Vienna Insurance Group AG · VIE:VIG
Vienna Insurance — Non-Deal Roadshow (September 2008)
55 slides from Vienna Insurance's roadshow presentation, Sep 17, 2008
Slide 1: VIG – A Top Player in the CEE region
VIG – A Top Player in the CEE region Roadshow London, 17 September 2008
Slide 2: Contents
Contents A 2 A VIG on a steady path of growth B Growth potential in CEE C Exploiting the potential – recent acquisition D VIG strategy delivers E 6M 2008 Results - Highlights F Appendix
Slide 3: Geographical Overview
Geographical Overview VIG is the leading Austrian insurance group operating in 23 countries A 3 Footprint VIG Is Well Positioned in its Markets Market # countries Position A CZ BG GEO RO SK TOP AL 8 PL 3 CRO SER TOP 5 2 UKR TOP 3 H 10 EST LAT TR >10 LIT 4 RUS 6% 12% 18% 24% 30% 36% 42% core markets
Slide 4: Purest CEE Insurance Play
Purest CEE Insurance Play VIG is the only international insurer with 43% of business from CEE A 4 CEE Premiums as % of Total Group Premiums 42.9% VIG 37.5% 31.1% 28.7% 15.5% 2007 UNIQA 12.6% 2006 10.2% 10.1% 2005 2004 5.0% Allianz 3.6% 3.3% 3.0% VIG‘s unique share of CEE 3.0% business growing fastes
Slide 5: Strategic Background
Strategic Background Setting for eastward expansion A 5 Situation of VIG in 1990 Assessment of Markets § VIG is pioneer in CEE; start of expansion in General parameters for market entry 1990 § Economic situation and potential § “Big fish in a small pond” § Legal and political stability § VIG decided
Slide 6: Why Focus on the CEE Region?
Why Focus on the CEE Region? Cornerstones of the CEE story A 6 Potential Multiple growth drivers 1 Management Approach Capital Hands-on approach 6 2 Risk-cautious exposure Similarity Expansion Process 5 3 Understanding demand Grab the lion’s share 4 Stability Regulatory framework
Slide 7: Contents
Contents B 7 A VIG on a steady path of growth B Growth potential in CEE C Exploiting the potential – recent acquisition D VIG strategy delivers E 6M 2008 Results - Highlights F Appendix
Slide 8: CEE Region Offers Multiple Growth (I)
CEE Region Offers Multiple Growth (I) Insurance density growing above GDP increase B 8 4,000 EU-15 Mature Markets GDP Growth Insurance Penetration 2007 – 2009F 20071 CEE2 5.0% 3.3% Insurance Density (USD) Austria 2.3% 5.8% A EU 15 1.8% 9.2% 2,000 RUS SLO BG RO CRO UKR H SK PL SER CZ TR Growth Market
Slide 9: CEE Region Offers Multiple Growth (II)
CEE Region Offers Multiple Growth (II) GDP, insurance penetration, wealth composition are growth drivers B 9 Shift in Households' Financial Wealth Composition Comments 0% 0% 4% Other Accounts § With increasing wealth household asset 29% Receivalbe allocation in CEE is to change in favour Cash & Depo
Slide 10: Macro Environment in CEE Countries
Macro Environment in CEE Countries Economy in CEE still in good shape B 10 Czech Republic Slovakia 9.0% 12.0% 8.0% GDP Grow th GDP Grow th CPI 10.0% CPI 7.0% Une m ploym ent Unemployment 6.0% 8.0% 5.0% 6.0% 4.0% 3.0% 4.0% 2.0% 2.0% 1.0% 0.0% 0.0% 2006 2007 2008f 2009f 2010f 2006 2007 2008f 2009f 201
Slide 11: Contents
Contents C 11 A VIG on a steady path of growth B Growth potential in CEE C Exploiting the potential – recent acquisition D VIG strategy delivers E 6M 2008 Results - Highlights F Appendix
Slide 12: VIG Exploits Opportunities
VIG Exploits Opportunities A systematic approach to consider best capital allocation C 12 New Market Entry Acquisition Process § Risk-cautious exposure of capital in new markets § Sound risk assessment of target § Recognize opportunity – benefit from it company Criteria § What does the company add t
