Vienna Insurance Group Investor Presentation Zürs, 29 March 2017
Agenda 2020 12M 2016 Preliminary results Please note: All information for the financial year 2016 is based on preliminary unaudited data. Financial results for 2015 have been restated.
VIG reached its targets for 2016 Solid preliminary results Profit before taxes Target: At least double the profit before taxes 2015 up to 400mn 2016 EUR 407mn Market share Target: Market share of at least 10% over the mid-term in selected markets Health insurance Target: Strengthening health insurance PL 6.7% (+0.1%p) 2016 EUR 516mn (+6.6%) CEE (~+20%) HU 7.3% (+0.5%p) Digitisation Target: Focus on digitisation in the area of products and services 2016 Partnership with Insurance Innovation Lab Leipzig HR 8.5% (+0.4%p) RS ~12% 3
Today VIG best positioned in its region due to successful business model Main pillars of the VIG business model Focus on Austria and CEE Local entrepreneurship Conservative investments and reinsurance Multi-brand strategy Multi-channel distribution Austria Baltics Czech Rep. Slovakia Romania Macedonia No 1 Albania Bulgaria Georgia Ukraine Top 3 Croatia Poland Serbia Latvia Lithuania Top 5 Bosnia & Herzegovina Montenegro Hungary Turkey Belarus >5 Note: Market positions as share of total insurance premium in the respective market 4
Positive economic environment and strong growth potential going forward Annual insurance spending shows significant growth potential in the CEE region Real GDP growth p.a. 2016-2019 Insurance density 2015, in EUR (premiums per capita) AT 1.2 AT 2,034.1 HR 2.2 HR 271.4 HU 2.3 HU 285.2 CZ 2.4 CZ 516.3 BG 2.6 BG 140.1 UA 3.0 UA 27.2 TR LT 3.2 3.3 TR LT 131.9 222.1 Eurozone 2,939 PL 3.3 PL 344.6 RS 3.3 RS 94.0 RO 3.4 RO 98.9 MK 3.5 MK 64.8 SK 3.6 SK 408.2 Eurozone +1.5% Source: IWF, World Economic Outlook Database, October 2016 Source: insurance density: in-house calculations based on information published by national insurance supervisory authorities and associations, the IMF and Swiss Re (Sigma) 5
Agenda 2020: Key strategic areas Directions of impact Optimisation of business model Safeguard future viability Shared Services Creating cost benefits by merging back-office functions and companies Profit optimisation in motor Development of targeted measures focusing on underwriting and risk selection Anti-fraud Group-wide best practise approach for reducing insurance fraud Closed File Review Group-wide procedure for identifying and avoiding excessive claims payments Use of growth potentials Intensify selected business areas e.g. health insurance, reinsurance, cooperation with Erste Group Digitisation Development of a digital hub to support and coordinate activities within the Group Insurance of the future Trends, innovation, technical developments medium to long-term adaption of the business model Assistance Assistance Services companies already active in CZ, SK, PL and BG creating additional value Organisation and Cooperation 6
Growth initiatives Leveraging selected business areas Health Potential in the area of private health insurance business. VIG companies with health ins. Focus on health insurance PL Reinsurance VIG RE in 2016 Founded in 2008 and by now well established 52 employees Active in 31 countries S&P rating A+ (FSR, stable outlook) HU RO BG Further internationalisation 38 out of 50 VIG Group companies are already providing private health insurance either as stand-alone product or riders Business plans for health portfolio increase to be developed with local management in PL, HU, RO, BG und Turkey TR Utilization of business opportunities within the Group in Austria and CEE Gradual expansion of German business Controlled market entry in Western Europe (Focus: France, Belgium, Luxembourg and Switzerland) 7
Successful partnership with Erste Group 2016: ~EUR 1.3bn of premiums generated as a result of bankassurance cooperation Promotion of bank insurance with Erste Group Common project together with Erste Group CZ SK AT HU HR RO Target: optimisation of products, distribution and profits for both with focus on health and other non-life business in all the markets where Erste and VIG work together Clients needs, easily understandable products and the integration in the bank s digitisation initiative are core BA MNE MK RS This includes organisational and structural considerations on the insurance side 8
Digitisation: Decentralised approach with local companies acting as innovation labs Customer behaviour and online preferences differ between generations and across countries Local companies develop appropriate digital solutions according to customer needs in terms of products, services and distribution in line with opportunities individual markets offer New, disruptive technologies and technical innovations (e.g. Blockchain) to change markets and insurance industry overall -> necessity to examine the potential impact on and implications for the VIG business model Partnership with Insurance Innovation Lab, Leipzig - VIG to receive external support for insurance relevant innovation topics - Lab provides access to proprietary know-how and their Insur-Tech and Start-up network - Exclusive cooperation for individual projects Agenda 2020: VIG plans to create a hub to support and coordinate all activities within the Group 9
Assistance Roll Out in CEE (2014-2017) Assistance as an integrated part of insurance products Stronger customer loyalty through high-quality service More than 350,000 assistance cases in the last 3 years Adaptation to changing customer needs through digitisation (Health app, GPS tracking, towing cars) Construction of the most modern automobile assistance in Slovakia Expansion of the existing assistance to the most modern assistance company in Bulgaria 2014 2015 2016 2016 2017 Further assistance rollouts planned in CEE countries Market leader and the most modern assistance company in the Czech Republic Construction of the most modern automobile assistance in Poland 10
Agenda 2020 12M 2016 Preliminary results Please note: All information for the financial year 2016 is based on preliminary unaudited data. Financial results for 2015 have been restated.
