Vienna Insurance Group Grows in Central and Eastern Europe

Posted on Jan 26, 2011 by Sergio Ulloa (G+)

The Vienna Insurance Group (VIG) has announced better than expected profits for 2010, highlighting the improvement in trading conditions in the fourth quarter last year. In a preliminary report covering operations in 2010, the insurer confirmed that it achieved a pre-tax profit of €505 million (US$686.8 million) reflecting a 15 percent year-on-year increase in margins. VIG initial evaluation of trading results indicate that unconsolidated premiums written reached €8.7 billion (US$ 11.83 billion) in the 2010 financial year - an increase of 6.1 percent. The insurer's non-life insurance segment achieved €4.8 billion (US$ 6.52 billion) in written premiums, with written premiums in the life insurance segment totaling €3.9 billion (US$ 5.3 billion) - a 11.7 percent increase compared to the previous 12 months. The 15 percent increase in profit for the full year was particularly significant, highlighting the strength of activity in the fourth quarter as the profit margin for the first three quarterly periods in total amounted to 11 percent. The Austria-based insurer is one the leading insurance groups in Central and Eastern Europe (CEE) and experienced strong growth as the CEE economies gathered momentum during 2010 and predicts the region will eclipse markets in Western Europe in 2011. The CEO of the Vienna Insurance Group, Günter Geyer, said "By achieving very remarkable growth rates in a challenging period, we accomplished something quite unexpected in 2010. Both in Austria and in Eastern Europe, we succeeded in boosting premiums significantly. We recorded strong increases, notably in the life insurance segment." In Austria, VIG's core market, the insurer's subsidiaries - Wiener Städtische Versicherung, Sparkassen Versicherung and Donau Versicherung recorded an increase of 4.5 percent to reach €4 billion (US$ 5.44 billion) in written premiums in 2010. VIG has been expanding in the CEE region over the past decade, with initial ventures in Germany, Slovakia and the Czech Republic in 1990 being followed by establishing insurance activities in countries such as Hungary, Poland, Liechtenstein, Croatia, Georgia and Belarus. VIG reported positive figures in the Czech Republic market with a year-on-year increase of 10.2 percent to total €1.8 billion (US$ 2.44 billion); this was generated by the groups Kooperativa pojiš?ovna, a.s, ?eská podnikatelská pojiš?ovna, a.s, and Pojišt'ovna ?eské spo?itelny, a.s, subsidiaries. VIG's Czech life insurance premiums amounted to €740.4 million (US$ 1 billion) - a surge of 20.4 percent in 2010 - with premiums in the non-life sector amounting to €1.1 billion (US$ 1.5 billion). The Slovak Group of companies Kooperativa pois?ov?a, a.s., Komunálna pois?ov?a, a.s. and Poist'ov?a Slovenskej sporitel'ne, a.s reported written premiums totaling €658.9 million (US$ 896.1 million) an increase of 3.2 percent over 2010; although non-life insurance premiums written declined to €318.4 (US$ 433 million) this was offset by an increase of 15.5 percent in Slovak life insurance premiums reaching €340.5 million (US$463 million). In Poland, VIG, recorded written premiums of €753.6 million (US$ 1.02 billion) - an impressive increase of 25.7 percent. VIG's ventures in the Polish non-life sector increased by 28.9 percent, amounting to €564.9 million (US$ 768.2) in premiums, while the life insurance sector reported an increase of 17.0 percent to reach €188.7 million (US$ 256.6 million). VIG said that the significant increase in Polish written premiums was primarily due to the expansion in the group's single-premium business. However, VIG's Romanian groups recorded an overall decline of 12.8 percent in the value of premiums due to the restructuring of its non-life portfolio in the country. Romanian life insurance premiums totaled €93.5 million (US$ 127.1 million) an increase of 8.2 percent, while the non-life insurance segment premium reached €442.5 million (US$. 601.8 million). VIG has been expanding operations in both emerging and established markets over the last two decades, building up the group's presence in Europe - particularly the CEE region - gaining a strong foothold and market status which has driven improvements in written premiums. Other insurance markets in which the Vienna Insurance Group has a presence include Albania, Bulgaria, Germany, Georgia, Croatia, Liechtenstein, Macedonia, Russia, Serbia, Turkey, Ukraine, Hungary and Belarus. Business in these countries produced total earnings amounting to €907.3 million (US$ 1.23 billion) in premiums written - contributing an increase of 7.5 percent in group results in 2010. The Ukrainian, Macedonian and Turkish insurance markets were highlighted by VIG as having developed significant premiums returns in 2010. VIG envisage that its operations in emerging CEE insurance markets will drive growth for the group in 2011, while activities in the established markets are likely to be more challenging as economic conditions suffer the impact of national austerity measures. Activities in the Ukrainian and Turkish insurance markets have been highlighted by VIG as core targets for future growth. In recent times, VIG has established life insurance ventures in Montenegro and Macedonia, and has specialized in property insurance in Lithuania. These new additions to the Austrian Group's portfolio are designed to increase its exposure in Eastern European and bolster premium growth in the future. Currently, VIG are the market leaders in the Austrian, Czech Republic, Slovakian, Romanian, Bulgarian and Croatian insurance markets. VIG provide clients with property/casualty, life, and health insurance products and services. The group offers a broad range of insurance coverage in areas of natural catastrophes, storm, technology, transportation, household, burglary, fire, liability, legal expenses, marine, aviation, motor vehicle, casualty, and credit guarantees. The insurance markets in Central and Eastern Europe (CEE) are growing in importance for multi-national insurers looking to expand global presence. The CEE countries have been particularly attractive to insurers over the last decade as more countries have gained access to the European Union improving opportunities for insurers. The growth in the demand for insurance products in Poland and Slovakia has been significant, while insurers see scope for further developments in the Turkish, Ukrainian, Macedonian and Albanian markets. Insurance Company Mentioned: Vienna Insurance Group The Vienna Insurance Group (VIG), is one the largest international insurance groups in Central and Eastern Europe with approximately 23,000 employees and a premium volume of around €8 billion. VIG is focused on the CEE economic region the insurance provider made the transition from a national insurance company to an international insurance group with more than 50 insurance companies in 24 countries. In total, about 50% of all VIG's premiums already come from the Central and Eastern European markets.