ECONOMIC REPORT

Business performance

The challenges we faced in our core markets also had a negative impact on our business development in the reporting year 2015, particularly in the field of old-age provision.

 

In this field, the ongoing low interest rate phase, negative press regarding the stability of life insurers and the reduction in the maximum technical interest rate were the main factors that led to continued reservations in terms of signing long-term contracts. Revenue in the field of old-age provision therefore declined in the reporting year.

 

Clients in the field of health insurance continued to display reservations in terms of signing new comprehensive private insurance policies. We attribute this to various factors including critical reporting on the topic of premium increases in the field of private health insurance. Yet despite this, our revenues in the field of health insurance displayed a positive development and were slightly above the previous year’s level. This is thanks to our good client basis, as well as the close and intensive support our clients receive.

 

Working together with our subsidiary FERI, we further strengthened our wealth management operations in the reporting period. FERI was able to acquire new clients in all business segments. The consulting and service portfolio was consistently expanded, above all in the areas of investment management, alternative assets and real assets (for example private equity, hedge funds and real estate). The positive development in this field of consulting at MLP Finanzdienstleistungen AG was another factor contributing to the significant increases in revenue in the field of wealth management over the previous year. The increase in assets under management in the MLP Group remains the driving force behind this.

 

In the field of non-life insurance, revenues were above the previous year’s level, even without the additional revenue contributions associated with the acquisition of the DOMCURA Group.

Consulting services expanded in and around the field of real estate

To cater even more effectively to the increased client demand for real estate and sustainably broaden its revenue basis, in the reporting year MLP once again significantly expanded its consulting portfolio in and around the field of real estate, which was launched in 2014. On request, MLP consultants can offer clients real estate objects in the form of owner-occupied properties or investment properties. Corresponding training events were held in the reporting year and further sessions are also planned for the coming year. Quality assurance for the brokerage of real estate objects is performed by the subsidiary FERI EuroRating, which undertakes a check of all providers who collaborate with us. In the field of real estate financing, MLP set new records in brokered new business, while revenue from real estate brokerage (which is reflected in other commission income) also recorded significant gains.

 

With the exception of a decline in the field of old-age provision as a result of market conditions, the MLP Group was therefore able to increase revenues in all fields of consulting. The further diversification of the revenue basis that MLP drove forward in the reporting year is therefore bearing fruit.

 

New potential in the field of non-life insurance through DOMCURA acquisition

A key focus within the scope of diversifying revenue streams was the acquisition of the DOMCURA Group at the end of July 2015. As a so-called underwriting agency, DOMCURA examines all offers in the market when designing, developing and implementing its extensive coverage concepts in the field of non-life insurance. These are brokered by market actors, such as insurance brokers. The DOMCURA Group will maintain and significantly expand this successful business model. Among others, the DOMCURA Group also includes specialist brokers for commercial and industrial insurance products. With the acquisition and integration of the DOMCURA Group into the MLP Group, MLP is developing another strategically relevant business segment. In addition to this, comprehensive revenue synergies are being created within the MLP Group.

 

Another positive effect results from the distribution of sales revenues. In the field of non-life insurance, a large proportion of the DOMCURA Group’s annual revenues are accrued in the first quarter, as most insurance premiums are due at the start of the year. Since MLP has traditionally generated a large proportion of its revenue in the 4th quarter, the acquisition of the DOMCURA Group will result in a more even distribution of revenues for the Group over the course of the year.

 

Digitalisation strategy successfully pressed ahead

Due to the digitalisation of the financial services sector new competitors are entering the market. These are both so-called fintechs as well as large companies that offer the core skills of financial services providers in the form of dedicated online offers. MLP took various steps in the reporting year to cater to this development and press ahead with the implementation of our online strategy, including entering into a cooperation with the fintech company massUp. The additional steps are described over the next few paragraphs.

Social media activities as a way of acquiring new clients

Within the scope of its online strategy, MLP launched a new internet presence for young adults in the reporting year. MLP financify addresses this target group in its own environment. At the same time, we have further expanded MLP’s presence on social media platforms such as Facebook, YouTube and Twitter. Our objective is to use these platforms to also position ourselves as the dialogue partner for all financial matters and stimulate interest. In addition to this, we relaunched our client website mlp.de in 2015. Among other things, the updated internet presence now also includes webpages for all MLP locations and information on each client consultant.

