Remaining Markets segment passes the EUR 1 billion mark in premiums for the first time
Thanks to highly dynamic performance in countries such as Hungary, Serbia, Turkey, the Baltic States and the Ukraine, the Remaining Markets segment recorded an 8.8% increase in premiums in financial year 2013 that moved it beyond the EUR 1 billion mark for the first time.
Successful placement of a subordinated bond
VIG successfully placed a 30-year EUR 500 million subordinated bond with institutional investors in Europe at the beginning of October 2013. The offer was more than four times oversubscribed, confirming how attractive VIG is for the bond market. The coupon pays 5.5% p.a. for the first ten years and thereafter a floating interest rate.
Repurchase of hybrid capital
Vienna Insurance Group issued a total of EUR 500 million in hybrid capital in 2008 and 2009 under its Hybrid Debt Issuance Programme. The first tranche of EUR 250 million was placed on the capital market in June 2008 and the second tranche of EUR 250 million in April 2009. The coupon pays 8.0% p.a. for the first ten years and thereafter a floating interest rate. In August 2013, the second tranche was repurchased prior to maturity.
Strategic forward-looking SME initiative
Small and medium-sized enterprises (SME) are an important part of the CEE economy, generating around half of all corporate sales in the region. VIG has analysed the future potential of these businesses, recognises the importance of SME as a business area and has begun an initiative as well as related distribution activities.
An SME growth strategy has been launched and sustainable measures aimed at optimising products and distribution have been implemented under this strategy. The main focus was on training distribution partners and cross-selling existing customers to take advantage of the potential offered by the different distribution channels. Another focus was on developing and modifying SME products and creating an exchange between VIG companies through best-practice activities and organised workshops. The activities, including innovative product development by Omniasig in Romania and Union Biztosító in Hungary, and a focus on expanding distribution activities in Poland and Italy, achieved growth rates of up to 20% in this business area. The growth improvements in these countries confirm the value of the initiative and plans to further intensify and expand it in 2014.
Solvency II update
Based on developments and activities at the European and national levels, the Solvency II changes to the European insurance supervision system can be expected to enter into force at the beginning of 2016. During financial year 2009, the VIG Holding Managing Board established a Group-wide project managed centrally from Austria to implement Solvency II at the individual company and Group levels. Group guidelines and methods are being developed in the Group and implemented locally in Group companies in order to ensure consistent and timely implementation of Solvency II and related topics at the individual company and Group levels.
Intensive work is continuing on the development and implementation of a partial internal model. Regular consultations are being held with supervisory authorities in the individual VIG countries in order to ensure approval when Solvency II comes into effect.
Based on current regulatory requirements and the analyses and test calculations that have been performed, VIG is well prepared for Solvency II at both the Group and individual company levels. See chapter for more information on this topic.