Austria

Austrian insurance market

Non-life insurance represented around 65% of total premium volume in Austria during the 1^st to 3^rd quarters of 2016, which was relatively high compared to other Western European insurance markets. As in previous years, the share of life insurance decreased once again and is now around 35%. There is therefore still significant potential for growth in life insurance.

The Austrian insurance companies generated EUR 13.1 billion in premium volume in the 1^st to 3^rd quarters of 2016. This represented a year-on-year decline of 2.8% that was primarily due to a decrease in life insurance (-10.8%).

Property and casualty premiums recorded a moderate increase of 1.5%. The increase was mainly the result of good growth in casualty insurance (+3.4%).

The continued low level of interest rates led to a further sharp decline in single-premium business (-37.8%) in the 1^st to 3^rd quarters of 2016. Regular premium life insurance also recorded a year-on-year decrease of 1.6%. Growth rates increased, on the other hand, for occupational disability (+9.3%) and nursing care insurance (+6.1%). Due to the difficult interest rate environment, the Austrian Financial Market Authority (FMA) further reduced the guaranteed interest rate (the maximum rate that can be promised to policy holders) for new life insurance policies from 1.0% to 0.5% at the beginning of 2017.

Health insurance recorded strong growth of 4.7% in the 1^st to 3^rd quarters of 2016.

Austria had an insurance density (per capita insurance premiums) of EUR 2,034 in 2015. EUR 1,245 of this amount was for non-life insurance and EUR 789 for life insurance.

VIG companies in Austria

Vienna Insurance Group is represented by three insurance companies in the Austrian market, Wiener Städtische, Donau Versicherung and s Versicherung. Although VIG Holding operates out of Austria as an international reinsurer and an insurer in the cross-border corporate customer business, it is assigned to the “Central Functions”. Wiener Städtische also operates branches in Italy and Slovenia. Donau Versicherung is also represented by a branch in Italy.

VIG’s market share of 24.2% in the 1^st to 3^rd quarters of 2016 makes it the leading insurance group in Austria. VIG also holds first place in property and casualty insurance with a market share of 22.2%, and in life insurance with a market share of 29.0%. In health insurance, VIG holds second place with a market share of 19.5%.

Business development in Austria in 2016

Premium development

The Vienna Insurance Group companies in Austria wrote EUR 3,941.32 million in gross written premiums in 2016 (2015: EUR 4,055.53 million). This corresponds to a year-on-year decrease of 2.8% that is due to the reduction in single-premium life business. When adjusted for this, the Austrian Group companies recorded an increase of 0.7%. Net earned premiums were EUR 3,247.94 million in 2016. This corresponds to a decrease of 3.6%.

Expenses for claims and insurance benefits

The Austrian Group companies had expenses for claims and insurance benefits (less reinsurance) of EUR 3,190.93 million in 2016, or EUR 171.02 million less than in 2015. This corresponds to a reduction of 5.1% due to a smaller allocation to the mathematical reserve as a result of the decrease in single-premium business.

Acquisition and administrative expenses

Acquisition and administrative expenses rose to EUR 619.01 million in 2016. The year-on-year increase of 3.3% largely corresponds to the growth in regular premium business.

Result before taxes

Profit before taxes decreased 7.9% in Austria to EUR 196.09 million in 2016 due to lower realised gains on the disposal of investments (2015: EUR 212.96 million).

Combined ratio

The combined ratio of 97.6% in Austria (after reinsurance, not including investment income) in 2016 remained close to the level of the previous year (2015: 97.5%).