Germany's ARAG says goal set for 2020 'not achievable' due to COVID-19 crisis
Germany-based legal expenses insurance provider ARAG Group achieved the "best result in its history" in 2019, but said that the original premium-income goal of €1.84 million set for 2020 will "not be achievable" due to the effects of the COVID-19 pandemic.
Paul-Otto Faßbender, chairman of the board of management, highlighted that the company's business model remains "solid, resilient and future-proof", and that it expects a stable premium income in 2020 in spite of the COVID-19 crisis.
ARAG posted a net income (after tax) of €77.5 million for 2019, compared with €34.7 million in 2018.
Gross written premium income rose to €1.76 billion, compared with €1.65 billion in 2018.
The group’s combined ratio appeared flat year-on-year at 88.7 percent, from 88.6 percent reported last year.
ARAG said that it achieved the "best result in its history", driven by growth in its international insurance business, as well as in the German home market.
The company's consolidated turnover, including revenue from ARAG service companies, came to €1.79 billion. The underwriting result reached a ten-year high at €98.5 million.
"The ARAG Group looks back today on the most successful business year in its history. We achieved a marked improvement on the very good results of the preceding years. ARAG is positioned for sustained success," said Faßbender, chairman of the Board of Management and majority shareholder of the ARAG Group. "The Group reported particularly dynamic growth in its international insurance business with a 9.5 percent increase in premium income. The German insurance business exceeded the market average once again with a 4.7 percent gain in premium revenue. Premium income in the German home market surpassed the one-billion euro mark (€1.02 billion) for the first time in the history of the ARAG Group. With net income after taxes of €77.5 million, ARAG posted the best result in its history. Thanks to this very good performance, Group equity capital increased by 14 percent to €558.1 million."
Commenting on the outlook for the current business year 2020, Renko Dirksen said: “Once again, we can be content with our Group’s conservative strategy today. We cannot predict how our business will progress for the remainder of the year. It is still much too early for a reliable assessment.”
According to Dirksen, who will assume the position of speaker of the management board for ARAG SE from July, the original premium-income goal of €1.84 million set for 2020 "will not be achievable due to the effects of the COVID-19 pandemic". Yet the group is confident in its ability to keep premiums at a stable level in 2020.
He said: “ARAG will overcome these challenges thanks to its strong position. We will overcome them above all because our Group is backed by its very special ARAG spirit, which will not allow the successes of past years to be taken from us so quickly. Thus I look at the current year with confidence. Our position and our business model are solid, resilient and future-proof.”