Preliminary results for the financial year 2016 Sound development of top and bottom line 9,051mn GWP 406.7mn PBT 97.3% CoR Growth of 0.3% despite reduced life single premium business Solid premium increases in all lines of business except for life single premium business (-19.2%) GWP excl. life single premium business up 4.4% PBT exceeds target Total financial result down by 81.4mn (-7.8%) Full consolidation of Austrian housing societies since Sept. 2016; PBT impact: ~ 29mn EPS reached EUR 2.16 Stable net combined ratio Improved cost ratio at 30.4% with slightly increased claims ratio at 66.9% Compared to 9M 2016 CoR down by 60 bps 0.80 Dividend Increased dividend proposal Pay out ratio of 35.6% in line with unchanged dividend policy Dividend yield 3.76% 12
Overall premium growth mainly influenced by life single premium reduction Overview of premiums by segments (I) Gross written premiums ( mn; y-o-y chg.) -2.8% 4,055.5 3,941.3-1.7% 1,554.8 1,529.1 +2.2% -2.3% +24.4% 716.5 732.3 838.9 819.2 428.6 533.4 Austria Czech Republic Slovakia Poland Romania Adjusted for life single premium reduction, stable premium development in Austria (+0.7%) and solid growth in Czech Republic (+6.4%) and Slovakia (+4.1%) Premium decrease of 2.3% in Poland impacted by FX-effects and Baltic non-life business transfer from Poland to the Baltic segment Growth of 24.4% in Romania driven by increased average premiums and additional policies in motor third party liability insurance; subdued development to be expected until May 2017 given the newly introduced maximum tariffs 13
Solid premium growth in CEE region Overview of premiums by segments (II) Gross written premiums ( mn; y-o-y chg.) +136.4% 140.2 204.3 +9.8% 224.2 131.1 +4.3% 136.7 182.3 +14.5% 208.7 307.2 +7.9% 331.4 410.0-13.9% 353.0 59.3 The Baltic Hungary Bulgaria Turkey/ Georgia Remaining CEE Other markets The Baltic: first-time consolidation of Baltikums and Compensa Lithuania included Hungary: solid growth in all lines of business Bulgaria: overall growth despite competitive environment and decreasing premiums in MTPL Turkey/Georgia: growth driven by average premium increases in MTPL in Turkey Remaining CEE: premium growth driven by Serbia (+18.5%) and Croatia (+9.4%) Other markets: reduction in life single premium business Remaining CEE includes Albania, Bosnia-Herzegovina, Croatia, Macedonia, Moldova, Ukraine and Serbia / Other markets are Germany and Liechtenstein 14
Reduction in life single premium business compensated by growth in all other lines of business Gross written premiums ( mn; y-o-y chg.) MTPL Casco Other property Total premiums +10.8% +8.2% +4.8% +0.3% 1,173 1,300 886 959 3,580 3,752 MTPL 9,020 1,173 9,051 1,300 Casco 886 959 Other Property 3,580 3,752 Life regular Life single Health +1.3% -19.2% +6.6% Health 484 516 2,461 2,493 1,554 1,255 484 516 Life regular 2,461 2,493 Life single 1,554 1,255 Consolidation -1,118-1,223 15
Group PBT of 406.7mn Overview of profits by segments (I) Profit before taxes ( mn; y-o-y change) -7.9% 213.0 196.1 163.0-6.3% 152.8-5.8% 51.9 48.9 20.8-91.0% 1.9 3.5-46.4 Austria Czech Republic Slovakia Poland Romania Due to new segmentation in line with amended Cash Generating Units since Q1 2016 regular depreciation and impairments of goodwill, insurance portfolios and brands are now shown in the respective segments In Austria and the Czech Republic the declining profits were driven by less financial income (AT - 80.4mn; CZ - 12.2mn) In Slovakia better technical result in P&C could not reach the size of the positive one-off in 2015 In Poland, decline impacted by ~ 25mn one-off for signed surrender fee agreement with the Polish Consumer Protection Unit and lower financial result (- 11.6mn) Romania: adjusted for impairments in 2015 (goodwill 52mn) and 2016 (brand 7.5mn) doubled underlying result 16
