CEO-Interview with Forbes Romania

Will your business be put on holiday during this period? Or is it no longer the time for "vacations" in the current geopolitical, economic and social context?

Elisabeth Stadler: Our business never takes a break or vacations in the summer. But that is not due to the current major challenges you mentioned. The summer months are usually characterized by storms, floods or fires as we have had in many Southern parts of Europe now. These natural disasters will continue to increase due to climate change, maybe the most important challenge going forward. And of course, we also want to be there for our customers in the summer vacation season with its associated risks. Motor vehicle or leisure accidents and especially travel insurance are another reason why summertime does not allow a break for our business.

In the discussions that Forbes Romania editors had with top managers throughout this year the most frequent topics concerned the inflation growth, the war in Ukraine, the pandemic, issues in supply chains, the lack of labor force, the explosive increase in utilities prices. What are your overall concerns in the next period?

Stadler: All the influences you have mentioned add up to a very challenging situation for all companies and industries and for all people. It is very difficult to make estimates at the moment. We have far too many influencing factors, which make it impossible to predict further developments. First and foremost, how long Putin’s war in Ukraine will continue or whether Russia will use its energy as a weapon again. Economic growth is slowing down for the time being due to the war, the associated rise in inflation and supply chain problems. However, according to economic forecasts, a recession remains avoidable for most countries. If oil and gas have to be rationed in the winter, the whole region could slide into recession. It can be assumed that the catching-up process of CEE with Western Europe will slow down in the near future. I do not dare to predict when we will return to the situation we had before the pandemic when economic growth in the CEE region was on average at least twice as high as in Western Europe. But I am convinced of the long-term growth potential in this region for insurance companies and VIG is best positioned to make use of upcoming opportunities. Insurance penetration in CEE is on average less than one tenth of that in Western Europe.

What worries you, for the next period, in the field/sector in which you operate?

Stadler: We showed a high level of resilience during the pandemic and are continuing to do so in this challenging period. We were already able to return to pre-Corona levels in our operating business by the middle of 2021, and the pre-Corona year 2019 was an extraordinarily successful year. I attribute this, among other things, to our successful business model and the diversity of the Group. All our Group companies are close to their customers and are able to act quickly according to the respective market needs. It also helped us to have addressed digitalisation in good time, which proved to be a key tool to keep up business operations and, above all, customer service, especially during the pandemic. We continue to see ourselves in a position to manage the challenges well. But of course, the geopolitical and economic situations also affect our business, to which we have to respond. For example, to the increased cost pressure resulting from the low real interest rates and the pressure on margins due to ongoing inflation. We also need to anticipate lower demand for insurance due to inflation-related loss of purchasing power. Therefore, we will position ourselves more strongly on platforms and in ecosystems to drive new customer access. To this end, we have an ongoing strategy program, VIG 25, which includes the implementation of numerous initiatives until the end of 2025, to stay ahead of trends of developments. We have reviewed the strategy program with regard to the influence of the current challenges. Fortunately, we currently do not see any reason to change our strategy. We have reviewed the initiatives under the "VIG 25" strategy program and weighted them accordingly in order to counter identifiable developments at an early stage.

What are your business plans for the end of this year? And for 2023?

Stadler: We as companies cannot directly influence the difficult macroeconomic and geopolitical environment ourselves. However, the success of our Group is built on a proven business model with a long-term focus, which is developed and adapted in a targeted manner according to the demands of the environment. We therefore believe that our broad diversity and conservative investment and reinsurance policy will enable us to continue to manage the operating insurance business well. We are therefore confident that we will be able to continue our positive operative development in 2022 and 2023.

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