VIG is attractive – and not just due to its strong capitalisation!
Stability and security are of utmost importance in gaining the confidence of investors and customers and in maintaining this confidence over the long term.
Vienna Insurance Group has focused on its customers’ concerns and kept the best interests of its stakeholders in mind since its inception, and the continued existence of its insurance companies and consequently the observance and fulfilment of the obligations to its customers are central elements of its mission statement. Vienna Insurance Group’s excellent level of capitalisation provides an indispensable foundation for this. The management of Vienna Insurance Group keeps this in mind at all times and follows a sustainable, long-term strategy in managing the Company.
The Group is excellently positioned
Vienna Insurance Group’s outstanding position in Austria and the markets of Central and Eastern Europe and its strategic approach to optimal exploitation of growth potential, combined with its conservative investment and reinsurance policy and excellent capitalisation make it an attractive investment.
“As an insurance group, stability and security are of particular importance to Vienna Insurance Group.”
As an insurance group, stability and security are of particular importance to Vienna Insurance Group. During periods of increased volatility and uncertainty, capitalisation and an adequate safety buffer become more important to customers and investors. Supervisory authorities also focus closely on the Group’s capital adequacy, i.e. precisely these “capital buffers”.
As a result of the introduction of Solvency II, new risk-based capital requirements entered into force for the European insurance sector on 1 January 2016. The key performance indicator for solvency is the solvency ratio, which is the ratio of own funds to the capital requirement. Capital is now determined using an economic balance sheet. Capital requirements are calculated using either a prescribed standard formula or an individual internal company model.
Vienna Insurance Group is the only Austrian insurance group with an internal model
This requires approval by the supervisory authorities. Because the standard formula did not adequately reflect Vienna Insurance Group’s risk profile, it decided to internally model the property and casualty and real estate investment areas of the business. This large-scale and highly complex project took years to complete and was successfully concluded at the end of 2015 with approval from the Austrian Financial Market Authority (FMA). Vienna Insurance Group is therefore currently the only insurance group in Austria with an approved internal model and has been using this model since Solvency II came into effect on 1 January 2016.
As an individual company, Vienna Insurance Group had a solvency ratio of around 390% at the end of 2016. The Solvency II ratio for Vienna Insurance Group as a listed group was at the level of the previous year, thereby providing evidence of the outstanding capitalisation of the Group (unverified values). However, financial strength has never been an end in itself for Vienna Insurance Group. The Group ensures that it has adequate risk buffers to protect against any future risks arising from its existing portfolio. As a listed company that is convinced of its growth potential, particularly in the Central and Eastern European region, Vienna Insurance Group also requires sufficient capital to take advantage of these growth opportunities and to provide dividends that allow shareholders to participate in its success. These are the factors the Group weighs up during its financial planning. The challenge is to find the proper balance.
“Vienna Insurance Group uses a very long-term approach for capital planning.”
Vienna Insurance Group uses a long-term approach for capital planning. This became clear in March 2015 when a subordinated bond with a par value of EUR 400 million was issued. The issue took advantage of favourable market conditions to achieve an attractive interest rate of 3.75%. In addition, two supplementary capital bonds were called in at the end of 2016 on their first call date in January 2017.
A+ rating with a stable outlook
The A+ rating with stable outlook assigned by Standard & Poor’s (S&P) starting in March 2009 indicates that Vienna Insurance Group is on the right track with regard to its long-term capital planning. The experts at S&P assess the Group’s business risk profile as “strong” and its financial risk profile as “very strong”.
With regard to the business risk profile, the rating report primarily mentions the Group’s solid diversification across lines of business and well-established multi-channel distribution, including its exclusive sales partnership with Erste Group and its strong competitive position in Austria and the Central and Eastern European region. The financial risk profile is based on an S&P capital model that provides an even better rating when taken on its own.
This means that Vienna Insurance Group has the best rating of all companies in the ATX index. Its goal is to maintain, or even improve, this rating over the long term.
The VIG Equity Story
- Market leader in Austria and the CEE region
- Long-term growth potential
- Successful business model: broad diversification across countries, products and distribution channels
- Optimal combination of local entrepreneurship and central risk management
- Experienced management
- Strong capitalisation
- Conservative investment policy
If you have any questions about the Group and VIG shares, please contact the Investor Relations team.
Head of Investor Relations
Phone: +43 (0) 50 390-21920