Ladies and gentlemen, welcome to the preliminary results for the financial year 2023 conference call and live webcast. I'm Moritz, the conference operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a question- and- answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Hartwig Löger, CEO of VIG. Please go ahead, sir.
A welcome also from my side. Hartwig Löger speaking, CEO from VIG. I also welcome on my side my colleagues, Liane Hirner, our CFRO, and Peter Höfinger, our Deputy CEO. Also participating today, Nina Higatzberger-Schwarz, head of investor relations, Roland Goldsteiner, head of group finance, and Werner Matula, our head of actuarial services. Altogether, we will take your questions after the presentation done by me, Liane, and Peter Höfinger. So I want to start with slide number three in our presentation. Here, I just want to shortly mention the key figures as they are shown on the slide to stress the positive developments of VIG in 2023, starting with the increase by 12.2% of insurance service revenue.
Out of that, also followed by a significant increase of profit before tax up to EUR 773 million, and also including a positive move from the net combined ratio, which is improved by 0.2 basis points down to 92.6%. Earnings per share, also in a very positive development from last year's EUR 3.63 to EUR 4.31 this year. Operating return on equity, which also increased from 11.6% in 2022 up to 15.1% in 2023. What I want to mention especially, the solvency ratio, which is quite strong at the level of 269%, which is including transitional measures. To the excluding transitionals, it is at the level of 243%. Compared to the solvency ratio of last year of 280%, the main drivers were decreasing own funds and also interest rate movements.
On slide 4, there is the dividend proposal, which will be given by the Board to a level of EUR 1.40. This is on one side based on the strong performance I mentioned just before and also in line with our new dividend policy, which, as you know, is aiming for continuously increasing the dividends year by year. And so out of that, we are, I think, quite in line also in the increase of EUR 0.10 up to EUR 1.40 in our proposal. On the next slide, 5, again, some topics about the achievements in 2023, which is out of our running VIG 25 group strategy. The slide shows some activities highlighting 2023.
On one side, it is activities especially. I want to mention the sustainability program where we are defining six spheres of impact in the areas of asset management, underwriting, and operations, which are, yes, acting in the ecological form. On the social side, we have the fields of employees, customers, and society. There is also, I think, important to mention that we established also an own group sustainability office, which is coordinating all the activities, which is defined in the topic of the sustainability program, which is one important key factor out of our VIG 25 strategy. Besides that, it's important also to mention that we launched also new forms in the digital transition regarding also telematic apps, which started in Czech and also will hand it over to Poland.
We're expecting for 2024 and the next years that this system will also improve our activities and be a positive factor also on the growth side for our activities in the countries. Merger and acquisition, just to mention, there was in 2023 the acquisition of the Slovakian pension fund company named 365.life. This acquisition was done by Kooperativa Bratislava. This is also underlining our activities in the VIG 25 strategy program where we clearly define also our expansion in the pension fund business in our countries. Closing of acquisition was done of the Polish and Romanian entities of the former Aegon CEE business. What was also important in 2023, the increase of the stake in the Hungarian business where we now have 90% of the shares of the holding, which was built up, and 10% left with Corvinus from Hungarian state-owned company.
In Poland, also, the group company's on the way to strengthen the market position where we are planning a merger during the year 2024. Going on to slide number 6, I think there will be also not only for the success of 2023, I mentioned too, the strong strategic partnership with Erste Group. We see here on this slide that there was also in 2023 a strong growth on the non-life business up to 10%, even in life, where the background with single premium was quite difficult, but it was possible on the regular premium side also to increase overall premium by 4.8%.
What is, I think, also for the future a very important factor, we see here down on the right side that the increase of sales development on the platform of George, not only in Austria but also in the banks in Central Eastern Europe of Erste Group, there was an increase of more than double of the amount of the last year. So this strong long-term partnership, which is defined now till 2033, is also over the next years a good basis for growth. And there is also a strong target agreement inside the Erste Group, which will also provide us in the movement. On slide number 7, CO3, I think might be a little bit surprising you from the definition. When we discussed about sustainability, there we are focusing to minimize CO2. The positive factor for us is CO3, which means communication, collaboration, and cooperation.
