Invest in the future

180 million potential customers and an insurance density that is only a fraction of the levels found in Western Europe, even in the developed CEE markets. These two figures alone make Central and Eastern Europe appear promising enough for long-term investments in the leading insurance group in the region. But they are inadequate to fully describe VIG’s prospects for success, since VIG is much more than just the top player in the CEE region. It has good capital resources, and is therefore fast-growing, it focuses on the future of both technology and society, and it promotes diversity to position itself as an attractive employer. And almost 200 years of successful history have shown that the Group can dynamically adjust to market developments.

Invest in growth

The formation of Kooperativa in the former country of Czechoslovakia shows that VIG was one of the first Austrian companies to recognise the potential in Eastern Europe. Today, most of its 25 markets are in the CEE region. The share of premiums and profit from the CEE show how forward-looking this business decision was. In 2018, 55.9% of premiums and 53.2% of the result before taxes came from Central and Eastern Europe. And the forecasts for future economic development of the region show long-term growth opportunities for the insurance industry.

Sustainable profitable growth is best realised with strong capital base. VIG is also acting risk consciously in this regard, as shown by its solvency ratio of 239%. VIG’s A+ rating with a stable outlook from Standard & Poor’s (S&P) is the best rating within the Austrian ATX Index. Its large capital buffer can be used to invest in the organic growth of Group companies, or to acquire other companies when this appears economically attractive. In VIG’s case, these are generally complementary acquisitions, so-called “bolt-on” acquisitions. VIG considered more than 45 potential acquisition candidates between 2012 and 2018 and acquired 20 of the companies.

Invest in vision

Focusing on the future requires companies to continuously examine their business activities. VIG does precisely that. It follows relevant trends and developments and repeatedly adjusts its insurance business in response, because changes like digitalisation, a transport revolution due to autonomous vehicles, or demographic change permanently affect insurance companies and their products and services.

VIG uses the new digital technologies, for example, to automate processes, analyse data more efficiently and serve customers better. It links its sales employees, enabling them to provide better advisory services. And it promotes innovation within the Group and with external partners. It responds to social change by expanding its assistance services and slowly changing from a claims handler to a service provider for loss prevention, among other things.

Invest in responsibility

VIG feels that responsibility has two aspects. It has an internal effect, for example, on risk balancing, Group management and corporate control. And it has an external effect on society.

VIG promotes diversity in a number of ways to balance risk. Using a wide variety of brands ensures that all target groups are addressed – from private customers and small businesses, all the way to international corporate groups. As a composite insurer, it offers products and services for all needs. And it uses all distribution channels, with Erste Group given priority for bank distribution. And, finally, diversity is also used as a guiding principle that values the diversity of experience and values that employees bring with them. This also makes business sense, as it attracts the smartest people in the labour market and strengthens innovation.

Local management, which guarantees Group companies a high level of autonomy, is balanced with effective management of the companies by VIG Holding. This involves clear, Group-wide rules, strict risk requirements for the investments area, appropriate infrastructure for the exchange of best practices and innovations, and rapid communication channels between the Group companies and VIG Holding. This is supplemented by an effective governance system for corporate control.

In order to fulfil its social responsibility and help create a future worth living, VIG has environmental and social goals in addition to its economic goals. It develops and launches products and services that provide added value in these areas. And it has invested in non-profit building societies for decades. Its principal shareholder Wiener Städtische Versicherungsverein also keeps initiating projects for disadvantaged people that are funded using VIG’s dividend distributions. All of this contributes to the Group’s social solidarity.

Invest in reliability

What could be stronger proof of reliability than close to 200 years of company history and 30 years of success in the CEE region? Shareholders also benefit from the Group’s many years of profitable growth. The Company, which is listed on the Vienna Stock Exchange, has paid a dividend to its shareholders every year since 1994. The new dividend policy provides for a shareholder dividend of 30–50% of Group net profit. This sustainable dividend policy is supplemented by a range of income and cost efficiency measures aimed at achieving a combined ratio of 95% by 2020. This means that VIG is not only a reliable partner today, but also tomorrow and in the future.