INTERVIEW: JOHANNES MARTIN HARTMANN, VIG RE
‘Still room to grow’ in continental Europe
As VIG Re revels in record results for 2022, the company looks to further growth and fresh global initiatives in spite of the trials of the ‘polycrisis’ and macroeconomic challenges for the whole industry.
Known for its market-leading position in Central Eastern Europe (CEE), VIG Re has been successfully expanding into continental Europe over the last six years. And “there is still a lot of room for us to grow”, says Johannes Martin Hartmann, chief executive officer and chairman of the board of directors.
The Prague-headquartered reinsurer is in a position to be bullish about the future after unveiling “record results, especially on the underwriting side”, in its 2022 annual report.
VIG Re reported its “highest top line ever, at almost €800 million ($880 million) gross written premium (GWP) with a net combined ratio of 91.9 percent, and a profit of €31 million”, he says.
Hartmann adds: “We continued to outperform the reinsurance industry, which struggled to earn its cost of capital in the past seven years..”
This year, the results for H1 are on track, he says, in spite of two major events that affected the reinsurer: the earthquake in Turkey and Syria in February; and civil unrest in France this summer. Other than these events, the first half of the year has been quiet, with few large losses.
VIG Re’s homebase is the CEE market, but the company opened offices in Germany six years ago and in France five years ago and has moved into continental Europe with aplomb.
“There’s still a lot of room for us to grow, to position ourselves as a trusted follower reinsurer. Our focus is to continue to grow our base in continental Europe,” Hartmann says.
In addition, the reinsurer is building three global initiatives concentrated on the lines of facultative, life reinsurance, and natural catastrophe.
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“What we also need, along with the wider industry, is a significant investment in our infrastructure.”
Johannes Martin Hartmann, VIG Re
“In these three areas, we have started to build a small diversified portfolio worldwide, but that’s not the main driver of growth yet. This is more about preparing for the future. These three global initiatives will enable us to build up our underwriting capabilities,” he explains.
There has been a lot of discussion in the industry about nat cat and its challenges but, Hartmann says, VIG Re has seen “significant improvements” on nat cat reinsurance terms and conditions, which is opening up more opportunity.
Reinsurer for the VIG Group
VIG Re is part of VIG Group, the biggest insurer in Austria and CEE. VIG Re is the reinsurance company of the group and buys reinsurance protection on its behalf. As a result, VIG Re places the business from around 50 insurance companies that cede to VIG Re. The reinsurer also writes third party business, which accounts for around 42 percent of its GWP and the majority of its retained business.
Future growth for the reinsurer will come mainly from further expanding its market position in Continental Europe and the three global initiatives in facultative, life reinsurance, and natural catastrophe, but it’s not entirely new territory. Hartmann says that the company has already delivered very good results in its life and facultative business, but these lines haven’t traditionally been the main pillars of the business.
“What is needed to scale it up is significant investments—on the personnel side we have to strengthen the teams—and in technology,” Hartmann says. He says that talent recruitment is already underway for these lines, while the business works to ensure that there is sufficient capital to run the business and to keep the risk on its books.
“We have to deal with things we have not modelled, or not modelled adequately.”
“What we also need, along with the wider industry, is a significant investment in our infrastructure. That means we are looking at our tools, methodologies, how we do things, digitisation, automation, even robotisation. This triggers quite significant investments, especially on the IT side.”
It has not all been plain sailing for the industry. Hartmann highlights the new world of uncertainties or “polycrisis”, which has made predicting the future much more complex and uncertain.
“We have to deal with things we have not modelled, or not modelled adequately and that were not high on the agenda in the past. Our future becomes even more uncertain and people feel that,” he says.
Macroeconomics is another industry game-changer, particularly with interest and inflation.
“We have a direct impact from inflation on the claims side. The last time inflation was this high was in the 1970s. It also means that interest is back, and this is likely to be a game-changer for the industry. We see for the first time since more than a decade that we do not have such overcapacity because investors, especially third-party investors, are holding back.
“The track record of the industry is rather poor and investors have alternatives to invest in. That is the main driver for the lack of capacity, which will provide opportunities for us as reinsurers in the years to come,” he concludes.
Johannes Martin Hartmann is chief executive officer and chairman of the board of directors of VIG Re. He can be contacted at: info@vig-re.com
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