In this form of CO3, we define the focus where we are clearly, yes, fostering and underlying also our activities of the initiatives of VIG 25 strategy program. Especially, I want to work out the cooperation, which is focusing on the identifying of synergies between the VIG companies being active in the same country. Here in this chart, you can see that we structure the definition along the value chain. In each country, we now are working up the potential of synergies in aligning the activities and the cooperation as we define it. Out of that, the local management guided by the VIG holding team will work out the potential of synergies, which will be, yes, get into action in between the next month and years.
For example, I just want to mention, as we discussed also in Poland, there is the topic that we will consolidate the activities in between the companies as far as possible. What does not mean that we are in line with mergers in all the countries, no. But we want to strengthen also on cost side and the potential of synergies in between the companies, also to strengthen their independence in between the group. So this was a brief overview on the main topics of 2023. Now I hand over to Liane for deepening the financials.
Thank you, Hartwig. I'm pleased to present our preliminary full year results based on the new accounting standards IFRS 17 and IFRS 9, together with restated figures for the comparative period 2022 in more detail. On slide nine, we show our group income statement. As already mentioned, the double-digit insurance service revenue growth of 12.2% is driven by strong developments in the P&C business. Overall, P&C accounted for 80% of the EUR 10.9 billion insurance service revenues, with health and life contributing 20%. When we speak about life and health, we have separate slides for the development of the CSM release because roughly 90% of this relates to life and health. I will touch upon the net investment result in detail on the next slide. It is, together with the increased insurance service result, the driver for our significant profit growth of 31.9%.
The ability to adjust tariffs to inflationary cost increases, a higher volume of profitable business, and the positive impact of higher interest rates on investments contributed to an excellent result before taxes of EUR 773 million, more than offsetting the adjustments that we have made in line with our overall conservative approach. The adjustments of EUR 103.3 million include the entire goodwill impairment for the Baltics in the size of EUR 75.5 million and impairment of purchased customer bases in Hungary and Türkiye in the size of EUR 20.8 million. The remainder are smaller software impairments in Romania and Poland. With this, let's move to slide 10 and the details of our net investment result development. We achieved a net investment result of plus EUR 284.3 million compared to the loss of EUR 12.2 million in 2022.
The comparative figure for last year was significantly influenced by the interest rate development, which is reflected in the large positive swing of the non-realized gains and losses. The counter movement from the technical reserves can be seen in the insurance finance result of minus EUR 1.7 billion in 2023. I would like to highlight that the interest revenue increased by 25.3% to EUR 895.8 million due to a higher average new investment yield of 5.5% in 2023 compared to 4.2% in 2022. In total, these positive developments support the overall increase of the net investment result as VIG achieves a higher investment performance. Now, for completeness, last year's impairment in the size of roughly EUR 80 million of the Russian investment exposure is mentioned.
As we were able to sell some of the Russian funds, we achieved a positive impact out of that for 2023 in the amount of approximately EUR 21 million. One comment with Signa. In the view of the current situation, we have impaired our exposure of around EUR 50 million. Over the page, we have the investment split and bond portfolio overview. The split refers to the investments held at VIG's own risk, meaning that the investments for unit and index-linked life insurance of EUR 7.8 billion are not included. Compared to last year's IFRS 9 split, bonds under IFRS 9 increased slightly to 75.3%, whereas the share of loans decreased to 2.1%. Real estate, including owner-occupied property and equities, remained stable at 9.6% and 3.3% respectively. Please keep in mind that VIG continues to value real estate at amortized cost.