 

Basis established for extension of the online product portfolio

With its two new web presences and the recently finalised cooperation with massUp, MLP has created the basis for online policy sales which was launched in January 2016. The technical platform now also provides the basis for extending the online product portfolio. In addition to this, the scope of two pilot projects was extended in the reporting year, focusing on video conferencing as a tool for online consulting and the use of eSignatures. MLP therefore created the technological basis and took important steps for further implementation of its digitalisation strategy throughout the reporting year. You can find details on this in the chapter entitled “Anticipated business development”.

 

Extension of offers in the fields of private health insurance and occupational pension provision

In 2015, MLP extended its offers in the field of private health insurance. Even policy holders that are not currently MLP clients can now have the MLP review and optimise the contract with their existing insurer. The flat-rate, one-off service charge of € 420 plus VAT is only applied in the case of a successful optimisation. This service remains free-of-charge for existing MLP clients.

Working to the maxim of “100 for 10”, since 2015 MLP has been offering an innovative sector concept for net salary optimisation in the field of occupational pension provision that is geared primarily to the needs of medical practices, law firms and similar enterprises.
  

“Quick Check” launched for non-life insurance policies

To support our client consultants, we introduced the “Quick Check” for non-life insurance policies in the reporting year. This allows consultants to quickly and easily check the old contracts of their clients that were not concluded through MLP to ensure that they are up-to-date and compare them against current market offers. The new analysis tool facilitates comparison of liability, building, contents, accident and legal expenses insurance policies.

 

Costs stable despite extensive investments

Due to the challenging market environment, MLP is supplementing its growth strategy with a consistent efficiency management programme. Despite comprehensive investments in the future, administrative expenses (prior to acquisition of the DOMCURA Group) remained at the previous year’s level and were thereby in line with our budget. Among other things, these include one-off expenses of more than € 5 million which can, as announced, be attributed to recruiting programs, implementation of our digitalisation strategy and investments in IT.

Changes in the corporate structure

Capital increase against contributions in kind

In the reporting period, MLP AG carried out a capital increase in exchange for contributions in kind. 1,456,948 new shares were issued in return for 33.33% of the shares in Schwarzer Familienholding GmbH (SFH GmbH), the parent company of the DOMCURA Group companies. These shares carry full dividend rights for the financial year 2015. This measure increased the share capital by 1.35% from 107,877,738 shares to 109,334,686 shares. The capital increase in exchange for contributions in kind was entered in the Commercial Register at Mannheim District Court on August 10, 2015.

 

Acquisition of the DOMCURA Group strengthens the field of non-life insurance

In June, MLP AG signed a company acquisition agreement for the full takeover of the DOMCURA Group. With conclusion of the transaction on July 29, 2015, MLP AG acquired 41.66% of the shares from SFH GmbH. Within the scope of a capital increase in exchange for non-cash contributions, which was entered into the Commercial Register at Mannheim District Court on August 10, a further 33.33% of the shares in SFH GmbH was transferred to MLP AG. The remaining 25% of the shares, which do not carry any voting rights or dividend entitlements are to be retained by Mr. Schwarzer, and will be transferred to MLP without any additional cash price payment by no later than January 1, 2017. MLP AG is entitled to receive dividends on 100% of the shares with backdated effect from January 1, 2015. The total transaction volume was € 18 million. € 12 million was paid in cash as the purchase price, while a further 6 million was paid in the form of the aforementioned issue of new shares in return for a 33.33% stake in SFH GmbH. With the financial statements as of September 30, 2015, the DOMCURA Group was included in the scope of consolidation at MLP Group level for the first time.

 

FEREAL AG approved as capital management company

Various changes were made to the structure and organisation within the FERI Group in the reporting period. Among other things, FERI Institutional and Family Office GmbH was merged with FERI Trust GmbH. In the same period, FEREAL AG also received approval from the Federal Financial Supervisory Authority (BaFin) to operate as a capital management company. Aside from this, there were no significant changes to the corporate structure of the MLP Group in the reporting year.

 

In the following description of the MLP Group’s financial position, net assets and results of operations pursuant to International Financial Reporting Standards (IFRS), the previous year’s figures are given in brackets.

 

However, the acquisition of the DOMCURA Group means that direct comparison with previous year’s figures is only possible to a limited extend.