You can count on us

Managing board (photo, © Ian; Ehm Illustration: © Jelka Lerche)

The VIG Managing Board: Peter Höfinger, Martin Simhandl, Elisabeth Stadler, Judit Havasi, Franz Fuchs, Roland Gröll (l. to r.)

The Managing Board of Vienna Insurance Group on the financial year just ended, and on what else you can expect from the market leader in Austria and Central and Eastern Europe.

2016 was once again extremely challenging for the insurance industry. The life business in particular is suffering from the now chronic low interest rate environment. While customers expect a reasonable yield, as an insurance company we are obligated to maintain a conservative investment policy.

We are therefore extremely happy that we have been able to maintain Group premiums at a stable level of slightly over EUR 9 billion in this difficult environment. This represents an increase of 0.3%. When adjusted for single-premium life insurance products, the increase even rises to 4.4%.

Growth in the CEE region

This was only achieved due to our strong presence in the CEE region. We currently already generate more than half our premium income there, and while Austria recorded a drop of 2.8% (an increase of 0.7% excluding single-premium life products), some of our growth markets recorded remarkable increases. The economic upward trend can be seen clearly in the CEE region. Romania, for example, recorded a growth of 24.4%, Turkey 15.3% and Hungary 9.8%.

The Central and Eastern European region also achieved good growth in motor third party liability insurance. This line of business is nevertheless highly competitive and, in some cases, suffers from regulatory measures imposed on the insurance industry. In Romania, for example, the government imposed a maximum limit on motor third party liability tariffs for six months. We are keeping an eye on developments like this and are not afraid to take appropriate measures if profitability is threatened.

At the same time, we also still have an appetite for more in the Central and Eastern European region, whether through organic growth or further acquisitions. We have identified Poland, Hungary, Serbia and Croatia as four growth markets where we aim to achieve a market share of more than 10% in the medium term. Our purchase of the AXA companies means we have already achieved this goal in Serbia in 2016.

“You can count on us” is more than just a catchy phrase. It states that keeping our promises is a top priority. This concerns the CEE strategy we have been systematically implementing for years as well as our profits. In 2016, we announced that we aimed to double our profit before taxes to up to EUR 400 million. We were able to achieve this in spite of the negative effects of the low interest rate environment. However, it should be mentioned that this was also due to a one-time positive effect on the financial result because of an agreement reached between the Carinthian Compensation Payment Fund and HETA’s creditors, which included Vienna Insurance Group.

Accepting the settlement before the 7 October 2016 deadline meant that the bonds that had been previously written off could be written up in value by around EUR 40 million.

Dividend increase

We also certainly feel obliged to maintain our dividend policy, which provides for a dividend of at least 30% of Group net profits (after minority interests) for shareholders. We will therefore propose a dividend increase to EUR 0.80 per share at the Annual General Meeting.

With regard to the ratio of losses to premium income, the Group combined ratio was further reduced compared to previous quarters to 97.3% in 2016. Our clear objective is to continue increasing Group profitability and improve the combined ratio in the direction of 95.0% in the future.

The Standard & Poor’s rating agency once again confirmed the path we have chosen and the resulting excellent capitalisation by assigning an A+ rating with a stable outlook in 2016. This means we have the best rating of all companies included in the ATX leading index of the Vienna Stock Exchange.

Count on us – apart from bare figures

Vienna Insurance Group’s major competitive advantage is our multi-brand strategy with local entrepreneurship. This is an expression of our diversity and one of the most important cornerstones of our strategy. Many studies have shown that companies with a high level of diversity are particularly successful. We place great importance on responding to different local needs and a Group-wide exchange of knowledge and information. This leads to many innovative product ideas and solutions that benefit our companies, employees – and in the end our customers.

When we bought companies in the Central and Eastern European region, they already had brands that were well known. Our customers and employees all identified with them. We are taking advantage of this by using a multi-brand strategy across our entire market area that is closely related to multi-channel distribution. Due to local differences, various approaches are implemented to address customers in different countries. Vienna Insurance Group intentionally uses established regional brands and autonomous local management to respond to these country-specific needs for insurance and future provision.

This local expertise is also greatly assisted by our long-term strategic partnership with Erste Group, which also operates in many of our markets. Personal insurance typically dominates the range of insurance products sold through banks. We also see a great deal of potential in sales of health and property insurance. A project group is being formed with our bank insurance partner Erste Group for this purpose. The aim of the project is to optimise products, distribution and profits for the banks and insurance companies in all countries where Erste Group and Vienna Insurance Group cooperate. The focus is on customer needs and requirements, easily understandable products and integration into the bank’s digitisation initiative.

With more than 24,000 employees, Vienna Insurance Group is the clear market leader in its Austrian and Central and Eastern European markets. We are in an excellent position to take advantage of the long-term growth opportunities offered by the region and its 180 million potential customers by providing service, customer-orientation and reliability – values that are particularly important in times of great change.

Count on us – now and in the future

We have developed a strategic work programme to ensure that Vienna Insurance Group remains a dominant player in the Central and Eastern European insurance market in the future. The programme focuses on three areas: ensuring future viability, optimising our business model and organisation and cooperation.

These three areas include many initiatives, and an overview and description of these is provided on the following pages. A few examples are briefly mentioned here. First, the ongoing digitisation taking place in all areas of life and work will also affect the insurance business. We are consciously focusing on automating processes and digitising our range of products and services.

We also see significant potential in promoting private health insurance – in both Austria and the CEE region. Public healthcare funding, demographic change and medical progress are factors increasing the need for personal, self-determined health insurance. The increase in prosperity in the Central and Eastern European region is also raising the demand for these products.

We are certainly also thinking about what the future holds for life insurance. Coverage for biometric risks and threats that are still currently underrated, such as occupational disability and nursing care, will become more important. We also should not forget that life insurance is the only financial instrument that offers a life-long annuity. This is an argument that continues to be valid even in view of the historically low level of interest rates.

Our clear objective is to continue increasing Vienna Insurance Groups’ profitability. We plan to generate around EUR 9.5 billion in Group premiums until 2019 and expect our profit before taxes also to increase to between EUR 450 and EUR 470 million.

As previously mentioned, 2016 was a challenge. What really matters, however, is how one approaches such challenges. We decided to take an offensive approach to difficult situations. We continue to work intensively on generating profitable growth and expanding our position as market leader in the Central and Eastern European region. That is something you can count on!


Group premiums EUR 9.1 billion
Adjusted for single-premium life insurance products, the increase was a satisfactory 4.4%.

Profit before taxes EUR 406.7 million
We have overachieved our stated objective of doubling the previous year’s profit to up to EUR 400 million.

97.3% net combined ratio
Solid underwriting result has led to a combined result significantly below the 100% mark in 2016.

Planned dividend per share of EUR 0.80
This will be proposed at the Annual General Meeting on 12 May 2017 to maintain our dividend policy of distributing at least 30% of Group net profit after minority interests to shareholders.

Market share greater than 10% in Serbia
The market share in Serbia was increased significantly by acquisitions in 2016.

Expansion in Serbia and Romania
VIG continued its successful expansion in the CEE region with acquisitions in Serbia and Romania in 2016.