Earnings Document

Operator

And we have our first question from Bhavin Rathod, from

HSBC. Please go ahead.

Bhavin Rathod

Hello, good afternoon. Thank you for taking my questions. I

have three on my side, and the first one would be on the

P&C pricing dynamics on your core markets. It would be

helpful if you could provide some more additional colours on

what kind of pricing dynamics you are seeing in your core

markets, like Czech, Poland, etc., vis-à-vis the claim

inflation.

The second one would be on the Turkish earthquake

exposure. I appreciate 170 million is the gross number. It

would be helpful if you could provide how should this

number look on a net basis.

And coming to the last one would be on your guidance,

which is obviously unchanged, and you're still aiming for a

positive operating performance. If you could provide some

more colour on how should we read this statement,

especially in the context where you are transitioning into

IFRS 17?

So, when you say a positive operating performance, should

we read this as positive improvement of IFRS 17 figures, or

IFRS 4 figures? On what KPI should we look at this positive

operating performance? Thank you, those are the three

questions that I have.

Peter Höfinger

Good afternoon. Peter Höfinger. Thank you for your

questions. The first question and the second question I will

answer, and then Liane takes the third question.

I'll start with the Turkish earthquake. We are announcing the

gross figures, as this is a mixture between active

reinsurance, local company, and also sometimes corporate

business, reinsured facultative. So, it's a mixture. From the

today perspective, the net effect will be a low double-digit

million figure.

Coming to the first question, P&C dynamics, I would start

generally, and I think we have mentioned this, in our region,

Central and EasteEurope, in the last 20 years, country-

by-country, there have been already times of higher

inflation.

So, we have management people in their jobs, which

already in their professional career were dealing with the

topic of rising inflation and claims inflation, maybe differently

to some WesteEuropean countries, which didn't have this

kind of inflation in the last 40, 50 years.

Therefore, there is a certain management ability and

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capability to deal with these challenges. In CEE, we do have

mainly one-year contracts. This means we are able to adopt,

according to our calculation, the rates.

We are not logged in differently in Austria, but in Austria,

where we have more long-term contracts, we have

indexation clauses on it.

And it's not just CPI inflation clauses, it's inflation clauses

relevant to the business line. So, for example, the

Construction Price Index for property, or Repair Cost Index,

Car Repair Cost Index for CASCO, which is ensuring a

proper pricing automatically with the index.

If we go to the countries, maybe I'll start with the most

challenging one, which is still Poland. We have still here the

whole market under pressure in the motor pricing. We do

believe that there is now the bottom line reached, and there

are first signs that motor pricing in Motor TPL is increasing.

We also believe that because we see this tendency in the

neighbouring Baltic states, and quite a number of insurance

companies operating in Poland are also operating in the

Baltics. So, therefore, we believe that also this trend will

come over.

In the property business, and this is again true for whole

CEE, also for our local competitors, they were experiencing

the significant rate increases of reinsurance in the last

renewal, which is also putting pressure on them on the

primary market. So, we see in general, in the property

business in CEE, a rate increase on the property business.

There was a certain delay. You know that in Western

Europe, these rate increases in the property started already

two, three years ago. We saw it in CEE last year, but this

year even a bit accelerated.

The same is true in Czech Republic, but with I think also a

decent performance in Motor TPL, and also in Austria,

where some rate increases are flattening. But this has been

already, over the last years, certain risk-adequate increases

done.

We are growing quite strongly in the CASCO line of

business, all over the place. On the one-hand side, due to

rising number of new car sales, combined with a rate

increase, combined with value increases, as also car prices

have significantly increased in the last 12 to 24 months,

which is standard function of the absolute premium. So, this

is a little bit a short overview about the environment.

Liane Hirner

I'm happy to take the last question on the guidance and what

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we mean with the positive operating performance. I would

like to remind you that the macroeconomic environment is

still challenging, and still we are experiencing volatile capital

markets, so when we talk about the positive operating

performance, we mean the insurance technical result.

And we see still, of course, some pressure in this year

regarding the high inflation rates. But this year, and

especially in 2024, we expect that the effect of adjusted

insurance tariffs we will see in our insurance result. So, this

is what we mean by better positive operating performance.

I hope this answers your question.

Bhavin Rathod

Very helpful. Thank you so much.

Operator

The next question is from the line of Thomas Unger, from

Erste Group. Please go ahead.

Thomas Unger

Yes, hello. Good afternoon. Thank you for taking my

questions, and also, thank you for the presentation today.

My first question would be on, you talked about the pricing

dynamics in the region.

Across all your product groups, is the indexation, are the

adjustments, the upward-price adjustments done, or mostly

done, for this year? And how has the lapse rate, in

connection with that, developed? That's the first question.

The second question would be on the changed interest rate

environment. What is the new money yield, or what was it,

in Q1 2023?

And then lastly, you mentioned it, that you'll be presenting

the half-year results under the new reporting standards of

IFRS 17 and 9. Do you provide any historical data, ahead of

these results, for the quarters in 2022? That would be highly

appreciated and helpful.

Peter Höfinger

So, I'll take the first question, thank you. We are making rate

adjustments at the renewal date, throughout the whole year,

so it's not done all on 1st January, but when the contract is

to be renewed. So, this is throughout the year.

We do currently not observe significant changes in

behaviour towards cancellation or lapse rate. What we see,

and this is more towards corporate business, that certain

coverages get changed. Self-retention gets increased,

certain extra coverages maybe get reduced.

So, it's not a cancellation of a whole insurance coverage,

but it's an adaptation of certain coverages in relation, then,

to the total premium to be paid.

Liane Hirner

Regarding your question, regarding the new money yield for

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the first quarter, the new money yield of total VIG in the first

three months amounts to 4.8%. And the last question

regarding the half-year results under the new accounting

regime, IFRS 17 and 9, we are happy to share with you the

year-end 2022 results in advance, so we will reach out to

you in this respect.

Thomas Unger

Okay, so no quarterly results will be presented in the

Adjusted Form, ahead of the half-year results?

Liane Hirner

We will have the half-year 2022 figures in the half-year

2023, as a comparative information, but we will give you the

year-end 2022 in advance.

Thomas Unger

Right, okay, and thank you for that. And the new money

yield, what is the comparative figure in the previous

quarters? You said 4.8% for Q1?

Liane Hirner

We have just the comparative figures for Austria only. In

Austria, the new money yield in the first three months was

3.7%, and the comparative figure in the previous quarter

2022 and the first quarter 2022 was 2.73%.

Thomas Unger

Okay.

Liane Hirner

I'm sorry, this was the whole-year 2022. The first three

months was 1.78%. This is the comparative figure to the

3.7%.

Thomas Unger

1.78% for Q1 2022, last year, okay.

Liane Hirner

Yes.

Thomas Unger

Super. Thank you very much.

Liane Hirner

Welcome.

Operator

Ladies and gentlemen, as a reminder, if you would like to

ask a question, please press star and one on your

telephone.

One moment for the next question, please. So far, there are

no further questions, and I hand back to Nina for closing

comments.

Nina Higatzberger-Schwarz

Thank you, ladies and gentlemen, for participating in today's

call. The next results call for VIG is going to be the half-year

results 2023, on 30th August, then based on IFRS 17/9. So

far, thanks and good afternoon.

Peter Höfinger

Bye bye.

Liane Hirner

Bye bye.