Biggest shift worth mentioning took place in the bond portfolio by issuer. Bonds issued by insurers are now shown under financials. Last year, they were part of the corporate exposure. As a result, the share of financials increased to 20.7%, whereas the share of corporates decreased to 17.8%. Slide 12 provides a detailed overview of the bond ratings by issuer. The rating splits of the covered bonds improved, but otherwise, there were no significant changes. With this, I would like to move on to slide 13 and the roll forward of the life and health net CSM. The net CSM in life and health remained broadly stable at around EUR 5.8 billion. The CSM release in life and health of EUR 534 million represents close to 90% of the total CSM release of EUR 616 million.
New business life health contributed EUR 326 million and led to an excellent new business margin of 8.9%, a substantial improvement compared to the 5.8% new business margin at year-end 2022, reflecting the higher volumes of profitable business splitting. Let me finish my part of the presentation with slide 14, with the results before taxes development. Austria with a strong contribution of EUR 113 million to our overall profit growth of 31.9%. I already mentioned last year's impairment on the Russian investment exposure, which impacted the net investment result last year. Profit before tax decreases in the Czech Republic and Poland were more than outweighed by strong growth in Extended CEE and special market segments. In the Czech Republic, the transition to IFRS 17 resulted in a special one-off in the life business.
In Poland, the development is fully in line with expectations given the market development and our merger activities that we presented in detail in our Q3 update call. The strong profit increase in Extended CCE was mainly driven by Hungary, where lower amortization of intangible assets related to purchased customer bases, together with an improved combined ratio, supported the positive development. Profit before taxes also increased in Slovakia and Bulgaria, mainly due to higher net investment results. Profit growth in these three markets more than offset the full goodwill impairment in the Baltics and the conservative expected credit loss allowance taken for Ukraine. Overall, the excellent pretax profit of EUR 772.7 million achieved in 2023, together with our strong capital position, demonstrates the strength of our well-diversified group and once again underpins our successful business model.
With this, I now hand over to Peter Höfinger for further details on our business development in 2023.
Thank you. Good afternoon from my side. Our insurance service revenues were growing by 12.2%, which was mainly driven by Extended CEE. And within Extended CEE, the drivers were the Baltics, Bulgaria, Slovakia, Hungary, and Romania. We also were experiencing a significant growth in Special Markets . This has also to do with the first-time consolidation of Aegon Life, now called Vienna Life. On the next slide, we are showing by lines of business.
You see that we are growing 16% in Casco business. This is also very much supported by the higher values which we are insuring, so higher car prices. We are also growing by 14% in other property and Motor TPL by 10.8%. If we look to the life business, this is now insurance service revenues. So therefore, figures are smaller as the saving part is now excluded. Over here, we have a stable development in different areas.
What is very positive, we are very much supporting our health portfolio, and health business is also growing, still small, but growing all over the place in Central Eastern Europe and also in Austria. When we come to the net combined ratio, we have a net combined ratio of 92.6%. In most of our segments, it has developed quite stable. We kept this combined ratio of 92.6% despite the weather-related claims of EUR 571 million gross, which is EUR 347 million net, which is approximately 30% higher than compared with the year 2022. Back to Hartwig.
Thank you, Peter. At least I will come to the outlook. And on slide number 19, I just want to mention, if you look on the right side to the map, which is showing our core market CE in the definition of VIG, and you can see also the Special Markets beside. I think important is for the outlook of 2024 that we realize that almost all countries are showing positive GDP growth in the expectation for this year. And this is notably stronger than it is.
This shows also the table down on the left side that besides the Eurozone and European Union 27, that there is a clearly higher expectation in the forecast, which here is split up to our three regions in between our core market center with 1.3 on the lower level, including Austria, as we know, which is quite on a low level in the expectation of this year. But beside these, all other countries, and especially in the northern and southern area of our markets, the expectation is up to 2.7, which is significantly higher than the expectation in the Eurozone. So out of that, we think that the definition of our core markets gives a good basis also for a positive expectation and outlook.
