Deputy General Manager Dr. Peter Hagen (left), General Manager Dr. Günter Geyer (right) (photo)


Insurance means responsibility. This year’s annual report underlines the great responsibility we bear to our customers, employees, partners and shareholders. The main objective of our work is to satisfy their needs as far as possible. These include the need for security and a life free from care, an appealing workplace, stable values and an appropriate rate of return. We want everyone to feel that they are in good hands with VIG. However, our sense of responsibility extends far beyond insurance so that we also feel an obligation to support cultural and social concerns.

We follow a clear strategy of long-term growth on a solid, sustainable foundation, with top-quality products and services, a determined and well-considered expansion in the CEE region, and a conservative investment policy. Our principles have proven themselves in the year just ended, which presented great challenges for government and business, including for our industry. In spite of highly challenging conditions, VIG succeeded in further increasing both premium volume and profits. Everyone in our environment benefits from this and can say with pride and conviction: MY VIG!

Günter Geyer,
General Manager

Peter Hagen,
Deputy General Manager

Interview with General Manager Günter Geyer and Deputy General Manager Peter Hagen

General Manager Dr. Günter Geyer (photo)

An interview with General Manager Günter Geyer, Chairman of Vienna Insurance Group Managing Board, and his successor, Deputy General Manager Peter Hagen

Mr. Geyer, this year’s annual report bears the title
“My VIG”. Who exactly can call VIG »theirs’«?

Geyer: Actually, everyone connected with our Group in some way should be able to say this – with conviction. “My VIG” is therefore a sort of goal we set for ourselves and underscores the great responsibility we bear. Our customers should be able to say “My VIG” because they feel they are well insured and receive personal service, and our employees should be happy and proud to work in our Group. Our partners should naturally also be able to say this. We want for them to be convinced of our reliability as well.

Hagen: The same applies to our investors, who should have confidence in us and see their interests reflected in our strategic decisions. It is important to us that our shareholders remain our shareholders and stay the course with us. In this sense, “My VIG” also emphasises our long-term focus – you only use the word “my” once you have truly identified with something.

Did your performance in 2011 help to promote this identification?

Geyer: Absolutely. Although 2011 was not an easy year, we were able to further increase both premium volume and profits. And the conditions at the time did not exactly make this easy to do. By this I mean mainly the challenging economic situation, particularly in the second half of the year. A change in Austrian law had serious effects on single-premium policies in the life insurance segment. On the other hand, unlike 2010, there were no natural catastrophes in our area of operations in 2011.

Hagen: We are particularly pleased about the solid performance achieved in the area of investments. Our conservative investment policy, which has always contributed to the great stability of our Group, once again proved its value. For example, we only have a small exposure to government bonds from the PIIGS countries. At the end of the year they represented only 0.3% of our total portfolio. At around 3%, our equity allocation is also quite small.

How did individual markets perform? There were undoubtedly regional differences ...

Hagen: In overall terms, the CEE region once again recorded very positive performance – we generate more than 50% of our Group premiums there. But the CEE region is definitely not homogeneous.

Performance was particularly good, for example, in the Czech Republic and Poland in 2011. This was helped by close customer relationships over a wide variety of distribution channels. Poland in particular, naturally also benefited from good economic growth.

Geyer: We were not quite as happy with Croatia, where problems affected our performance, including problems related to the banking system. The difficult market environment also affected our overall performance in Romania.


Performance was somewhat mixed in your home market of Austria ...

Geyer: Property and casualty insurance did well in Austria in 2011, and we also increased current premiums in the life insurance business. Our only setback – about one quarter – was in single-premium policies, due to the already mentioned changes in the legal framework. The minimum lock-in period was increased from ten to 15 years under tax law. This is particularly counterproductive in uncertain times, when understandably no one wants to lock themselves in for a long period of time. However, it should also be noted that the decrease was so large because we were very successful in this class in earlier years.

And why do you achieve such market success?

Geyer: The most important factors are certainly our close relationships with customers, a flexible, personally-tailored range of products that addresses every life situation, and, last but not least, our consistent pursuit of the multi-brand policy, which allows us to use multiple distribution channels. We also consider our steadily expanding partnership with the Erste Group as another key factor in our success. Our service orientation is naturally also a very important factor in all areas, from advisory services to rapid claims settlement.

Bosnia-Herzegovina is your newest market, your 25th ...

Geyer: This country was still a blank spot on our map, and we also took advantage of the opportunity to make an early market entry here. Our new company Jahorina is headquartered in Republika Srpska, but operates throughout the country. Like almost all of our Group companies, it is retaining its name in order to continue using the power of its established brand.

