UPDATE 1-Vienna Insurance pretax up 34 pct, dividend hiked

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VIENNA, March 29 (Reuters) - Vienna Insurance Group posted a 34-percent gain in 2006 pretax profit on Thursday, driven by high premium growth in eastern Europe and rising pension savings in its home market of Austria.

Pretax profit rose to 321 million euros ($429 million), the group said in a statement, triggering a 24-percent dividend raise to 0.82 euros per share in line with the company's policy to pay out a third of net profits to shareholders.

"We gained additional market shares in all lines of business in Austria and developed our shares in premiums particularly dynamically in central and eastern Europe," said Chief Executive Guenter Geyer in the statement.

Gross written premiums grew 17 percent, mostly in the former communist bloc which meanwhile accounts for more than a third of Vienna Insurance's premium income -- making it the second-biggest foreign-owned insurer in the region.

But high damage claims due to bad weather conditions in the first half of the year, especially in Slovakia and the Czech Republic hit earnings in those countries.

Austrian premium growth was also high at 8.3 percent, mainly driven by a 12 percent rise in life insurance premiums as Austrians increased their pension savings. Austrian pretax profit surged 45 percent and contributed most to earnings growth.

In presentation slides for an analyst conference call later on Thursday, Vienna Insurance reiterated it expected 370 million euros in pretax profit this year, bang in line with the median forecast in a Reuters Estimates analyst poll.

Vienna Insurance had said in January pretax profit would come in between 315 and 320 million euros after consolidated premiums written rose 17 percent last year, and said it would increase its dividend to 0.80 euros per share.