 2014. The increase in the effective tax rate reflects the impact of health care reform, primarily from the 2015 increase in the non-deductible health insurer fee.
  • Share repurchases totaled 0.9 million shares at a cost of $100 million for the second quarter of 2015.

Health Care segment results

Health Care, which provides a full range of insured and self-insured medical, pharmacy, dental and behavioral health products and services, reported:

  • Operating earnings (1) were $708.0 million for the second quarter of 2015 compared with $584.3 million for the second quarter of 2014. Operating earnings increased primarily as a result of higher underwriting margins in Aetna's Government business, partially offset by an increase in general and administrative expenses as described in Operating expenses above.
  • Net income (2) was $714.0 million for the second quarter of 2015 compared with $521.1 million for the second quarter of 2014.
  • Operating revenues (3) were $14.4 billion for the second quarter of 2015 compared with $13.8 billion for the second quarter of 2014. The 5 percent increase is due primarily to higher premium yields as well as membership growth in Aetna's Government business partially offset by membership losses in Aetna's middle-market Commercial Insured products. Total revenues were $14.5 billion and $13.8 billion for the second quarters of 2015 and 2014, respectively. Total revenue for the second quarter of 2015 includes approximately $110 million of net litigation-related proceeds.
  • Sequentially, second-quarter 2015 medical membership remained essentially flat due to growth in Aetna's Commercial ASC products and Government business, substantially offset by a decline in Aetna's Commercial Insured products.
  • Aetna's second-quarter 2015 Commercial MBR increased when compared to the second quarter of 2014 primarily as a result of the impact of programs mandated by health care reform (the "3Rs"), partially offset by improved performance in Aetna's large group business. In the second quarter of 2015, Aetna recorded an additional $252 million of net health care reform risk adjustment payables compared with no amount recorded in the second quarter of 2014. Aetna did not record any health care reform risk corridor receivables at June 30, 2015, or June 30, 2014. In aggregate, the incremental net charges incurred in connection with the 3Rs during the second quarter of 2015 were $177 million, compared with net benefits of $48 million in the second quarter of 2014.
  • Aetna's second-quarter 2015 Government MBR improved over the second quarter of 2014 primarily as a result of actions impacting revenue and medical costs designed to solve for the gap between Medicare premiums and medical costs and other expenses and improved performance in Aetna's Medicaid business as well as increased favorable development of prior-period health care cost estimates in 2015.
  • In the second quarter of 2015, Aetna experienced favorable development of prior-period health care cost estimates in its Commercial, Medicaid and Medicare products, primarily attributable to first-quarter 2015 performance. In addition, in the second quarter of 2015, Aetna experienced additional favorable development of prior-years' health care cost estimates which resulted in contractual premium reductions under certain customer arrangements, including minimum medical loss ratio requirements in certain of Aetna's Government contracts.
  • Prior-years' health care costs payable estimates developed favorably by $699.0 million and $531.9 million during the first half of 2015 and 2014, respectively. This development is reported on a basis consistent with the prior years' development reported in the health care costs payable table in Aetna's annual audited financial statements and does not directly correspond to an increase in 2015 operating results.

Group Insurance segment results

Group Insurance, which includes group life, disability and long-term care products, reported:

  • Operating earnings (1) were $44.8 million for the second quarter of 2015 compared with $60.6 million for the second quarter of 2014, primarily due to lower underwriting margins in Aetna's Life and Long-term Care products as well as lower net investment income.
  • Net income (2) was $49.1 million for the second quarter of 2015 compared with $61.4 million for the second quarter of 2014.
  • Operating revenues (3) were $628.9 million for the second quarter of 2015 compared with $626.4 million for the second quarter of 2014. Total revenues were $635.7 million and $627.7 million for the second quarters of 2015 and 2014, respectively.

Large Case Pensions segment results

Large Case Pensions, which manages a variety of discontinued and other retirement and savings products, primarily for qualified pension plans, reported:

  • Operating earnings (1) were $6.2 million for the second quarter of 2015 compared with $5.4 million for the second quarter of 2014.
  • Net income (2) was $5.6 million for the second quarter of 2015 compared with $6.6 million for the second quarter of 2014.
  • Operating revenues (3) were $90.3 million for the second quarter of 2015 compared with $93.2 million for the second quarter of 2014. Total revenues were $89.4 million and $95.1 million for the second quarters of 2015 and 2014, respectively.

(1) Operating earnings and operating earnings per share exclude from net income attributable to Aetna and operating expenses and operating revenues exclude, as applicable, amortization of other acquired intangible assets, net realized capital gains or losses and other items, if any, that neither relate to the ordinary course of Aetna's business nor reflect Aetna's underlying business performance. Although the excluded items may recur, management believes that operating earnings, operating earnings per share, operating revenues, operating expenses and the operating expense ratio provide a more useful comparison of Aetna's underlying business performance from period to period. Management uses operating earnings to assess business performance and to make decisions regarding Aetna's operations and the allocation of resources among Aetna's businesses. Operating earnings is also the measure reported to the Chief Executive Officer for these purposes. Non-GAAP financial measures Aetna discloses, such as operating earnings, operating earnings per share, operating revenues, operating expenses, pretax operating margin and the operating expense ratio, should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).

