International Property News

Austria's VIG to establish own reinsurer in Prague

19th February 2008

Austria's Vienna Insurance Group (VIG) has decided to establish its own reinsurance company that will be based in Prague, Guenter Geyer, chief executive of VIG's unit Wiener Staedtische, said today.

VIG made the decision on the establishment of own reinsurer at a supervisory board meeting on Monday and will apply for a licence with the Czech National Bank (CNB) in the days to come.

The reinsurance company should launch full operation next year, Geyer told CTK. VIG is already active in the Czech Republic through insurers Kooperativa and Ceska podnikatelska pojistovna (CPP).

The new reinsurer will have an owner's equity worth EUR100m. Its aim is to collect premiums worth around EUR300m in the next two to three years.

In the future, the company expects premiums volume could reach EUR1bn, given the huge potential of markets in Central and Eastern Europe, Geyer said.

An establishment of a reinsurance company is an extraordinary move as there are not many such firms in the world. There is no such company in Austria, for instance. Reinsurance company is a firm providing insurance to other insurers.

The placement of the company in Prague shows appreciation of the importance and share of the Czech insurance market on the group's activities, said Geyer.

It is also an important signal to the entire region of Central and Eastern Europe which is VIG's key market, he said.

The group wants to offer VIG companies and other insurers in the region new reinsurance possibilities, based on its 15-year experience and know-how collected on these markets, Geyer added.

VIG has now branches in 23 countries, mainly in Central and Eastern Europe where it is active through more than 40 insurers. Foreign units make up 60 percent of the group's premiums collection.

The Czech Republic is the group's most important foreign market, making up around 20 percent of the total premiums volume.

In 2007, VIG raised revenue from premiums collection by around 17.5 percent year-on-year to more than EUR7bn. Consolidated profit reached EUR435m, up by 35 percent on the year.

VIG shares entered the Prague Stock Exchange (BCPP) at the beginning of February. The group is the first insurance company traded on the BCPP.