SOFIA (Bulgaria), April 28 (SeeNews) – As the largest international insurance group in Central and Eastern Europe, the Vienna Insurance Group (VIG) is aware of its responsibility and that it can only be successful in a socially and ecologically intact environment, the group's CEO Elisabeth Stadler told SeeNews.
Following is the full text of the interview:
VIG has presented very positive business figures for 2021. Premium volume of 11 billion euro for the first time, profit before taxes increased by 50%. How did the VIG Group manage to cope so well with the pandemic?
I consider our business model, which gives all regional Group companies the entrepreneurial freedom needed to tailor products and solutions to meet local needs, as a very positive factor in our stable development. It allows us, as the largest international insurance group in Central and Eastern Europe, to act quickly and individually in the different situations in each country in our region.
Our high level of diversity and broad diversification across a variety of markets and brands enables us to remain stable even in crisis situations. The more diversely I am positioned, the easier it is to compensate for turbulence in individual markets or at individual companies with the overall result. We have now also noticed and benefited from this during the pandemic.
Furthermore, we have dealt with the major challenges facing the industry in good time, especially with digitalisation. This has proved to be a key instrument for maintaining business operations and, above all, customer service during the pandemic.
Which markets specifically in SEE were growth markets in 2021?
As of fiscal year 2021, we have streamlined our reporting by segment and reflect the markets of the SEE region in the segment Extended CEE. In general, we can say that we see a very positive development in all our markets in the SEE region, there is currently no market where we see a critical perspective, which is already very good. Our fastest growing markets in SEE in 2021 – in terms of premiums written – were Croatia (+23.1%), Romania (+17.2%) and Hungary (+13.6%).
We are still facing a pandemic and are confronted with another major crisis, the war in Ukraine. To what extent is the VIG Group affected here?
We are represented by three companies in the Ukraine. The war in Ukraine horrifies us very much. We are doing everything we can to support our approximately 1,400 Ukrainian colleagues and their families during this very difficult time. Not least through our specially established VIG Family Fund. We have established a fund and endowed it with 5 million euro as a base. All our VIG companies and employees pay into this fund, which we want to use for reconstruction after the end of the war. In addition, our companies also support local aid organizations and we have organized housing for refugee employees and their families in many of our countries. The support within our Group is huge and shows our great solidarity. In addition to the human component, which is our top priority, we are
naturally monitoring the economic and strategic effects very closely. At the moment, the economic damage cannot yet be assessed. We had defined Ukraine as a growth market and achieved good increases there. With a premium volume of just over 100 million Euro, Ukraine only accounts for a small share of our total premium volume of 11 billion euro.
What do you see as the biggest challenges for the insurance industry at the moment?
One of the biggest challenges is the issue of sustainability. The insurance industry has recognised that investments in ESG criteria play an important role in strategic considerations throughout Europe – regardless of whether this is due to their own strategic conviction or because of regulatory requirements or even stakeholder demands. Investors and customers are increasingly paying closer attention to whether companies are active in this area or not.
Another major challenge is digitalisation. The experiences in the pandemic show us that insurance support will be increasingly hybrid and a mixture of personal and digital contact in the future. Digitalisation will lead to expanded sales opportunities.
The low interest rate environment and increasing regulatory pressure have also been shaping the market environment for insurers for several years. We will see a change from competition between sectors to competition between ecosystems. It will no longer be individual companies that compete for the customer’s favour, but the providers together in the various ecosystems.
You mentioned sustainability and that is also part of the current strategy programme. What is VIG's focus here?
We have defined sustainability as one of our strategic Group goals. As an international insurance group, the investment area is the biggest approach lever here. We are gradually stepping up our investments in renewable energy and green bonds. Our portfolio volume of green bonds has increased to 436 million euros as of the end of 2021. This is an increase of more than 83% compared to the previous year. Since 2018, we have increased the share of green bonds more than six-fold. In March 2021, we became the first insurance company in Europe to issue a benchmark sustainability bond in the amount of half a billion euros, which will be used for investments in green and social assets.
Another key goal of the VIG Group’s sustainability strategy is to withdraw from the coal energy sector, which we have already decided to do in 2019. In its climate change strategy, the VIG Group has committed to not taking on any new insurance for companies in the coal sector. No new insurance policies have been taken out for coal mining or coal-fired power plant projects since May 2019. Existing insurance policies in this sector will be phased out. In 2021, coal risks in the corporate sector could be reduced by 74% compared to 2019.
It is very important for us to align our investment strategy with social and ecological criteria and to offer products with ecological added value. Because we see it as our task to protect today what will count even more tomorrow: sustainable, renewable energy, worth living environment while conserving resources, and social cohesion.
VIG has expanded again after a somewhat longer period of time and has now become the market leader in Hungary. In Turkey, VIG is entering the life insurance business. Further companies are being added in Poland and Romania as part of the deal with the Dutch insurance group Aegon. In Serbia, you are founding an assistance company. What are the strategic approaches behind this?
With the acquisition of the Aegon companies in Hungary, Poland and Romania, we aim to expand our leading market position in CEE. Our goal is to achieve at least a top-three position in each CEE market except Slovenia by the end of 2025. We are already the market leader in many countries, also in the SEE region like Romania, Bulgaria, North Macedonia and the Czech Republic. With the closing in Hungary, we achieved our target of being among the top three in the market by the end of 2025 already in 2022 and took over the market leadership in the country. Entering the life insurance business in Turkey we can offer all lines of business to customers in the country together with our existing Turkish company Ray Sigorta. And by founding our own assistance companies, we try to ensure the quality and added value of assistance services within our own company.
Why is it so important for you to expand your own assistance companies?
The VIG Group has set itself the goal to offer assistance services via its own companies instead of third-party companies. In doing so, we are pursuing two key advantages: Firstly, we are creating tangible new supplementary services that we want to offer independently of risk protection. This approach is increasingly important given that the frequency of contact with customers is decreasing, which in turn makes our visibility as an insurance partner even more crucial. Secondly, with this approach we are able to provide a single-source solution for the entire process, from the quote through to claims management and assistance. The concept creates clear added value for customers, and it allows us to significantly influence and improve service quality by controlling the process cycle for claims management from the first contact through to compensation payments.
What do you expect overall for the business year 2022?
The business year 2022 will remain influenced by uncertainty factors especially associated with the war situation in Ukraine and its unforeseeable consequences. Furthermore, the ongoing pandemic, inflation, high commodity prices, supply chain problems and resource scarcity are included among the factors that lead to increased risks and will affect the current business year. We are confident that we will continue to manage our operating business as well as we have done over the past two years.