Austrian insurance companies are world-class

The Austrian insurance companies are world-class

The Vienna Insurance Group is a big player in CEE. CEO Elisabeth Stadler tells us about her company’s operations.

Austrian insurance companies are among the most stable in the world. While insurers in the United States went bust, the Austrian ones didn’t twitch even during the most severe crisis. Insurance companies with their roughly 60,000 staff are important employers in Austria and have a stabilising effect on the financial markets. They have assets of more than 110 billion euros in government bonds, real estate, holdings and stocks.

The sector makes a massive contribution to socio-political questions such old-age provision, health, coverage in traffic or during sports activities, protection of property and economic operation. Austrians believe in insurances: They have taken out more than 50 million policies. Overall, in 2019, the Austrian insurance sector recorded an increase in premiums of 2.1 percent to 17.7 billion euros.

Like in the rest of Europe, there was a decrease in premiums for life insurances due to low interest rates. The overall premium generation was at about 18 billion euros in 2020, which is an increase of about 1.9 percent.

Big player in the East

One of the big players in Central and Eastern Europe is the Vienna Insurance Group VIG. It emerged from the Wiener Städtische Versicherung, the corporation’s predecessor which was only operating in Austria. Today, VIG has about 50 subsidiaries in the entire CEE region.

In 2016, Elisabath Stadler, who graduated in actuary, became the CEO of VIG Holding. Speaking to “World Champion Austria”, she tells us of the operations and plans of one of the biggest insurance companies in Central and Eastern Europe.

Can you tell us about the advantages for your business of being headquartered in Austria? Like many Austrian companies we were able to benefit from the fall of the Iron Curtain by expanding to Eastern Europe. With the break-up of the Eastern Bloc Austria moved from Europe’s border to its centre and is now the optimal platform for our expansion strategy due to the high economic and structural development.

We were the first mover to begin expanding to the CEE region exactly 30 years ago. Today, we are not only the market leader in Austria but also in Central and Eastern Europe. We are number one or at least among the top 5 in the majority of our markets.

Austrian’s like to be insured: They have taken out more than 50 million policies.

Firstly, having taken the opportunities for expansion in a then upand-coming region early on. The Vienna Insurance Group puts its focus on Central and Eastern Europe and pursues long-term business strategies in the markets we operate in. It wasn’t just important to be one of the first insurers to take advantage of the fall of the Iron Curtain. It was a spot-on decision. By now, we generate more than half of our premiums and of our profit in the CEE region. Secondly, we are pursuing a long-term and customer-oriented strategy in these markets.

With the exception of Russia, we have not left any market that we had opened up. We invest sustainably and make an important contribution to the positive development of the insurance markets that we operate in. And thirdly, our wide diversification is another factor of our success. We take up all opportunities while spreading our risks.

Where and how does VIG want to grow? Our compass continues to point eastwards even though we are also successfully pursuing business opportunities such as in Northern Europe, for example. Simply put, we are always open for ideas

when we see potential for growth. Our primary focus remains the CEE region, however. We still see tremendous growth potential here. Which criteria do you go by when selecting opportunities for growth? Profitability has to be at the forefront of all our considerations, of course. If it doesn’t add up, we’ll leave it be. We make deci“The business model of insurers won’t change in it- sions not only to benefit from self but I consider adaptations necessary.” favourable economic data but to be profitable and successful Elisabeth Stadler with our long-term strategy. When it comes to acquisitions, we are constantly surveying opportunities on the market. Not everything we are looking at meets our standards. We only make acquisitions when it makes economic sense. What is your positioning strategy? It is our defined goal to be a reliable and stable partner. Our business results prove this, I would say. We have exceeded the goals that we set every year since 2016. Our core business is defined by

VIG’s is headquartered in the Ringturm tower in Vienna’s city centre.

thinking in and for generations and being able to meet our customers’ insurance benefits. Far-sighted and profitable growth are therefore the prerequisite for the Group’s long-term stability.

What is your market share in your area of operation? We are not only the largest insurance group in Austria with a market share of 25.5 percent but also the leading insurance group in Central and Eastern Europe with a market share of about 18 percent.

How many people do you employ in total? More than 25,000 people work in 30 countries for VIG, serving more than 22 million customers.

How did 2020 go for you so far? Which measures did you take? The Covid-19 pandemic is a global economic crisis that we also felt, of course. We were affected in particular by the developments on the capital market. We are therefore looking very closely at the development of the capital markets. But we are confident that we can manage the effects of the Covid crisis as well as possible because we have solid equity and can look back at excellent results in 2019.

Having a great balance sheet and prudent accounting are a strong foundation in times like these. Another strength of ours is our management programme Agenda 2020, which focuses on improving efficiency and forcing digital transformation within the Group. We started this programme in 2017 and will continue to strictly pursue our goals even during the Covid crisis.

What are your goals for 2020? As I said, we are focusing on the Agenda 2020, which serves foremost to further increase our profitability and sustainability. It also includes opportunities to take advantage of growth potentials, which we see for example in health insurance, bank insurance retail, corporate business, in the expansion of our re-insurance business and in profitable acquisitions. We are already working out a subsequent programme for 2025.

What will your focus be on? We believe that sustainability and digitisation are two areas that will have the biggest impact on society and the economy, and are therefore decisive for growth opportunities. I don’t see the Covid crisis having an impact on the importance of these two areas – quite to the contrary. Living with the pandemic will leave its marks and I believe it will actually accelerate the trend for more sustainability. The effects of climate change, which we all are noticing and have to face, will not disappear because of the Covid crisis.

We see sustainability as an essential part of our business strategy and as a competitive advantage. For me, keeping in shape for the future is part of a sustainable, long-term perspective. Therefore, we consider the digital transformation an opportunity for growth. We can create clear additional benefits for customers through digitisation and adapt our business model to technology-driven and changing customer behaviour. Right now, we have more than 180 digitisation projects up and running in our Group and we are investing about 50 million euros annually into digitisation.

How is digitisation going to change the business model of insurers? The business model of insurers won’t change in itself but I consider adaptations necessary. They regard offers and services that are not part of the traditional insurance business, i.e. protecting against risks. I’m thinking of assistance services, for example. I see a changing behaviour among customers when it comes to protection, which is signified by specific events and short-term thinking. As an insurance company we need to change in this regard: Foremost, we need to adapt our business model to the new technology-driven customer behaviour in order to meet the customer’s demands.

We see digitisation thus as an additional benefit foremost. We are not just having contact with customers in case of a damage but we can offer them a number of appealing services. We are already implementing numerous measures in this regard.

All of this is being done from your headquarters in the iconic Vienna Ringturm tower, which is celebrating its 65th anniversary this year. Is it a special office building to you? It is, without a doubt. It is not only the headquarters of our main shareholder, Wiener Städtische Versicherungsverein, our largest subsidiary, Wiener Städtische Versicherung, and of the Vienna Insurance Group. It is also the first high-rise office building in Austria and opened shortly after Austria’s independence on 14 June 1955. Therefore, it has also of high social significance as it became a symbol of Austria’s regained freedom and the economic boom. Today, we consider our headquarters as a meeting point to exchange ideas. There are numerous cultural and political forums as well as exhibitions. The Ringturm has also gained cultural significance as one of Europe’s largest urban works of art: Since 2006, the Ringturm is regularly turning into a 4,000 sqm big work of art. Unfortunately, we couldn’t do the annual ‘wrapping of the Ringturm’ due to the Covid pandemic in 2020. ◆