Slide 13: Acquisition of Erste Bank's Insurance Operations
Acquisition of s Versicherung Long-term CEE cooperation agreement C 13 Long-Term Preferred Acquisition Highlights Bancassurance Agreement Acquisition of Erste Bank’s Insurance Operations § VIG strengthens the No. 1 position in Central and Eastern Europe (CEE)1 Rationale § VIG successfully diversifie
Slide 14: Potential of 16mn Erste Bank Clients
Potential of 16mn Erste Bank Clients Bancassurance agreement offering outstanding access to clients C 14 Erste Bank Strengths Mutual Distribution Agreement § Preferred partnership for sale of life, non-life and health products – building on existing § Largest retail bank in the CEE region P&C cooper
Slide 15: Now is the Time for Life Business
Now is the Time for Life Business Banking distribution is key for harvesting CEE life potential C 15 CEE Insurance Markets1 Comments § Life gaining importance in mature 58% 53% 54% NL markets 73% 65% 61% 83% 79% 80% L § In EU-15 about 2/3 of insurance market is life business 17% 21% 20% 27% 35% 39%
Slide 16: VIG – Distribution Is Key in Insurance
VIG – Distribution Is Key in Insurance Multi-brand & multi-channel provide best customer access C 16 Multi-brand Multi-channel Tied agents Brokers Banks Other Austria ü ü ü ü Czech Republic ü ü ü ü Slovakia ü ü ü ü Romania ü ü ü ü Croatia ü ü ü ü Hungary ü ü ü ü Serbia ü ü ü ü Ukraine ü ü ü ü Multi-
Slide 17: Performance Drivers
Performance Drivers Bancassurance, experience and business growth C 17 Experience in P&C Bancassurance Profitability Drivers § Similar mindset and corporate culture Business Growth § Existing exemplary P&C cooperation with Erste § Extended product and service offering tailored to Bank in Austria and
Slide 18: No.1 Position in CEE
No.1 Position in CEE Taking on leadership also in life insurance C 18 Total Market Share in CEE1 Market Share in CEE1 Life 12.7% 14.6% 9.9% 13.0% 11.4% 8.3% 8.2% 11.0% 7.4% 6.7% 6.1% 4.6% 3.9% 4.5% 3.2% 3.9% 3.1% 3.8% 2.5% 2.4% 2.3% 1.6% KBC sVersicherung VIG ING AIG s Versicherung KBC Aviva Uniqa A
Slide 19: VIG Benefits from Stability and Similarity
VIG Benefits from Stability and Similarity CEE region offers unique convergence C 19 Unique Stability Similarity Nearly all VIG core markets are § Austria and many CEE markets already member of the EU or on the benefited from EU enlargement process way to become a member § Partly joint tradition and
Slide 20: Management Approach
Management Approach Excellent track record in integrating CEE subsidiaries into VIG C 20 Management Approach Track Record § CEE already contributes 43 percent of § Each board member of VIG parent has direct premium income and more than 30 percent of responsibility for CEE countries Group profits § V
Slide 21: The Austrian Case
The Austrian Case VIG capitalises on catch-up potential in life insurance C 21 Situation in Austria High Growth Potential Life insurance density is low in Austria § Austria is a largely mature market $4,000 3,668 Life § Still strong growth potential in life: Austria $3,500 Non-life $3,000 2,621 lags
Slide 22: Contents
Contents D 22 A VIG on a steady path of growth B Growth potential in CEE C Exploiting the potential – recent acquisition D VIG strategy delivers E 6M 2008 Results - Highlights F Appendix
Slide 23: VIG Growth Strategy Delivers
