Earnings call transcript: Vienna Insurance Group reports strong Q2 2025 growth

Vienna Insurance Group (VIG) demonstrated robust growth in its Q2 2025 earnings call, with significant increases in both gross written premiums and profit before tax. Despite market volatility and geopolitical uncertainties, the company maintained its leadership position in Central and Eastern Europe. The stock remained stable at $210.90, reflecting investor confidence in VIG’s strategic direction and financial health. According to InvestingPro data, VIG maintains an excellent financial health score of 3.82, with liquid assets exceeding short-term obligations.

Key Takeaways

• Gross written premiums rose by 8.7% to €8,569 million.
• Profit before tax increased by 10.5% to €531 million.
• The net combined ratio improved to 91.9%.
• Strong growth in motor and health insurance segments.
• Solvency ratio increased to 278%.

Company Performance

Vienna Insurance Group reported a solid performance in Q2 2025, driven by strong growth across multiple insurance lines. The company capitalized on its market leadership in Central and Eastern Europe, achieving double-digit growth in motor third-party liability and health insurance. Despite a challenging macroeconomic environment, VIG’s strategic focus on diverse markets and product innovation yielded positive results.

Financial Highlights

• Revenue: €8,569 million (+8.7% YoY)
• Insurance service revenues: €6,396 million (+8.1% YoY)
• Profit before tax: €531 million (+10.5% YoY)
• Earnings per share: €5.92 (+10% YoY)
• Operating return on equity: 18.9%

Outlook & Guidance

VIG is targeting the upper end of its €950-1,000 million profit range for the year. The company plans to unveil a new strategic initiative for 2026-2029 in Q3, which may include potential expansion into the German market. VIG remains committed to a conservative dividend policy, having maintained dividend payments for 20 consecutive years with a current yield of 1.65%. This consistent performance has contributed to a strong 10.47% total return over the past year. For detailed analysis of VIG’s growth potential and comprehensive valuations, check out the in-depth research report available on InvestingPro.

Executive Commentary

Peter Huffinger, Deputy CEO, emphasized the company’s commitment to exceeding expectations: "Better to overdeliver what we promised." CFO Leanne highlighted VIG’s proactive approach to opportunities: "We have always embraced opportunities throughout our whole history." These statements reflect the company’s strategic focus and risk management philosophy.

Risks and Challenges

• Geopolitical uncertainties in Central and Eastern Europe could impact market stability.
• Potential challenges in the Hungarian market following a goodwill impairment of €72.8 million.
• Ongoing market volatility may affect insurance demand and pricing dynamics.
• Competition in the German market could pose challenges if VIG pursues expansion.
• Weather-related claims, although reduced, remain a concern for profitability.

Q&A

During the Q&A session, analysts focused on the potential acquisition of Nuremberger in Germany and the development of VIG’s Contractual Service Margin (CSM). Executives provided insights into pricing strategies across different markets and clarified the company’s stance on the Hungarian market post-impairment.

Full transcript - Vienna Insurance Group Wiener (VIG) Q2 2025:

Matilde, Chorus Call Operator, Chorus Call: Ladies and gentlemen, welcome to the VIG Results for the First Half Year twenty twenty five Conference Call and Live Webcast. I’m Matilde, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. The conference must not be recorded for publication or broadcast.

At this time, it’s my pleasure to hand over to Peter Huffinger, Deputy CEO of VIG. Please go ahead.

Peter Huffinger, Deputy CEO, Vienna Insurance Group: Good afternoon to our half year presentation and thank you for joining us. We are happy to present you today strong half year results. We have achieved the gross written premiums of EUR 8,569,000.000 premiums, which is a growth of 8.7%. Insurance service revenues of EUR 6,396,000,000.000, which is an increase of 8.1% and profit before tax of EUR $531,000,000, which is 10.5% growth. Our net combined ratio of 91.9% and earnings per share up 10% to EUR5.92, which resulted in operating return on equity of 18.9%.

On the next slide, I’m happy to guide you through our main events which we had in the first half year. Besides having the strong performance, we also had goodwill impairment in Hungary in the amount of €72,800,000 We had an improvement of our combined ratio, which was also supported on one hand side by a lower frequency and lower impact of weather related claims and also a better cost ratio. Weather related claims in the first six months were €73,000,000 in comparison to last year of €113,000,000 We have announced on August 8 that we entered an exclusive due diligence with the Nuremberger in Germany, and we also have won an official tender Monday this week for Moltseg in Moldova. All this gives us confidence that we will keep our guidance and we are convinced that we will come out to the upper end of our target range of €950 to €1,000,000,000 for the year end. With this, I’m handing over for the details to Leanne.