Hagen: In addition to our market entry into Bosnia-Herzegovina, we also made other purchases in Albania and Poland in 2011, thereby underscoring once again that the CEE region is our strategic growth market. At the same time, we continue to work on streamlining and strengthening our market presence in the region. This means that we are continuing to combine back-office administrative activities. In 2011, for example, we began taking measures of this sort in Albania and the Ukraine. In Poland, Bulgaria and Romania, we are in the process of preparing mergers in the non-life area, to optimise our market presence in view of our overall strategy. This does not, however, put our successful multi-brand policy into question.

Deputy General Manager Dr. Peter Hagen (photo)

Will there be more acquisitions?

Hagen: If attractive offers are brought to us, we will certainly review them. However, due to the rapid growth we have experienced in the last two decades, we are also naturally subject to restrictions under competition law, as we are already well positioned in some countries, with market

shares on the order of 30%. This means that we will continue to push measures for organic growth.

VIG has always been involved in social issues.
Are there any new initiatives?

Geyer: In fact, two important initiatives were introduced in 2011. To mark the European Year of Volunteering, we introduced what we call the “Social Active Day” in nine countries. This initiative gives every employee one working day a year or – for activities at the weekend – an additional vacation day for volunteer activities. The Social Active Day was very well received, with more than 2,000 employees taking part. The activities ranged from serving soup to the needy and working with people with special needs, all the way to filling shelves in a supermarket for low-income people. Of course, the management also took part in this initiative.

Hagen: The second important measure was founding the Dr. Günter Geyer Social Active Award. This prize will be used to award a total of EUR 100,000 to three Group company projects or three employee projects. We are planning to award the prize for the first time in May 2012.

This is around the same time that the CEO position changes hands at VIG ...

Geyer: As is already well-known, I am withdrawing from my direct involvement in the business operations and handing over my responsibilities with great pleasure to Mr. Hagen on 1 June. During the more than two decades he has now been with our Group, I have come to know him as a highly capable insurance professional and an experienced manager. He is also quite familiar with the CEE region, among other things from his many years as a manager in the Czech Republic. Fundamental decisions are made by the members of the Managing Board as a group. Mr. Hagen has been a board member since 2004, and has had a decisive influence on the path we are following. I believe he will be very successful in leading VIG. And I will devote myself to new responsibilities at our principal shareholder Wiener Städtische Wechselseitige in the future.

Hagen: I regard taking over the CEO position from Mr. Geyer as an exciting challenge. Mr. Geyer has been instrumental in the successful and formative expansion of VIG. The transformation from a purely Austrian company to an international insurance group that began in 1990 was pushed forward with determination under his leadership. I see him as an example of courage, personal willingness to take on risk, and unconditional dedication. And he is someone who has both feet on the ground.

Will this change in leadership also mean a change in strategy?

Hagen: No, we shall certainly adhere to the course we have followed in recent years, as it has proven itself well. As an insurer, we will remain aggressive in our markets, but conservative in our investments. Financial stability will continue to be one of the cornerstones of our growth. And of course, in addition to Austria, our geographic focus will also remain on the CEE region in the future, together with our multi-brand policy.


Where are the greatest challenges at the moment?

Hagen: The difficult economic environment remains the greatest challenge and certainly also has an effect on our growth in premiums. But we do think we are in quite a good position given the broad range of our markets and high diversification of our business. Naturally we are also working continuously on our profitability. We expect significant cost savings from a variety of reorganisation measures, such as optimisation of administrative procedures and standardisation of IT systems, in the range of EUR 20 to 25 million a year.

At the same time, we are constantly expanding our product portfolio and services and making them more customer-oriented and innovative. Retirement provisions remain an important, and promising, part of this and we are working to increase public awareness of this subject.

The preparations for Solvency II are well underway. We are working at the Group level to create Group guidelines and methods that can then be locally implemented in our Group companies. As far as I know from the new equity rules that have been planned, we will not have any additional capital requirements.

And what can investors expect from VIG?

Hagen: Of course no one, including us, can foretell the future. But investors can always rely on us to be predictable, fair and transparent. This will continue to be the case in the future. We have committed to a distribution ratio of at least 30% of profits and this commitment will naturally be maintained. We are going to propose to the executive bodies to increase the dividend for 2011.

As a final note, let us look forward to 2012.
What is on your agenda for the new financial year?

Hagen: Our goals are clear. We want to grow faster than the market in the countries in which we operate. At the same time, we want to further improve our profitability – although we are of course dependent on the general economic environment in this regard, particularly the situation in financial markets. We will certainly do whatever can be done to achieve these goals. Of that, our customers, employees and shareholders may be certain.

Thank you for the interview.