VIG Growth Strategy Delivers Growth materialises in strong increase in profitability D 23 VIG's Path of Profitability Comments 8,000 450 GWP 400 7,000 PBT § VIG is one of the fastest growing 350 6,000 insurance groups present in CEE 300 GWP in €mn § From 2002 to 2007 VIG succeeded PBT in €mn 5,000 2
Slide 24: 6M 2008 Highlights
6M 2008 Highlights Guidance for 2008 unchanged D 24 § Excellent top-line growth, in particular in CEE (also net of acquisitions) § For the first time ever, in Q2 share of CEE business more than 50 % of total premiums § Combined ratio (net) stable at 95.9% § Profit before tax growing at faster pace t
Slide 25: Financial Targets
Financial Targets Targets remain in place D 25 VIG’s Financial Targets Comments Premium Target for 2011: > EUR 12bn § Further expansion through organic growth and acquisitions Profit before tax targets in € mn § Improve market positions in less advanced markets CAGR: ~25% ~1,050 § Smaller to medium
Slide 26: Contents
Contents E 26 A VIG on a steady path of growth B Growth potential in CEE C Exploiting the potential – recent acquisition D VIG strategy delivers E 6M 2008 Results - Highlights F Appendix
Slide 27: 6M 2008 Highlights (I)
6M 2008 Highlights (I) VIG defying market trends E 27 GWP Profit before Tax 6,912 5,882 20.7% 437 5,008 33.9% 4,215 321 288 3,493 240 3,029 215 143 2005 2006 2007 6M 06 6M 07 6M 08 2005 2006 2007 6M 06 6M 07 6M 08 IFRS IFRS Net Profit after Tax and Minorities Combined Ratio (net) 313 29.3% 97.9 261
Slide 28: 6M 2008 Highlights (II)
6M 2008 Highlights (II) E 28 EPS* ROE before Tax (%)* 3.72 2.98 3.06 21.9 2.48 18.0 2.27 2.17 16.9 17.0 14.8 13.2 2005 2006 2007 6M 06 6M 07 6M 08 2005 2006 2007 6M 06 6M 07 6M 08 * diluted, annualised IFRS * diluted, annualised IFRS
Slide 29: Contents
Contents F 29 A VIG on a steady path of growth B Growth potential in CEE C Exploiting the potential – recent acquisition D VIG strategy delivers E 6M 2008 Results - Highlights F Appendix
Slide 30: 6M 2008 Income Statement
6M 2008 Income Statement IFRS (€mn) F 30 6M 2008 6M 2007 +/-% 1. Gross written premiums 4,215.1 3,493.1 20.7 2. Net earned premiums 3,471.3 2,829.1 22.7 3. Net investment income 618.7 553.2 11.8 4. Other income 30.7 20.7 48.5 Total income 4,120.7 3,403.0 21.1 6. Expenses for claims incurred -2,912.4
Slide 31: 6M 2008 Balance Sheet
6M 2008 Balance Sheet IFRS (€mn) F 31 6M 2008 YE 2007 +/- % Intangible assets 848 525 61.7 Total investments 18,625 20,171 -7.7 Unit- and index-linked investments 2,214 3,066 -27.8 Reinsurers’ share in technical provisions 1,088 1,187 -8.3 Receivables 1,976 1,200 64.6 Deferred tax assets 83 34 144.4
Slide 32: 6M 2008 P&L Major Items – Gross Written Premiums
6M 2008 P&L Major Items – Gross Written Premiums Premium growth stronger than in Q1 (€mn) F 32 § Group GWP gained 20.7% to € 4,215mn (+ 15.4% net of acquisitions) § Austria: total GWP up 8.3% to reach € 2,120mn. Life up 13.3% at 112.7 € 1,014mn (strong single premiums); P&C up 4.5% at 126.8 € 947.7m
Slide 33: Geographical Diversification Enhanced
Geographical Diversification Enhanced GWP split by region F 33 GWP by Geography 6M 06 GWP by Geography 6M 07 GWP by Geography 6M 08 Other CEE Other Other CEE Other 3.9% Other Romania 3.1% 4.2% 3.6% Other CEE 2.6% Romania 5.7% 3.5% 5.5% Poland Romania 4.2% Poland 8.6% Austria Austria Austria Slovakia
Slide 34: 6M 2008 P&L Major Items – Expenses for Claims Incurred
