Vienna Insurance Group – outlook

As a market leader in Austria and the CEE region, Vienna Insurance Group with its around 25,000 employees is in an excellent position to take advantage of the opportunities available in this region and the long-term growth possibilities they offer. VIG remains committed to its proven business strategy of profitable growth. Based on VIG’s values of diversity, customer proximity and responsibility, the Group plans to use its successful management principles to consolidate and further increase its market share. This includes both organic growth and growth by acquisitions, particularly if an opportunity arises to strategically expand our existing portfolio or take advantage of economies of scale.

VIG also sees growth potential in the bank insurance business. A separate joint project aimed at further intensifying this distribution channel was initiated with our bank insurance partner, Erste Group, in reporting year 2017. The goal was, and continues to be, broadening the range of products offered and optimising the cooperation between banks and insurance companies in all countries where Erste Bank, Sparkassen and VIG are working together. On the insurance side, consideration was also given to organisational and structural changes to optimise the cooperation, leading to the merger of life insurance companies specialising in bank distribution with local Group companies. The mergers in Austria, the Czech Republic, Slovakia, Hungary and Croatia will be implemented at the beginning of 2019, subject to approval by the local authorities. Faster communication, simplified processes, easily understandable products and integration into bank online sales will generate additional business and cost benefits in the medium and long term.

The Group will continue to focus on efficiency improvements and making use of synergies, and will work systematically on reducing both losses and expenses with the aim of achieving sustainably a combined ratio of 95%. In life insurance, efforts will also be made to further promote biometric risk coverage and the regular premium business. This is aimed at offsetting the ongoing reduction in the ordinary financial result caused by the low interest rate environment.

The strategic measures and initiatives set by the Agenda 2020 work programme to optimise our business model, organisation and cooperation and ensure future viability helped accelerate the development of the Group in 2017. Based on this, VIG is moving forward the targets previously indicated for 2019, and now plans to generate EUR 9.5 billion in premiums and a profit before taxes of EUR 450 to 470 million in reporting year 2018.

Based on current conditions and the positive macroeconomic development of the region, Vienna Insurance Group aims to steadily increase premiums to more than EUR 10 billion and achieve a profit before taxes in the range of EUR 500 million to EUR 520 million over the medium term by 2020. This will also benefit our shareholders, who can expect to receive stable dividends that increase with corporate earnings based on VIG’s established dividend policy.