SOFIA (Bulgaria), June 9 (SeeNews) - The Vienna Insurance Group (VIG) aims to be among the top three actors in each market in Central and Eastern Europe (CEE), except Slovenia, by 2025 by focusing on financial stability and profitability, customer proximity, sustainability and market growth, CEO Elisabeth Stadler told SeeNews.
"We want to achieve this through organic growth, but we will also consider possible acquisitions. As I said, we are aiming for this Top 3 target, but of course the right opportunities have to arise. Because we remain true to our overriding premise that only profitable assets that suit to our strategy will be an option for us," Stadler said in a recent interview with SeeNews.
Faced with the challenges of the ongoing pandemic, VIG Group has shown strong resilience to unforeseeable events and implemented all the projects that had been planned or were in progress before the crisis hit, Stadler noted.
"We reported a very solid performance, premiums and the combined ratio are at the same level as in the previous year and the profit clearly increased," she added. "We were very successful before the start of the pandemic, have so far made it through this unique global situation very solidly and are already seeing a return to the levels achieved in the first quarter of 2019."
VIG Group reported premiums of 3.11 billion euro and a 5% annual increase in pre-tax profit to 128 million euro for the first quarter.
OPTIMISM SETS IN
The return to the pre-crisis levels gives VIG grounds for optimism that it will meet its 2021 targets.
"Although economic recovery in most countries within the CEE region will be delayed due to the rising rates of infection we have seen since autumn 2020, we are confident that we will achieve our targets for 2021 which means a premium volume at the level of 2020 with 10.4 billion euro, profit before taxes in the range of 450 million to 500 million euro. Vaccination rates will be pivotal to securing tangible economic improvements, and we are currently seeing significant progress in this area in many of our markets."
Stadler attributed the group's stable development in this exceptional global situation to its broad diversity across countries, brands, distribution channels and products, and heavy investments in digitalisation in good time. "It has also been shown that insurance policies that are about protection and security are very important, especially in times of crisis," she added.
Regarding the financial parameters set in the programme for the next four years, Stadler said VIG targets a premium volume of around 12.3 billion euro by the end of 2025.
"This represents an average annual increase in premium income of about 380 million euro, based on the 10.4 billion euro recorded in 2020. The aim is to achieve a combined ratio of less than 95%," she noted.
Based on the new strategy, and considering the current operating environment, the objective for the solvency ratio is between 150% and 200% as this range does not take into account the transitional measures which the group is currently making use of. A new indicator, operating return on equity (RoE) that should be above the cost of equity and thus set a target in terms of sustainable value creation, will be presented in external communications starting with the full-year results for 2021.
The group also aims to create sustainable value by earning the cost of equity and to achieve environmental, social, and governance-related goals in respect of the society, customers and employees.
To achieve its objectives, VIG has sharpened its country portfolio and makes a distinction between its core market of CEE which comprises 20 countries including Austria, and special markets like Georgia, Germany, Nordics and Turkey with their own specific objectives.
"We have defined portfolio groups with different objectives within the 20 CEE markets, in line with the respective market potential," Stadler said.
The new strategy programme also includes a reorganisation of the country responsibilities of the group’s managing board members along regional lines.
Southeast Europe (SEE) is defined as Region South and will be under the responsibility of board member Peter Hоеfinger. Region South includes Croatia, Serbia, Romania, Bulgaria, Albania, Kosovo, North Macedonia, Bosnia and Herzegovina, Montenegro, Moldova and Slovenia.
"Our programme is based on an analysis of key trends and their effects on the insurance industry. Low interest rates, increased regulatory pressure and the growing importance of environmental issues have shaped the market facing insurers for many years now. Sales will increasingly become hybrid – which is underlined not least by our experience during the pandemic – with a mix of personal and digital contact," the CEO explained.
"The frequency of contact with customers is falling, which means that visibility among customers is gaining in importance, and we also want to offer new customer experiences that go beyond providing coverage against risks. Despite ongoing digitalisation, the human element and the expertise of our employees clearly counts for a lot at VIG. And this will give us the opportunity to tap into additional growth potential by using new approaches to address customers," she added.
SOCIAL RESPONSIBILITY IN FOCUS
To create sustainable value, the group will initiate various measures focused on society, customers and employees, including an increase in green investments, as well as the newly defined goal of making office operations at all group companies climate- neutral by 2030 at the latest.
"We consciously included a strong focus on social responsibility in the objectives we defined for the group, alongside financial indicators, as it is a particular concern of ours to anchor this topic more strongly in the CEE markets," Stadler said.
She pointed to the low general level of personal financial awareness and education in SEE as the main reason for the high latent demand for insurance.
"Our idea is to play an active role in improving financial awareness through initiatives to raise awareness and knowledge, build networks and provide individual risk solutions by for example financial literacy training and apps, risk education in schools, employee programmes for companies. This is also intended to improve the reputation and awareness of the brand in the local market."
The group plans to set up a programme designed to raise awareness of the importance of retirement saving and the benefits of insurance, which will be launched in three-quarters of the CEE markets by 2025.
Digitisation, which has gained a particular momentum, not least because of the pandemic, too will remain a major topic for VIG in the next four years.
"Undoubtedly, and I mentioned that in sales, for example, we will see a hybrid model of digital and face-to-face contacts and digital services will continue to increase," Stadler said.
As an example she pointed to “beesafe”, the group's first purely digital insurer, which was established in Poland with motor vehicle insurance, with plans to roll out the model to other interested companies within the group.