Please, Leanne.

Leanne, CFO/Financial Presenter, Vienna Insurance Group: Thank you, Peter. Now let’s start on Slide six with the group income statement. Apart from the already mentioned increased insurance service revenue, I would want to highlight the improved total capital investment result, up by 32.5%, profiting from higher interest rates. With regard to the goodwill impairment taken in Hungary, which Peter already mentioned, please note that the profit before taxes in Hungary adjusted for this goodwill impairment would have amounted to 16,800,000.0 We recorded an increase of 2.8% in the insurance service revenue to €324,500,000 and the net combined ratio improved to 94.8%. Given the market environment, we are satisfied with the developments in Hungary.

However, the additional premium tax got prolonged until 2026, and further governmental initiatives in Hungary cannot be excluded. This is why VIG, and this is fully in line with our conservative approach, decided to go for this complete goodwill impairment and sold down the remaining €72,800,000 of goodwill in Hungary. Despite this measure, we were able to achieve group profit before taxes of 5 and €31,400,000 and the net profit after taxes and non controlling interests in

Yudesh Chikoray, Analyst, Autonomous Research: the

Leanne, CFO/Financial Presenter, Vienna Insurance Group: amount of €386,700,000 both up by 10% approximately. On the next slide, we show the details for the insurance service revenue of €6,400,000,000 being up by 8.1%. I would like to point out that our biggest segment in this half year with €1,900,000,000 in revenues and an increase of 8.6% is extended CE. Compared to the first six months of last year, extended CE contributed 148,800,000 more in revenue. It’s worth mentioning here that several CE markets achieved double digit growth ratios.

For example, Slovakia, plus 12% and The Baltics, plus 11.4%, accounting for about half of the additional revenue. You can find the full overview of the individual market developments on Slide 26 in the appendix. We are pleased about the continuously sound insurance service revenue growth of 4.7% in Austria, 6.7% in Czech Republic and 8.9% in Poland. However, outperforming all other segments in terms of revenue growth is Special Markets, up 29.7%, driven by the ongoing dynamic business development in Zwickia. Let’s now take a look at the breakdown of Insurance Service revenue by line of business.

As you can see on Slide eight, MTPL was plus 11.2%, Health with plus 15.1% as well as unit and index linked life and life without profit participation with each roughly plus 11% present robust double digit growth. From an already high revenue level of more than billion euros other property grew by 3.9%, contributing roughly €120,000,000 of additional revenue. Overall, this slide illustrates the diverse growth profile of our group. Currently, only life insurance business with profit participation remains stable, but on a favorable level. On the next slide, we present the development of the result before taxes in more detail.

Strongest growth contributor with plus €21,200,000 is Poland, followed by The Czech Republic with plus 17,900,000.0 markets supported by significant improvement of the combined ratio. To be fair, if we adjust for the goodwill impairment already mentioned in Hungary, the segment extended CE would have been our top performer. Nevertheless, despite this goodwill impairment, we achieved double digit profit growth of 10.5%, which demonstrates the strength of our business model. Now over the page, the combined ratio details and the split between claims and cost ratios are shown. The net combined ratio of the group improved to 91.9%, including a discounting impact that increased from 3.1% to 4.4% on the claims ratio.

As mentioned already by Peter Hoefinger, significant lower costs arising from weather related claims and natural catastrophes in the first six months of this year compared to the same period of last year were supporting this overall positive development. The substantial improvements by more than four percentage points both in The Czech Republic and in Poland were additionally driven by positive developments in motor. Moreover, Polish household insurance profited from higher average premiums. The deterioration of the combined ratio by five percentage points in the special market is due to two factors. Firstly, a one off effect in the previous year and secondly, a negative development in Motor and Other Property and in Turkiye this year.

Now let’s move on to Slide 11 and the Contracted Service margin in Life and Health business. On the left, the Life and Health CSM roll forward shows an 8.9% increase for the period to a net CSM of €6,000,000,000 supported primarily by the rise in long term interest rate curve. Also the CSM release of €283,000,000 could not be fully offset by the new business of €228,000,000 The sustainability ratio improved to 80% after 77% in six months twenty four. The new business CSM in Life and Health was strong at €228,000,000 with a still favorable new business margin of 8.9% for the 2025, up slightly down so total slightly down from 10% at year end. Now over the page, we present the details of the total capital investment result of €295,600,000 up by 32.5%, driven by an increased interest rate revenue plus €51,200,000 mainly due to a higher volume of fixed income investments and also higher interest rates in Zekire.