On slide number 20, here, you see that we, as VIG, over the last years have clearly shown that we are ready to also manage these challenging geopolitical and economic conditions. Out of that, we are still focusing that the continuity, stability, and diversity in our market situation will give the basis that there is a clear aim of the management to achieve profit before taxes within the range of EUR 825 million-EUR 875 million in the year 2024. This is a clear ambition and also a clear target we will focus on. So thank you also for your interest. Now we come to the end, and we are ready to take your questions. Thank you.
Ladies and gentlemen, at this time, we will begin the question- and- answer session. Anyone who wishes to ask a question may press one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only handsets and turn off the volume on the webcast. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. The first question comes from Bhavin Rathod from HSBC. Please go ahead.
Hello. Good afternoon. Thank you for taking my questions. Congratulations on the excellent result. So I have three on my side. The first one would be on your PBT guidance for 2024. It would be very helpful if you could provide more granularity as to which region or geographies you expect to provide this incremental growth in 2024. The second one would be on the combined ratio of 92.6% that reported in 2023. Just trying to better understand how should we now think about the normalized level of combined ratio for VIG, given the fact that we have seen this 92.5% level of combined ratio for the last two years. So should we expect an improvement going forward from here on? And the last one would be on Poland. Poland appeared to be one of the challenging markets in terms of the MTPL rates.
It would be helpful if you could provide more colors, as in what kind of dynamics you are seeing here on. Are you seeing any improvement in the MTPL rating cycle? Yeah. I guess those are the only two questions that I have. Thank you.
Okay. Thank you for your question. I will take question number 1 and 3 from my side, and I will ask then Peter Höfinger to answer the question to the combined ratio. Maybe to go a little bit deeper in the expectation of the aim and the vision for 2024, I think on one side, I would split it up in the also targeted growth for this year, 2024, which is based, as I mentioned, on the expectation also of GDP growth on a higher level in our core markets. But especially there, I also touched the topic of our strategic partnership with Erste. Overall, the Erste Group herself decided to give a clear target of increase over the next two, three years, the income out of insurance commission up to a level of +50%.
And this is a common agreement we also have on the basis that there, especially non-life, will be a strong potential also in growth beside the, I would say, important and successful life activities. Going on to that, we see that in most of our countries, we have a clear target also to take the potential of non-life, also in the new form of digital insurance and platform activities. So there is also a growth path we clearly defined over the next time and also in 2024. And it was also mentioned before by Peter Höfinger in the results of 2023. There is still potential also, especially in the health business, where we also see the chance over the markets, including Austria, also to strengthen our position there. Also important on the side of efficiency and cost, there is also a clear target.
For example, I mentioned from my side also under the topic of cooperation that we, for example, are now in Poland merging three non-life companies. We will merge Vienna and Compensa non-life. Out of that, there is also the situation that out of three life companies, we will merge to one. So there will stay two non-life companies beside InterRisk and then Compensa non-life and also one life company. Here, we see that there are also effects we will take in the results of our group. I also mentioned in the strategic initiatives of VIG 25, there are key activities also to strengthen the efficiency and increase efficiency in the automation. For example, in claims handling, there are a lot of activities in the group companies also to work on that. I also take now the question number three to Poland. Yes, you are right.
There in Poland, we have the situation that there is a soft market. It is not easy at the moment, especially in Motor TPL, to increase on a high level the premium. Besides that, we are clear that there will be also the need of more, I would say, technical approach in segmenting on the market side to the premium. There are activities now including and also guiding the merger activities. But there are also initiatives which will work up a positive impact. We see in 2023 a strong growth in non-life beside Motor TPL. And so this is also showing us that there is potential also in a positive form for Poland. All over, as you see, the merger, which is, I think, on a technical basis, fixed in 2024, in the second half, this will bring up our basis results coming from Poland.
We are fostering our activities there. As I marked it before on the map, we can see that there is a clear target also to take the potential we have on Poland markets for the next years. I will hand over to Peter to answer the question to combined ratio.