6M 2008 P&L Major Items – Expenses for Claims Incurred Loss ratio improving despite one-off effects in RO, SK F 34 § Group loss ratio (net) at 63.4% (down from § Poland improving by 8.6% pts to 54.2% due to 64.7% in 6M 2007 ) effective claims and risk management and benign motor pricing § Austrian l
Slide 35: 6M 2008 P&L Major Items – Operating Expenses
6M 2008 P&L Major Items – Operating Expenses Cost ratio slightly up due to acquisition expenses F 35 § Group cost ratio (net) increasing by 1.2% to § Poland showing higher cost ratio at 42.1% reach 32.5% influenced by acquisition costs resulting from fast business growth and Religa tax issue § Impac
Slide 36: 6M 2008 P&L Major Items – Net Investment Income
6M 2008 P&L Major Items – Net Investment Income One-off gains balanced by market downturn (€mn) F 36 Net Investment Income § Increase in Group Net Investment Income by 8.1 11.8% to € 618.7mn influenced mainly by 11.1 122.5 63.3 - one-off gains from sale of BACAV and UNITA Other CEE - adverse market
Slide 37: 6M 2008 P&L – Business Segments (Property & Casualty)
6M 2008 P&L – Business Segments Property & Casualty, IFRS (€mn) F 37 6M 2008 6M 2007 +/-% 1. Gross written premiums 2,403.8 1,976.2 21.6 2. Net earned premiums 1,690.1 1,331.9 26.9 3. Net investment income 154.2 93.3 65.3 4. Other income 19.2 11.9 60.9 Total income 1,863.5 1,437.2 29.7 6. Expenses f
Slide 38: 6M 2008 P&L – Business Segments (Life)
6M 2008 P&L – Business Segments Life, IFRS (€mn) F 38 6M 2008 6M 2007 +/-% 1. Gross written premiums 1,653.1 1,362.0 21.4 2. Net earned premiums 1,625.5 1,344.3 20.9 3. Net investment income 458.3 445.8 2.8 4. Other income 11.5 8.7 31.5 Total income 2,095.2 1,798.8 16.5 6. Life benefits -1,701.0 -1,
Slide 39: 6M 2008 P&L – Business Segments (Health)
6M 2008 P&L – Business Segments Health, IFRS (€mn) F 39 6M 2008 6M 2007 +/-% 1. Gross written premiums 158.2 155.0 2.1 2. Net earned premiums 155.7 152.9 1.8 3. Net investment income 6.2 14.1 -56.0 4. Other income 0.0 0.0 0.0 Total income 161.9 166.9 -3.0 6. Expenses for claims incurred -139.1 -135.
Slide 40: 6M 2008 P&L - Split by Regions (I)
6M 2008 P&L - Split by Regions (I) Regional segments, IFRS (€mn) F 40 Austria Czech Republic 6M 2008 6M 2007 +/-% 6M 2008 6M 2007 +/-% 1. Gross written premiums 2,120.4 1,957.7 8.3 691.0 577.1 19.7 2. Net earned premiums 1,757.8 1,611.2 9.1 542.0 445.8 21.6 3. Net investment income 488.1 478.7 2.0 2
Slide 41: 6M 2008 P&L - Split by Regions (II)
6M 2008 P&L - Split by Regions (II) Regional segments, IFRS (€mn) F 41 Slovakia Poland Romania 6M 2008 6M 2007 +/-% 6M 2008 6M 2007 +/-% 6M 2008 6M 2007 +/-% 1. Gross written premiums 297.5 243.8 22.1 393.9 247.6 59.1 360.5 192.3 87.5 2. Net earned premiums 245.7 189.9 29.4 361.4 216.3 67.1 289.6 13
Slide 42: 6M 2008 P&L - Split by Regions (III)
6M 2008 P&L - Split by Regions (III) Regional segments, IFRS (€mn) F 42 Other CEE Other TOTAL 6M 2008 6M 2007 +/-% 6M 2008 6M 2007 +/-% 6M 2008 6M 2007 +/-% 1. Gross written premiums 239.2 147.8 61.8 112.7 126.8 -11.1 4,215.1 3,493.1 20.7 2. Net earned premiums 178.5 114.3 56.2 96.4 112.0 -13.9 3,47
Slide 43: 6M 2008 Results by Country
6M 2008 Results by Country IFRS (€mn) F 43 Non-Life Life Total Profit before Tax Combined Ratio 6M 2008 6M 2007 6M 2008 6M 2007 6M 2008 6M 2007 6M 2008 6M 2007 6M 2008 6M 2007 Austria 1,105.9 1,062.0 1,014.4 895.7 2,120.4 1,957.7 154.5 138.5 92.4% 94.3% Czech Rep. 520.5 442.3 170.5 134.8 691.0 577.1
Slide 44: Change in Group Shareholders' Equity
