Access America 2004 Annual Report Download - page 20

Review of Operations
18
Review of Operations for the year 2004
Annual Closing December 31st, 2004: consolidated accounts
Turnover (Premium and Service Revenue)
Mondial Assistance Group's strong growth in turnover
of 10.5% (turnover written gross, both insurance premiums
and service fees) to 1,099.7 million euros throughout the
twelve-month period ended on December 31st, 2004,
was strongly influenced by more favorable conditions for the
two main lines of business, travel insurance and automobile
assistance.
Travel insurance turnover was boosted by 9% and reached a
share of 46% of total turnover. This development was due to
the comeback of the tourism sector to normal, at least prior to
the Tsunami in Asia on December 26, and the notably strong
growth in Australia.
In an environment of almost stagnant new vehicle sales (world
automobile market +3% in 2004), the need for sophisticated
automobile assistance led to a growth of turnover of 19% and
a share of 43% of total turnover.
The third line of business, healthcare services, which was
launched in 2003, was further developed and increased its
turnover by 50%.
Geographically speaking, turnover development was particu-
larly strong in certain markets. From a regional perspective,
growth was registered throughout all regions. The Asia-Pacific
region contributed to overall turnover growth with an increa-
se of 24% with respect to 2003, the Americas with +10%,
Europe (excluding France) with +13% and France with an
increase of more than 7%.
Fluctuation of currency exchange rates impacted the Group’s
turnover also in 2004, resulting in a net decrease of 7.9 million
euros (stemming from fluctuations of the US dollar, the
Brazilian real and the British pound), compared to a
hypothetical situation at constant exchange rates of 2003.
Claims and Expenses
The claims ratio (including claims administration costs, net of
re-insurance) in the insurance business improved to 61.6%
(2003: 63.2%), while the claims reserves were up by 13.5%
to 126.3 million euros.
The impact of the Tsunami disaster on December 26, 2004 led
to claims in Mondial Assistance Group’s retention of 2.7 million
euros (estimated gross claims before reinsurance amounted to
7.0 million euros) for the financial year 2004.
Compared to 2003, Mondial Assistance Group’s reported
global commission ratio (gross of reinsurance) slightly increased
to 17.2% (both for insurance as well as for service activities).
General expenses increased by 5.7% to 409 million euros
(2003: 388 million euros). The operating entities succeeded in
efficiently retaining control of the expenses despite the strong
growth of turnover. Thanks to the strong premium increase,
the favorable development of the claims, commissions
and expenses led to an improved combined ratio of 95.8%
(previous year: 97.5%; -1.7 points).
Investments and financial results
On December 31st, 2004 the Group's financial investments
amounted to 467.2 million euros (2003: 418.6 million euros).
The cash and cash equivalents could be successfully reduced
to 136 million euros (2003: 173 million euros; - 21.5%),
but are considered still relatively high. In 2004, almost
all shares in the portfolio were sold in order to further reduce
the investment risk.
Ordinary investment income increased to 18.4 million euros
(2003: 14.0 million euros) as interest rates in the markets
recovered slightly and due to the higher investment portfolio
on fixed interest securities and short term deposits. The sale of
Mondial Assistance Group's participation in a French subsi-
diary is the main reason for a decrease of the realized result.
In addition, the US dollar was further devalued against the
euro. In total, the described effects reduced the financial result
to 10.1 million euros (2003: 16.9 million euros).