Interview: Johannes Martin Hartmann and Peter Thirring, VIG Re
Growth based on market knowledge
VIG Re is mounting an expansion beyond its core markets based on its intimate
knowledge of markets and its low cost ratio, chairman Johannes Martin Hartmann
and Peter Thirring, member of the managing board, told Monte Carlo Today.
As a “niche” insurer in Central Eastern
Europe (CEE), VIG Re’s expansion
strategy has been quite different
from that of other reinsurers, according to
chairman Johannes Martin Hartmann.
He told Monte Carlo Today that the
company’s intimate knowledge of markets
and low cost ratio have helped them grow as
they set their sights on further expansion.
Being part of a larger group also supports
Peter Thirring, member of the managing
board, explained that VIG Re is part of VIG
Group, adding that “VIG is the biggest insurer
in Austria and CEE. It will reach about €10
billion this year.”
He added that VIG Re, the reinsurance
company of the group, has several tasks,
one being the reinsurance business within
the group but without being exclusive. VIG
Group has around 50 insurance companies
that all cede a portion of the business to VIG
Re, but it is not full cedance, Thirring said.
“In principle we are different from other
big companies such as Allianz, AXA, Generali
or Zurich—we are a more decentralised group,
so our group companies have the possibility
to cede the business to the open reinsurance
“We get external business into VIG Re, which
is a growing area. We have a strong position
in CEE, where we are the reinsurance market
leader and very active on the external market.
“Now we are expanding in the rest of the
European world,” he said.
As part of growth plans last year, the reinsurer
opened two branch offices in Frankfurt and
Paris. The former looks after Germany, Austria
and Switzerland, and the latter France, Spain,
Portugal, Italy and Benelux.
Hartmann said: “What we can bring to the
table in CEE is a really intimate knowledge
of local market conditions. We are very close
to clients now, so they don’t have to explain
things to us.”
He said a mistake larger insurers may make
is to think Eastern Europe is all the same and
so don’t differentiate.
“They don’t know the difference between
Slovenia and Slovakia. They mix them up but
Monte Carlo Today Day 4 Wednesday September 11 2019
“It helps that our headquarters are in
Prague. What you have to pay for staff there
is 30 percent of what I pay for them in Zurich
or London, so that already brings our cost
“Everything that is not reinsurance-related we
outsource to our sister companies: investment,
HR, IT and that kind of thing,” he explained.
This structure allows Hartmann to run the
operation at an internal cost ratio of 2 percent,
which gives the reinsurer “something like a 10
percent edge against our competitors”.
“We can also write lower margin business,
which is still profitable, but not have this high
margin business. We can look up smaller deals,
which no longer make sense for the larger
reinsurers because their fixed costs are too high.
“We are stepping in and taking over the
business from the large ones. We are taking
on the smaller pieces of business that we can
run very efficiently,” he said.
When it comes to new markets, the cost
ratio is still important.
“We open branches with a small team
of people who do the client relationship
and account management. Everything else
is still in the central office in Prague, for
example, actuarial, underwriting, claims, and
accounting, so the company doesn’t lose the
cost benefit,” he explained.
Running an operation in Paris and Frankfurt
is more expensive, Hartmann acknowledged,
adding: “We have to be close to our clients, it’s
one of our principles. Our clients appreciate
that we are close to them and have people on
the ground, speaking the language.”
However, he added, VIG Re doesn’t yet
have the same intimate knowledge of the
local markets in CEE.
“That means on the underwriting you have
to be more prudent and careful. We compensate
by having a very distinct client selection.
“We focus on clients and believe we have
a common understanding of a long-term
relationship, we are not quickly opportunistic
and we are especially targeting mutual
companies,” he said. l
Johannes Martin Hartmann is the chairman of VIG
Re. He can be contacted at: email@example.com
Johannes Martin Hartmann
“We have to
be close to our clients,
it’s one of our
they are very different and the regulator is
different, it’s not all unified.
“We know the regulators, the consumer
protection, the legal changes going on, so our
clients don’t have to explain,” he said.
Keeping costs low
Another advantage VIG Re enjoys and will
use to ensure its growth is a low cost ratio.
Hartmann said his business runs on a very
efficient, but also lean, business model to
keep the cost ratio down.