Thank you for your question to the combined ratio. I think we have to look on various aspects in answering this question. One topic, and I mentioned it in the presentation, you can see even though we had significantly higher weather-related claims in the year 2023, we were able to keep a stable combined ratio. This could imply that there is potential for further improvement in our claims ratio in the years to come. On the other hand side, I think we will also have to learn that weather-related claims become more and more part of our ordinary business due to certain climate changes effects. The other topic is the cost ratio. And having more than 50 insurance companies in our portfolio, and we also have their medium-size and smaller insurance companies, they should benefit in the years to come by economies of scale effects.
So therefore, our cost ratio over the time should go further down, which is a clear improvement which we will see in the years to come in our combined ratio. The third effect is the higher volatility which we experience out of IFRS 17 and therefore the correlation of interest rates to discounting and therefore impact on the combined ratio. So I hope that I somehow could give you a flavor of an answer.
No, very clear. Thank you so much for that elaborate answer.
The next question comes from Thomas Unger from Erste Group. Please go ahead.
Yes. Well, good afternoon. Thank you very much also for taking my question. Thank you for the presentation. I would like to come back to your PBT guidance for 2024. I would ask for another angle. You're guiding EUR 825 million-EUR 875 million for 2024. And if I look if I take out the adjustments that the one-offs that you had in 2023, that was you basically are at around the top end of the new or you were in 2023 at the top end of the 2024 guidance. So essentially, I'm trying to ask, is there a degree of conservatism built into your forecast, or do you anticipate a worsening of any of the main P&L lines in 2024? So that would be my first question. Then secondly, on your solvency ratio, that declined quite significantly in Q4. I believe in Q3, you reported a ratio above 300%.
Can you explain the factors that affected the ratio in Q4? And maybe also, did the M&A activities have an impact here? And then lastly, I'd like to ask on the CSM and how you feel about the ratio between the releases and the new business and how you see that going forward. And then also on the new business margin, life health, that increased, as you mentioned in the presentation, from 5.8%-8.9%, very substantially. And what were the drivers here, and where do you expect that to settle in in 2024 and beyond? Thank you.
Thank you, Thomas. Excellent questions regarding the PBT guidance. As you know and as we have always told also in the past, we have, in general, a more conservative approach. We had, in the past years, always adjustments. So there is, I would say, an overall conservatism included in these numbers. But there is no specific reason that some lines of business would not perform or not increase as expected. So this would be my answer for the first question. Second question, the solvency ratio in Q4, the decreases are only related to the interest rate curve, which decreased in quarter four. For CSM, I hand over to our Chief Actuary, Werner Matula.
Yeah. Thank you very much. Good afternoon as well. Let me first comment on the new business margin. Well noted, the profitability went up significantly to close to 9%. In terms of drivers, this was indeed a business driver. So we had significant improvement in both pricing of business sold in the last year as well as volume sold in the profitable lines of business. In particular, also coming very much from Czech Republic. A little bit of effect as well from other valuation parameters, but I would consider them minor. Whether this is a lever that will be sustainable looking forward, hard to say because it always depends on the business being sold in the particular year. In terms of the sustainability of the CSM, we already see in 2023 an improvement here.
So on the life and health, net CSM, it's slightly above 60% now, and it was even below 50% previously. Of course, we know the issue. The release of the transition CSM is stronger than the new business that we built. But as well, there are other factors being the changing variable fee, the change of the other changes in the CSM development, which are factoring in. And as we see, the more profitable new business we are building, the better we are working against losing CSM. And the CSM has been stable also in an environment where interest rates went down in 2023. So we are very confident on maintaining the profitability also for the future.
Super. Thank you very much.
As a reminder, anyone who wishes to ask a question may press star followed by one at this time. It seems like there are no further questions. I would hand back to Nina for any closing remarks.
Thank you for listening in and for your questions. We will release the annual and sustainability report on the 24th of April. If there are any specific questions or data that you require, please feel free to get in touch with investor relations. We will try to help. The next scheduled event is going to be the annual general meeting to be held on the 24th of May. Thank you, and have a good afternoon.
Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.