For the periods covered in this press release, the following items are excluded from operating earnings, operating expenses and operating revenues, as applicable, because Aetna believes they neither relate to the ordinary course of Aetna's business nor reflect Aetna's underlying business performance:

  • Aetna incurred transaction and integration-related costs of $21.4 million ($30.7 million pretax) and $52.1 million ($76.3 million pretax) during the three and six months ended June 30, 2015, respectively, related to the acquisitions of Coventry Health Care, Inc. (“Coventry”), the InterGlobal group (“InterGlobal”) and bSwift LLC ("bswift"). Aetna incurred transaction and integration-related costs of $36.3 million ($55.8 million pretax) and $78.2 million ($199.5 million pretax) during the three and six months ended June 30, 2014, respectively, related to the acquisitions of Coventry and InterGlobal. Transaction costs include advisory, legal and other professional fees which are not deductible for tax purposes and are reflected in Aetna's GAAP Consolidated Statements of Income in general and administrative expenses.
  • In the three months ended June 30, 2015, Aetna received proceeds of $71.3 million ($109.6 million pretax), net of legal costs, in connection with a litigation settlement. These net proceeds were recorded in fees and other revenue in Aetna's GAAP Consolidated Statements of Income.
  • Aetna incurred a loss on the early extinguishment of long-term debt of $59.7 million ($91.9 million pretax) during the three months ended March 31, 2014 related to the redemption of Aetna's 6.0% senior notes due 2016.
  • Aetna recorded a charge of $78.0 million ($120.0 million pretax) during the three months ended December 31, 2012 related to the settlement of purported class action litigation regarding Aetna's payment practices related to out-of-network health care providers. That charge included the estimated cost of legal fees of plaintiffs' counsel and the costs of administering the settlement. During the three months ended March 31, 2014, Aetna exercised its right to terminate the settlement agreement. As a result, Aetna released the reserve established in connection with the settlement agreement, net of amounts due to the settlement administrator, which reduced general and administrative expenses by $67.0 million ($103.0 million pretax) in the three months ended March 31, 2014.
  • Other acquired intangible assets relate to Aetna's acquisition activities and are amortized over their useful lives. However, this amortization does not directly relate to the underwriting or servicing of products for customers and is not directly related to the core performance of Aetna's business operations.
  • Net realized capital gains and losses arise from various types of transactions, primarily in the course of managing a portfolio of assets that support the payment of liabilities. However, these transactions do not directly relate to the underwriting or servicing of products for customers and are not directly related to the core performance of Aetna's business operations.

(2) Net Income (Loss) refers to net income (loss) attributable to Aetna reported in Aetna's GAAP Consolidated Statements of Income. Unless otherwise indicated, all references in this press release to operating earnings, operating earnings per share, net income (loss) and net income per share are based upon net income (loss) attributable to Aetna, which excludes amounts attributable to non-controlling interests.

(3) Operating revenue excludes net realized capital gains and losses as noted in (1) above. 

(4) Projected 2015 operating earnings per share exclude from net income estimated after-tax amortization of other acquired intangible assets of approximately $165 million ($254 million pretax), projected integration-related costs related to the Coventry, InterGlobal, and bswift acquisitions, projected transaction-related costs related to the proposed Humana Inc. ("Humana") acquisition, any future net realized capital gains and losses and other items, if any, that neither relate to the ordinary course of Aetna's business nor reflect Aetna's underlying business performance. After-tax amortization of other acquired intangible assets relates to Aetna's acquisition activities, including Coventry, InterGlobal and bswift. Aetna is not able to project the amount of future net realized capital gains and losses or any such other items (other than estimated after-tax amortization of other acquired intangible assets and projected transaction and integration-related costs related to the Humana, Coventry, InterGlobal and bswift acquisitions) and therefore cannot reconcile projected operating earnings per share to projected net income per share in any period. Projected full-year 2015 operating earnings per share reflect approximately 353 million weighted average diluted shares.

(5) The operating expense ratio excludes net realized capital gains and losses and other items, if any, that are excluded from operating revenues or operating expenses, as noted in (1) above.

(6) In order to provide useful information regarding Aetna's profitability on a basis comparable to others in the industry, without regard to financing decisions, income taxes or amortization of other acquired intangible assets (each of which may vary for reasons not directly related to the performance of the underlying business), Aetna's pretax operating margin is based on operating earnings excluding interest expense and income taxes. Management also uses pretax operating margin to assess Aetna's performance, including performance versus competitors.

(7) Operating revenue and operating expense information is presented before income taxes. Operating earnings information is presented net of income taxes.

(8) Aetna's Corporate Financing segment is not a business segment. It is added to Aetna's business segments to reconcile segment reporting to Aetna's consolidated results. The net loss of the Corporate Financing segment includes interest expense on Aetna's outstanding debt and the financing components of Aetna's pension and other postretirement employee benefit plan expenses (benefits). As described in (1) above, the operating earnings of the Corporate Financing segment exclude other items, if any, that neither relate to the ordinary course of Aetna's business nor reflect Aetna's underlying business performance.

(9) Medicaid membership includes members who are dually-eligible for both Medicare and Medicaid.

(10) Represents members in consumer-directed health plans included in Commercial medical membership.

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