As of 31 December 2007, Vienna Insurance Group’s directly held equity investments represented approximately 6% of the book value of the total investment portfolio, and if indirect shareholdings through funds are taken into account, total equity investments were approximately 9%. In accordance with the investment guidelines for Austria, management is performed using the “top-down” approach, subject to the constraint that diversification be used to minimize the market price risk of the equities. Key elements are diversification by markets or regions, sectors or industries, capitalisation (large, medium and small caps), business cycle (value, growth), and valuation allocations (fundamental or quantitative models). For the Group’s companies in CEE countries, the overall equity component is very small.

Risk diversification within the Vienna Insurance Group equity portfolio is achieved by geographic diversification. In addition to investments in sound international blue-chip securities, the portfolio also contains a variety of blocks of liquid shares in listed Austrian companies. Highly restrictive investment rules apply to subsidiaries in the CEE-region, such that equities play no, or only a secondary, role in their portfolios.

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