Change in Group Shareholders‘ Equity IFRS F 44 1.1. - 30.06.2008 1.1. - 30.06.2007 Equity as of 1 January 2,615,563 2,283,208 Currency Changes 55,336 -1,957 Changes to consolidation 39,270 39,396 Capital Increase 1,343,078 - Unrealised Gains and Losses on financial -76,857 -69,667 instruments availa
Slide 45: Life Insurance Premium Split
Life Insurance Premium Split IFRS (€mn) F 45 Premiums written - direct business 6M 2008 6M 2007 +/- % Regular premiums 926.9 880.5 5.3% Single premiums 723.7 480.3 50.7% Total premiums written - direct business 1,650.6 1,360.8 21.3% thereof: Policies with profit participation 936.9 783.4 19.6% Polic
Slide 46: Q2 2008 Income Statement
Q2 2008 Income Statement IFRS (€mn) F 46 Q2 2008 Q2 2007 +/-% 1. Gross written premiums 1,903.9 1,474.8 29.1 2. Net earned premiums 1,734.5 1,364.8 27.1 3. Net investment income 443.1 347.9 27.4 4. Other income 13.2 11.8 12.1 Total income 2,190.8 1,724.4 27.0 6. Expenses for claims incurred -1,553.2
Slide 47: 6M 2008 Investment Split
6M 2008 Investment Split Prudent investment policy paying off F 47 Investment policy Portfolio Overview Alternative Inv. Affiliated § VIG follows a conservative Companies ~ 1% Loans ~ 5% investment policy throughout ~ 6% market cycles § VIG has no US-subprime investments Real Estate Bonds ~ 16% ~ 65
Slide 48: Embedded Value (I)
Embedded Value (I) Group Embedded Value - Dec 31, 2007 F 48 in € mn Life & Health Property & Casualty Total Austria/Germany ANAV 735,4 617,5 1.352,9 VIF 1.384,5 n/a 1.384,5 - FOG -31,6 n/a -31,6 - CoCNMR -75,7 n/a -75,7 2.012,6 617,5 2.630,1 CEE ANAV 148,2 1.374,2 1.522,4 VIF 429,1 n/a 429,1 - FOG -
Slide 49: Embedded Value (II)
Embedded Value (II) Group Embedded Value - Dec 31, 2007 F 49 2007 2006 30% 20% 44% A/G L&H A/G P&C 10% CEE L&H 50% CEE P&C 12% 20% 14% GEV = € 4,551.0mn GEV = € 4,258.8mn1 1 restated
Slide 50: Embedded Value (III)
Embedded Value (III) New Business Values F 50 in € mn Life & Health 2007 2006 + / - % Austria / Germany NBV 63,1 50,9 + 24,0% APE 205,1 225,1 APE-Ratio 30,7% 22,6% PVNBP 1.906,3 1.982,6 PVNBP-Ratio 3,3% 2,6% CEE NBV 45,0 30,7 + 46,6% APE 71,0 45,4 APE-Ratio 63,3% 67,5% PVNBP 409,7 262,4 PVNBP-Ratio
Slide 51: 6M 2008 Exchange Rates
6M 2008 Exchange Rates National currency unit per EUR F 51 6M 2008 6M 2007 Balance Sheet Balance Sheet Country Curr. P & L EUR P & L EUR EUR EUR Bulgaria EUR/BGN 1.9558 1.9558 1.9558 1.9558 Croatia EUR/HRK 7.2365 7.2556 7.3035 7.3576 Liechtenstein EUR/CHF 1.6056 1.6114 1.6553 1.6318 Poland EUR/PLN 3
Slide 52: Shareholder Structure (I)
Shareholder Structure (I) Total number of shares 128,000,000 F 52 Shareholder Structure ~71 % Wiener Städtische Wechselseitige Versicherungsanstalt- Vermögensverwaltung ~ 29 % Free Float
Slide 53: Shareholder Structure (II)
Shareholder Structure (II) Total number of shares 128,000,000 F 53 Free Float Geographical Split ~21 % Austria ~20% ~14% North America Others ~32% ~13% Continental Europe UK & Ireland
Slide 54: Contact Details
Contact Details Investor Relations F 54 Wiener Städtische Versicherung AG Vienna Insurance Group Schottenring 30, 1010 Vienna, Austria www.viennainsurancegroup.com Stock exchange listing: VIENNA / PRAGUE Ticker symbol: VIG / VIG Reuters: VIGR.VI / VIGR.PR Bloomberg: VIG AV / VIG CP § Thomas Schmee T
Slide 55: Disclaimer
Disclaimer F 55 IMPORTANT NOTICE These materials do not constitute or form part, or all, of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in any jurisdiction in which such solicitation, offer or sale would be unlawful, nor sha
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