Business development of the Group in 2014

General information

Vienna Insurance Group includes around 50 insurance companies in the property and casualty and life insurance business and, in some countries, in the health insurance business as well. These three insurance lines of business are discussed in the Group report, which is broken down by lines of business.

The Montenegro and Belarus markets were not included in the VIG consolidated financial statements in 2014 due to immateriality. More information on the scope of consolidation and consolidation methods is provided on page 75 (see Notes) of the notes to the consolidated financial statements. The notes to the consolidated financial statements provide detailed information on changes in the scope of consolidation starting on page 76 (see Notes).

Vienna Insurance Group operates with more than one company and brand in most of its markets. The market presence of each company in a country may also be aimed at different target groups, and their product portfolios will differ accordingly. Use of this multi-brand strategy does not mean, however, that potential synergies are not exploited. Structural efficiency and the cost-effective use of resources are examined regularly. Back offices that serve more than one company are already being used successfully in many countries. Specific country responsibilities also exist at the Managing Board level to ensure uniform management of each country. Mergers of Group companies will be considered if the additional synergies that can be achieved outweigh the benefits of multiple market presences. This was the case in 2014 in Poland for the merger of the two life insurance companies Compensa and Benefia to create Compensa Life, and in Albania for the merger of the two Group companies Interalbanian and Sigma to create Sigma Interalbanian.

To improve readability, company names have been shortened throughout the entire report. A list of full company names is provided in the List of abbreviations.

In order to avoid duplicate information, reference will be made below to appropriate information in the notes.

Changes in significant balance sheet and income statement items are presented in both the segment report and the notes to the financial statements. Additional disclosures in the management report below are intended to explain these data in more detail.

Retrospective restatement

As of 1 January 2014, VIG had adopted IFRS 10, 11 and 12 and the amendments to IAS 27 and IAS 28. The central focus, particularly with respect to the introduction of IFRS 10, is on establishing a uniform framework to be applied to all investees to determine which are to be included in the consolidated financial statements based on the existence of control. Based on the provisions, control can be said to exist if the parent company has the power to direct the activities of the investee, shares in the variable returns of the investee and can, by exercising its power, materially influence the size of the variable returns.

When adopting IFRS 10 and the amendments to IAS 28, VIG critically examined the scope of companies to be consolidated (fully or at equity). As a result, VIG decided to retrospectively include the following companies, which were previously not consolidated due to the materiality guidelines of the Group, in the scope of consolidation:

• Fully consolidated companies: Doverie
• At equity consolidated companies: Beteiligungs- und Immobilien GmbH, Beteiligungs- und Wohnungsanlagen GmbH, Österreichisches Verkehrsbüro, VBV – Betriebliche Altersvorsorge

Purchase price allocations were performed during retro-spective first-time consolidation in accordance with IFRS 3, and the resulting goodwill values are presented on page 76 (see Notes).

In the case of Doverie, an insurance portfolio value of EUR 110.00 million (book value as of 31 December 2014: EUR 15.26 million) was recognised as a result of purchase price allocation.

The comparative values in 2013 were adjusted to take account of these changes.

Financial performance indicators

The key financial performance indicators that form the basis for assessing VIG’s business development are presented below.

Key figures from the consolidated income statement