Overview of profits by segments (II) Profit before taxes ( mn; y-o-y change) +9.5% +180.4% +13.3% 20.2 22.2 3.8 5.4 3.2 9.0 6.6 7.4-2.6-4.7-2.4-11.2 The Baltic Hungary Bulgaria Turkey/ Georgia Remaining CEE Other markets The Baltic: Start-up costs and non-life portfolio transfer impacted the result of the Baltic segment Hungary: 7.5mn goodwill impairment in 2015 Bulgaria: positive development driven by better technical result (CoR below 100% compared to YE 2015) Turkey/Georgia: development driven by 3.9mn profit growth in Turkey Remaining CEE: impacted by goodwill impairments 17
Combined ratio (P&C) stable at 97.3% P&C Combined ratio development P&C CoR 12M y-o-y regional development (net, %) 97.3 30.6 97.8 33.3 97.9 31.4 97.9 30.5 97.3 30.4 AT CZ SK 97.5 97.6 90.7 90.5 96.2 94.9 +0.1%p -0.2%p -1.3%p 66.7 64.5 66.5 67.4 66.9 PL 99.3 99.4 +0.1%p 3M16 6M16 9M16 RO 102.4 100.1-2.4%p Cost ratio Claims ratio Poland: substantially reduced cost ratio helped to offset increased claims ratio Romania: CoR clearly improved but not yet below 100% Turkey: decline in cost and claims ratio drives CoR improvement to below 100% in segment Turkey/Georgia The Baltic HU BG TR/GE Remaining CEE Other markets 83.0 81.8 105.3 103.6 102.3 98.2 102.5 95.7 102.7 101.4 135.4-1.2%p -1.7%p -4.2%p -6.8%p -1.3%p Rounding differences may occur when rounded amounts or percentages are added up. 18
Outlook for 2019 Stable development and continuous improvement 2019 Outlook Gross written premium VIG plans to steadily increase the premium volume to 9.5bn by 2019 Profit before taxes Despite the low interest rate environment and the continued negative effect this is expected to have on the financial result, VIG aims to increase profit before taxes to between 450mn and 470mn by 2019 Combined ratio Medium-term target of CoR improvement towards 95% Dividend policy Distribution of at least 30% of net profits after minorities unchanged; dividend per share development to follow results increase 19
Contact details Investor Relations Date 23 Mar. 2017 19 Apr. 2017 02 May 2017 12 May 2017 Financial calendar 2017 Event Preliminary results for the financial year 2016 Annual Report and Embedded Value 2016 Record date Annual General Meeting Annual General Meeting 17 May 2017 Ex-dividend-day 18 May 2017 Record date dividend 19 May 2017 Dividend payment day 23 May 2017 Results for the first quarter 2017 22 Aug. 2017 29 Nov. 2017 Results for the first half-year 2017 Results for the first three quarters 2017 Investor Relations Team Vienna Insurance Group Schottenring 30, 1010 Vienna E-Mail: investor.relations@vig.com www.vig.com/ir Nina Higatzberger-Schwarz (Head of IR) Tel. +43 (0)50 390-21920 E-Mail: nina.higatzberger@vig.com Olga Flattenhutter Tel. +43 (0)50 390-21969 E-Mail: olga.flattenhutter@vig.com Asmir Musić Tel. +43 (0)50 390-21930 E-Mail: asmir.music@vig.com Daniela Lemmel-Seedorf Tel. +43 (0)50 390-21919 E-Mail: daniela.lemmel-seedorf@vig.com 20
Disclaimer 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 shall part, or all, of these materials form the basis of, or be relied on in connection with, any contract or investment decision in relation to any securities. These materials contain forward-looking statements based on the currently held beliefs and assumptions of the management of VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe ( VIG ), which are expressed in good faith and, in their opinion, reasonable. These statements may be identified by words such as expectation or target and similar expressions, or by their context. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, financial condition, performance, or achievements of VIG, or results of the insurance industry generally, to differ materially from the results, financial condition, performance or achievements express or implied by such forwardlooking statements. Given these risks, uncertainties and other factors, recipients of this document are cautioned not to place undue reliance on these forward-looking statements. VIG disclaims any obligation to update these forward-looking statements to reflect future events or developments.