VIG Re sets sights on Germany, France
Since it started writing external business some 10 years ago, VIG Re has built up a reputation as a specialist in Austria and Central and Eastern Europe. But it is now starting to set its sights further afield, Johannes Martin Hartmann, its chief executive, told Monte Carlo Today.
VIG Re has been writing some business in Germany for six years but, by the end of September, it will have an office in Frankfurt, Germany, to service this business and target further growth.
It has also started writing a small portfolio of business in France and expects to announce two hires who will cover the France/Benelux region in the coming months. They will initially operate from the head office in Prague but the company is also pondering launching an office in Paris in either 2018 or 2019.
At its foundation nine years ago, VIG Re was essentially a captive—it reinsured its parent company, the VIG Group, and bought reinsurance on its behalf.
After the strategic decision was made to turn the company into an active reinsurer, writing third party business, it has invested heavily in better systems, processes and people, Hartmann said, and has grown steadily in its core region of Austria and Central and Eastern Europe.
It performs well in these markets, thanks to deep market knowledge of the region. This, combined with its low cost base—half that of many of its rivals—means it outperforms its rivals in these markets, Hartmann said.
The company is ready to embark on an international expansion. “We have been operating in Germany for several years already but we feel it is time to take the next step into this market and others,” he said.
Hartmann admitted that VIG Re does not yet have the in-depth regional knowledge it has in its core region but it can bring other attributes that are attractive to cedants. Since its parent has no intention of competing in Germany and France, it can also offer primary insurance services and skills to its clients, supplied by its parent.
“Aspects of the German market are challenging but we work mainly with mutuals and public law insurers who appreciate some of the services we can offer and our relationship-driven approach,” Hartmann said. “We have built up a nice portfolio on that basis.”
The company plans a similar strategic approach in France, working with mutual and regional players in the same way.
“There is a similar cultural fit in that market and we will replicate what we have done in Germany,” he said.
He stressed that despite its expansion plans, the company sets itself no growth targets, preferring to find the right relationships over time.
“Once we work with a client we are there to stay. We do not follow cycles, it is a very long-term dynamic for us.”
Hartmann added that he believes the reinsurance landscape is changing and a wider variety of business models will emerge over time. “There will always be room for a smaller, more nimble player able to work very closely with clients,” Hartmann said.
He added that VIG Re still fulfils the role of reinsurance buyer for the VIG Group, which is one of the largest buyers in Central and Eastern Europe buying approximately €400 million ($480 million) of coverage.
Hartmann said its reinsurers do not see its dual role as a potential conflict, being more interested in leveraging its deep knowledge of the region to work closely there instead. With his buyer’s hat on he believes that after several years of softening rates, things will level off in the upcoming renewals but he expects very little change beyond that, in either his own programme or the wider market.
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