First investments held at our own risk shown on Slide 13 further increased to billion euros up by €1,000,000,000 compared to the year end. The split between the different asset classes is hardly changed with the vast majority of 74% invested in bonds. The total capital investment portfolio as of June 25 amounted to €45,600,000,000 As there are only minor shifts in the bond rating split due to portfolio quality improvement, I would move on to Slide 14 and the solvency ratio and the details of the own funds development, which is shown on Slide 15. Solvency ratio, including transitionals as of June 25, increased to 278% after 261% at year end and 271% at quarter one twenty five. While the SCR of €4,000,000,000 only slightly increased by 1.5% due to higher requirements for health and non life insurance.

The own funds of €11,000,000,000 increased by more than 8%, impacted by the positive interest rate development and the capital measures taken. The details details of the own funds are presented on the next Slide 15. The solvency ratio, excluding transitional measures of 238%, underpins the strong capitalization of VIG and allows us to successfully further develop our business model and to look at business opportunities in our markets. It’s great to see that the positive business developments within our group are reflected in the increase in VIG’s share price over the past six months. With a share price of €43.7 as of June 25 and the plus of 44 percent, VIG shares have outperformed both the Austrian traded index and the STOXX Europe 600 insurance index.

Looking at our book value per share of €47.26 at half year ’25, there is still some room for improvement. With that, I have come to the end of my presentation. And now we are happy to answer the questions you might have.

Matilde, Chorus Call Operator, Chorus Call: The first question comes from the line of Yudesh Chikoray from Autonomous Research. Please go ahead.

Yudesh Chikoray, Analyst, Autonomous Research: Good afternoon, everyone. Can you hear me?

Leanne, CFO/Financial Presenter, Vienna Insurance Group: Yes, we can hear you. Thank you.

Yudesh Chikoray, Analyst, Autonomous Research: Yes. Thank you. Hi. I’ve got a few questions on the contractual service margin and one question on the dividend policy. So on the contractual service margin, I mean, there was a material benefit from the changes in variable fee, which I understand is due to longer term interest rate.

So I was wondering if you could specify what kind of duration you’re talking about here because at the ten year end of the curve, I mean, I see rates only moving by 30 basis points, so not very much. So maybe if you could clarify something, the duration you were referring to? That’s my first question. Then secondly, on the CSM itself, I think the new business margin dropped to around 9%, 89% in H1. And again, I think you mentioned a change in the term structure of interest rates.

So again, if you could clarify the technicalities around that, that’d be very helpful. And then finally on the CSM again, I think since we transitioned since you transitioned to IFRS 17, the balance between new business and CSM release has been improving, such that I think last year your new business was basically covering the entirety of the CSM release, but this seems to have gone in reverse in H1. So if you could talk a bit around that, that would be very helpful. And then on the dividend policy, it’s more a clarification actually. I guess your policy talks about paying a dividend, is at least the same as last year, if not increase with the development of operating earnings.

And if I look at operating earnings in H1, it’s up 25%. So obviously, that’s excluding the impairment. So I’m wondering whether when we think about the dividend trajectory, is the growth the rise in operating earnings the right way to think about it? Or should we actually be thinking more in terms of at a more modest pace of dividend growth? Thank you very much.

Leanne, CFO/Financial Presenter, Vienna Insurance Group: Thank you very much. I’m happy to take your questions. I would propose to start with the dividend policy because I think it’s very important for you. I can confirm that we did not change our dividend policy for the moment. So at least the dividend of last year will be the dividend of the current year.

And as we always said, also, if the positive business development will have an impact on the dividend. So if we expect rising profits, then usually, also the dividend should follow this path. So for the time being, this is all dividend policy, so no changes here. Regarding CSM development, your first question was related to the duration. So we have the release factor, which you can use is for the CSM release in Life and Health is approximately 10%.

So this is a valid proxy to model the CSM release and the years is also approximately 10%, yes. And the last question was or the third question was regarding CSM new business. The new business CSM is slightly below year end new business CSM. This has mainly to do with the interest rate cost structure. So in the shorter period, the interest rates decreased.

In longer in the long term interest rates increased. And yes, the balance is improving. There is also less impact from the Turkish company in the second quarter twenty twenty five. So this has also an impact. I hope this answered your question.

