Outlook for VIG Insurance Group

As a market leader in Central and Eastern Europe, VIG Insurance Group with its more than 25,000 employees is in an excellent position to take advantage of the opportunities available in this region and the long-term growth options they offer. It remains committed to its proven business strategy of profitable growth. Based on the values of diversity, customer proximity and responsibility, VIG insurance companies want to use their successful management principles to strengthen and further increase their market shares. This includes both organic growth and growth by acquisitions, particularly if an opportunity arises to strategically expand the existing portfolio or to take advantage of economies of scale. The goal is to increase market share to a minimum of 10% in Poland, Hungary, Croatia and Serbia in the medium term. This goal was already achieved in Serbia in 2016. In November 2020, VIG Insurance Group signed a share purchase agreement with the Dutch company Aegon N.V. to acquire its companies in Hungary, Poland, Romania and Turkey for EUR 830 million. The transaction includes insurance companies, pension funds and asset management and service companies. The acquisition will make VIG Insurance Group the market leader in Hungary for the first time, giving it a market share of more than 19%. It will also enter the life insurance business in Turkey, and with the acquisition of the pension fund companies in Hungary, Poland and Romania it will strengthen its activities in the area of retirement provisions. The acquisition will increase the customer base by 4.5 million. The transaction is subject to the necessary regulatory and competition approvals and is expected to be formally concluded in the 2^nd half of 2021.

The strategic measures and initiatives set by the work programme Agenda 2020 – business model optimisation, ensuring future viability and organisation and cooperation – contributed to the solid performance achieved in 2020. The next strategic programme for the period until 2025, which is currently being prepared, will continue to focus on efficiency and synergy potentials. It will be presented in the 2^nd quarter of 2021.

Based on the long-term capital planning of the Group and current interest rate situation, the Managing Board initiated measures to optimise the capital of the Group, focusing on increasing investments in socially and environmentally sustainable projects. In the 1^st half of 2021 a senior sustainability bond with a volume of EUR 500 million depending on market conditions will be issued. In addition, a subordinated bond with a volume of EUR 300 million was placed as a restricted tier 1 instrument with the principal shareholder of Vienna Insurance Group, Wiener Städtische Versicherungsverein.

Under its dividend policy, which foresees a distribution in the range of 30 to 50% of Group net profits, the dividend per share will continue to be aligned with the Company’s performance.

Due to the fact that there is still no foreseeable end to the COVID-19 pandemic, estimates of business development for the financial year 2021 are still highly uncertain. Although VIG Insurance Group has been able to navigate very well through this exceptional period so far and sees itself in the position to manage its operating business well, adverse effects due to economic developments have to be expected based on the current situation. Taking this and current parameters into account, VIG Insurance Group expects premium volume to remain stable at the level of 2020 and profit before taxes to be in the range of EUR 450 to 500 million. As the closing has not yet taken place, the Aegon companies are not included in the outlook for 2021. The combined ratio is expected to remain at a sustainable level of around 95%. In accordance with its dividend policy, the Managing Board of Vienna Insurance Group will propose a dividend of EUR 0.75 for the financial year 2020. This corresponds to a dividend payout ratio of 41.5%.

Vienna, 17 March 2021

The Managing Board: