‘Still room to grow’ in continental Europe

VIG Re is well-known for being a top player in Central Eastern Europe (CEE) and has also made successful advances into continental Europe during the past six years. Furthermore, according to Johannes Martin Hartmann, the CEO and chairman of the board of directors, there are still plenty of opportunities for future growth.

The reinsurance company based in Prague is feeling optimistic about the future following the announcement of "unprecedented outcomes, particularly with regards to underwriting" in its annual report for 2022.

Along with the larger industry, it's necessary for there to be a substantial investment in our infrastructure. VIG ReVIG Re stated that they had their "highest top line ever" which was almost €800 million ($880 million) gross written premium (GWP) with a net combined ratio of 91.9 percent and made a profit of €31 million, according to Johannes Martin Hartmann.

According to Hartmann, we have consistently performed better than the reinsurance industry, which has had difficulty in earning enough money to cover its costs over the course of the past seven years.

According to him, the H1 results are going as planned this year, even though two significant incidents had an impact on the reinsurer - the earthquake in Turkey and Syria in February and the disturbance in France during summer. Except for those occurrences, there were not many significant losses in the first six months of the year.

VIG Re primarily operates in the CEE market, however, it expanded its operations to Germany six years ago and to France five years ago. The company's success in expanding into continental Europe has been impressive.

Hartmann stated that there is ample opportunity for them to expand and establish themselves as a reliable reinsurer. They aim to further strengthen their network in the European continent.

Furthermore, the company that provides insurance to insurance companies is creating three worldwide projects that focus on different types of insurance: specific risk agreements, life coverage, and events caused by natural disasters.

We have started creating a diversified portfolio in different parts of the world in three specific areas. However, this is not the main factor responsible for our growth so far. Our main focus is to prepare ourselves for the future. Through these three global initiatives, we are aiming to enhance our underwriting capabilities.

Many people in the business world have been talking about the difficulties that come with natural catastrophes and how to deal with them. According to Hartmann, VIG Re has experienced positive changes in the way they provide reinsurance for natural catastrophes. As a result, more potential opportunities are now available.

A company that provides insurance to insurance companies, known as a reinsurer, is a crucial component within the VIG Group. This organization understands the importance of mitigating risk, and by utilizing the services of a reinsurer, they can confidently offer their customers a broader range of insurance options. The reinsurer's primary function is to protect VIG from significant losses that may occur in extreme circumstances. In turn, this will allow the company to maintain long-term financial stability, ensuring they can continue to provide quality service to their clients for years to come.

VIG Re belongs to VIG Group, which is the largest insurance provider in Austria and CEE. It serves as the reinsurance arm of the group and procures reinsurance protection for the organization. Therefore, VIG Re takes care of the business emanating from almost 50 insurance companies that transfer to it. In addition, it also undertakes third-party business that makes up 42% of its GWP and forms a substantial chunk of its maintained business.

The reinsurer is set to grow in the future by increasing its market share in Continental Europe and through its three worldwide programs focused on facultative, life reinsurance, and natural catastrophe. However, this is not completely unknown territory, as Hartmann notes that the company has already achieved impressive results in its life and facultative business, though these segments have not been the primary drivers of the company's business in the past.

Hartmann believes that to expand the business, substantial investments are necessary. He highlights that the teams need to be bolstered, and technology should be upgraded. According to Hartmann, the undertaking to recruit capable workers has already started, and the organization is striving to secure enough funds to operate the enterprise while also managing the risk entailed.

In addition to the rest of the industry, we require a substantial amount of funding to improve our infrastructure. This involves evaluating our equipment, procedures, implementation of digital technology, automation, and even the use of robots. This will require a great deal of financial investment, particularly on the information technology front.

The industry has faced some challenges recently. Hartmann points out that the current state of the world is full of uncertainties or "polycrisis," which has made it difficult to make accurate predictions about the future.

According to him, we need to handle situations that we did not fully prepare for, or didn't prepare for at all, and which were not considered a priority in the past. This causes our upcoming days to be even more unpredictable, leading to a sense of uncertainty among people.

The world of economics is influenced greatly by macroeconomics, specifically in regards to interest rates and inflation.

Inflation is affecting our claims section directly. The current inflation rate has not been seen since the 70s, and it's affecting the industry in a unique way. Investments are gaining more interest, and this is causing changes in the way we do things. Compared to before, investors, especially those not directly involved, are being cautious and not rushing in, which is not a common occurrence in the past decade.

The industry has a bad history and investors have other options for investing. This is why there is a lack of capacity, which will create chances for us as reinsurers in the future," he ends.

Did you find this story helpful? Register for our everyday newsletters for free and receive similar stories directly in your email inbox.