Yudesh Chikoray, Analyst, Autonomous Research: Thank you very much. Yes, this answered most of my questions. But if I could come back on the dividend. I mean, the operating earnings growth is very high. So I was wondering whether the relationship between your business operating results and the dividend trajectory is like a one to one relationship or not basically?

Leanne, CFO/Financial Presenter, Vienna Insurance Group: Judith, I kindly ask for your patience. It’s we did not change anything to the dividend policy for the time being. So let’s wait and see.

Yudesh Chikoray, Analyst, Autonomous Research: All right. All right. Okay. Thank you very much.

Matilde, Chorus Call Operator, Chorus Call: The next question comes from the line of Auguste Marcant from UBS. Please go ahead.

Auguste Marcant, Analyst, UBS: Hi, Leon. Hi, Peter. Thanks for taking my questions. I have three. First one on the updated targets.

I appreciate the slight upgrade. But if I take the 1H performance and I normalize the second half of the year for Boris, it feels like the target is not too difficult to achieve. Is this just conservatism? Or is there anything else going on here? Then my second question is on Hungary.

Could you give more details on the impairment? And should we expect anything more going forward here? And does this full impairment mean you’re looking to exit Hungary as a market? And then finally on the P and C market, could you give a bit color on how the pricing versus inflation is developing across your key non life markets? And how have the weather related claims been in 3Q so far?

Thank you.

Leanne, CFO/Financial Presenter, Vienna Insurance Group: Thank you very much for your questions also. I will take the questions on the updated targets and on Hungary and start with these two questions regarding targets. So we increased our outlook in the way that we, for the moment, are confident that we reach the upper end of our range. As you know, ongoing the macroeconomic environment is ongoing volatile and also other geopolitical uncertainties are happening. This, I would like to mention, but also favorable weather related and NABCAD claims development in the 2025, which we did not experience in the last year, but also not in the second half of the last year.

So we will see what will happen in this area. And in general, we always would like I would again like to emphasize that we have a conservative approach. And as insurance, we want to stay also on the safe side also when it comes to target settings. And yes, better to overdeliver what we promised. It’s what we also said in previous periods.

With regard to the goodwill impairments, when you look in our balance sheet, you will see that there is an amount of €1,200,000,000 goodwill left, but the list of countries decreased significantly over the past years. Regarding Hungary, the impairment, which has been booked in the first half year, 25%, was the entire goodwill impairment, so there’s nothing left in Hungary. We are satisfied with the business in Hungary and also with the results. I told you before, it’s a positive result when we exclude the goodwill impairment. So there’s absolutely no idea to exit the Hungarian market.

So with all of this, we stay conservative, and we will see what we will present to you in the next quarters regarding outlook. Yes, so these were the two questions. And I would like to hand over to Peter for the P and C questions.

Peter Huffinger, Deputy CEO, Vienna Insurance Group: Thank you for your question. Maybe let’s start with some of our main markets, Poland, Czech and Austria, specifically here in property and here in retail property business. You see a positive impact on pricing due to the large flood events of last year. So there is an increased pricing momentum. You see in motor business more a lowering of the pricing momentum, but this has also to do with the lowering of the inflation.

We have been benefiting also over the last years of always catching up in pricing with inflation as inflation is now going down. There is the consequent element also in pricing. But seeing this, I think you also saw our claims ratio, it’s still a quite favorable environment. What can be seen recently for the large corporate business, large industrial business, where there is also international participants, monoline insurers participating in the accounts. We see a certain flattishness or even sometimes a reduction, which is obviously driven by certain pricing momentum from the London market.

But this is only for the very top end accounts. For all the other larger corporate business, we see a stable environment in our region. So this is somehow giving you a bit of color of the pricing environment.

Auguste Marcant, Analyst, UBS: Thank you.

Matilde, Chorus Call Operator, Chorus Call: We now have a question from the line of Thomas Unger from Erste Group. Please go ahead.

Thomas Unger, Analyst, Erste Group: Yes. Hello. Good afternoon. Thank you for taking my questions as well. I would like to ask you about the potential acquisition of the controlling stake in Njungberg.

And what do you see in this company that is particularly appealing to you? The company evidently has its issues and is in the transformation process. So is it mainly the German market that’s appealing to you or the potential earnings contribution after a successful turnaround? And also, how would such a transaction support your strategy, which is focused in Central And Eastern Europe and in which Germany currently is only a special market? That’s my first question.

