VIG celebrates 20 years on the Vienna Stock Exchange

First, however, let’s take a quick look at the current situation. Vienna Insurance Group (VIG) had a market capitalisation of EUR 4.7 billion on 31 December 2014, making it one of the largest companies in the ATX Index. It managed to achieve a price gain of 2.4% even in the volatile stock exchange conditions of 2014, while the ATX Index lost 15.2% of its value.

Trading in the 128 million VIG shares currently listed on the Vienna Stock Exchange has passed through many milestones closely related to the extraordinary development of the Group. It is worth a closer look.

Start of trading in October 1994

It all began in October 1994, with an issue of non-voting preferred shares at a price of ATS 1,030.00 by the former Wiener Städtische Allgemeine Versicherung AG. This was the first time the capital market was accessed for funding the beginning expansion into Central and Eastern Europe. Starting with only 1,350,000 tradable shares and a free float of around 11%, liquidity was quite low at the time and stock market price performance was correspondingly unspectacular until 2003. The Group’s acquisition activities were therefore more than impressive during this period, with insurance companies acquired in the Czech Republic, Slovakia, Hungary, Poland, Croatia, Bulgaria and Serbia.

VIG shares did not begin to really perform, however, until a 1-to-7 stock split in mid-2004 gave trading in VIG shares a significant boost. Since the capital market already had little liking for different share classes at the time, the next step taken a year later was to convert the 9,450,000 preferred shares to no-par value ordinary voting shares.

Establishing the Investor-Relations-department as a point of contact for investors and shareholders at the end of 2004 and beginning of 2005 was a clear indication of the new importance the capital market had for the Company. Once the Company voluntarily undertook to comply with the Austrian Code of Corporate Governance, all the criteria for admission to the Prime Market segment of the Vienna Stock Exchange were fulfilled and the way was open for the Company’s 86,357,600 common shares to enter Austria’s most important share index. VIG was included in the ATX Index on 19 September 2005.

Successful capital increases

In December 2005 and May 2008 the Company conducted two very successful capital increases with a total volume of around EUR 2 billion. The first capital increase, with an issue price of EUR 49.00, increased the Company’s free float to around 30%. The funds that were raised were primarily used to finance further expansion in Central and Eastern Europe. The second capital increase in 2008, with an issue price of EUR 49.50, was mainly used to finance the acquisition of Erste Group insurance companies and for the mutual strategic (distribution) partnership that was concluded at the same time. This was the largest share placement that had ever been performed by an insurance company on the Vienna Stock Exchange at that time. The attractiveness of the investment was shown by an upward price trend that raised VIG shares to an all-time high of EUR 58.20 on 27 February 2008. To underline the great importance the CEE region has to the Group, VIG shares have also had a second listing on the Prague Stock Exchange since February 2008. The interest in Vienna Insurance Group has also grown significantly, as can be seen by the number of analysts that regularly issue reports and recommendations for VIG shares. At the end of 2005, only seven financial institutions performed this kind of analysis – but today there are 17.

Crisis handled well

A look back at 2008 has to mention the bankruptcy of the Lehman Brothers investment bank in the US. It triggered the start of a worldwide financial and economic crisis that still persists in various forms today and also negatively affected the price of VIG shares. VIG shares reached a low of EUR 16.00 on 27 October 2008, the lowest price since 2005, and came close to this historical low again in 2009. The price began to recover in the medium price range of EUR 30 to EUR 40 in the years that followed.

The financial and economic crisis and its effects on the global economy changed perceptions about the CEE region and the expected growth potential in VIG’s markets. What has not changed, however, is the fact that the Group has paid a dividend each year since its initial public offering (IPO) in 1994. Since the first capital increase in 2005, these dividends have been based on the sound dividend policy of Vienna Insurance Group, which provides for a dividend of at least 30% of Group net earnings (after minority interests) for shareholders. The Managing Board is also following this guideline for financial year 2014, and will recommend a dividend of EUR 1.40 per share at the Annual General Meeting on 29 May 2015.