And then secondly, I would like to ask you and congratulate you on the operating performance in the 2025. Really, many of the countries have improved the top line as well as the profits contribution. And I’d like to ask you specifically about the Baltics and to the after the strong revenue increase and also profit growth. What are the drivers there? And then lastly, about Turkey, top line growth really strong, but this is has not, at least in the 2025, has not translated into profit growth.

What are the challenges there? Thank you.

Leanne, CFO/Financial Presenter, Vienna Insurance Group: So thank you, Thomas, for your questions. I would like to start with your first question with Nielensberger topic. And it’s clear, are market leader in CEE. And when you look at our history, we have always embraced opportunities throughout our whole history. In Germany, we have two companies.

It’s a special market for us. And Nuneberger could contribute to VLT to the further diversification of our portfolio. This is a very important strategic topic for us. And as you know, we are a little bit different. We have a multi strategy.

So this in combination also with local entrepreneurship, which is very anchored within our group, we think that we could offer ideal conditions also for securing the location and preserving the identity of the strong Nuremberg brand. So this makes absolutely sense from this perspective. And I’m sure you noted on August 8, we made a press release also that we started into exclusive due diligence. And yes, we have to wait. We have to look into the details.

We have also external support in this exercise. And after the conclusion of the due diligence work, we will draw our conclusions what will could be the next step. So this is for the moment all I can say for this topic.

Peter Huffinger, Deputy CEO, Vienna Insurance Group: I’m happy to take the question for The Baltics. In The Baltics, we are clearly number one in all of the three countries. Three, four years ago, we made an exercise of merging also one company and we are realizing over the last years synergies. And we are now very well strong forces there. The main driver of the growth currently is the Health business, where we have achieved also with quite digital solutions in having a strong market share in Health business.

But also in property insurance, we are over proportionally growing and winning business there. All this is supported by the motor market, which is a growing motor market by number of vehicles, but also by a technically sufficient premium, which we are experiencing in motor. And also one has to say, we do have a quite exceptional management team currently in The Baltics in all of our companies, which are working excellently in exploring the opportunities of this market.

Thomas Unger, Analyst, Erste Group: Thank you very much. Maybe lastly on Turkey, if you could also talk about that.

Peter Huffinger, Deputy CEO, Vienna Insurance Group: Maybe then I should also take Turkey. In Turkey, we are in the Life business and in the Non Life business. Life business is very decently developing, and we do have attractive products for our customer there specifically in this high inflationary environment. Also with the currency devaluation, we still do offer attractive products and this is the growth driver in the Health business. On the Non Life side, it is a balance which we have to run them, because the high inflation is a challenge in non life business.

If you sometimes look purely on your technical result, you maybe would see combined ratios above 100, but this has to be seen in the context of double digit interest rates, which are there in the market. And there you have to find the match and the balance of your book. This is the main challenge, which we see currently in Turkey. Balancing the opportunities, but at the same time, having a quite cautious risk management in this exceptional environment. And we are also willing to have a conservative balance sheet there strengthening our reserve and making sure that we are well prepared also for volatilities, which are there today, but maybe also volatilities, which could be ahead of us.

I hope that this somehow answered your question.

Thomas Unger, Analyst, Erste Group: Yes. Thank you very much.

Matilde, Chorus Call Operator, Chorus Call: We have a follow-up question from the line of August Marcan from UBS. Please go ahead.

Auguste Marcant, Analyst, UBS: Hi, thanks for taking my follow-up. In the presentation, you gave indication that you will give details on the new strategy for 2026 to 2029 at the 3Q update. I was just wondering if you could give us a little preview of is it going to be new KPIs? Is it going be a bit more KPI oriented than the current strategy? Just anything if you can at this say at this point.

Peter Huffinger, Deputy CEO, Vienna Insurance Group: You. As we have stated that we will give an update next time, I think it’s too early to give you now the update. As our VHE25 strategy is coming to an end by the end of this year, we are happy to inform you in the last quarter about our new strategic exercise and the main value drivers, which we will go to follow for the next strategy. Please next time, okay?

Auguste Marcant, Analyst, UBS: Okay, thank you.

Matilde, Chorus Call Operator, Chorus Call: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Nina for any closing remarks.

Leanne, CFO/Financial Presenter, Vienna Insurance Group: Thank you for your interest and for your questions. We look forward to presenting the update for the 2025 on the November 25, together with first insights into our new strategy program for 2026 to 2028. And if you have any questions in the meantime, please do not hesitate to contact us in Investor Relations. Thank you. Goodbye.

Matilde, Chorus Call Operator, Chorus Call: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

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