Group Annual Report 2022

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Acquisition and administrative expenses

The acquisition and administrative expenses item is broken down into acquisition expenses, administrative expenses less reinsurance commissions and profit commissions for re­insurance cessions. Expenses for claims investigation, loss prevention and claims processing (claims handling ex­penses) and for making insurance payments (settlement costs) are shown in the expenses for claims and insurance benefits item.

Affiliated companies

The parent company and its subsidiaries are considered to be affiliated companies if the parent company is able to exert control over the business policies of the subsidiary. Examples of this are where the parent company can affect variable returns from the subsidiary, a controlling agreement exists or it is possible to appoint the majority of the Mem­bers of the Managing Board or other executive bodies of the subsidiary.

Asset and liability management (ALM)

ALM refers to taking both assets and liabilities into account when implementing strategic decisions in order to achieve optimal company results. ALM is therefore needed for de­ter­mining and managing the risk capital required, match­ing assets and liabilities (duration, cash flow and income matching) as well as optimising investments and reinsur­ance.

Austrian Commercial Code (UGB)

The Austrian Commercial Code (UGB) includes commercial law provisions applicable to companies. These include company law, accounting provisions, special civil law pro­visions and provisions on company-related transactions.

Austrian Insurance Supervision Act (VAG)

The Austrian Insurance Supervision Act (Versicherungs­aufsichtsgesetz – VAG) includes provisions governing the organisation and supervision of insurance companies.

Baltic states

The Baltic states consist of the countries Estonia, Latvia and Lithuania.

Business operating result

The business operating result is included as a subtotal in the income statement in order to show the operating finan­cial performance of the Group. The business operating result is a before-tax amount that excludes the impairment of intan­gible assets and reversal of impairment of intangible assets items and, until financial year 2019, the result from fully con­solidated non-profit societies.

Cash flow statement

The cash flow statement presents the changes in cash and cash equivalents during a financial year, broken down into the three areas of ordinary activities, investing activities, and financing activities. The aim is to provide information on the financial strength of the company.

Ceded reinsurance premiums

Share of the premiums that is paid to a reinsurer so that it will cover certain risks.

Central and Eastern Europe (CEE) or CEE markets

The VIG 25 strategic programme distinguishes between CEE markets and special markets in the country portfolio. The 20 CEE markets include: Albania, Austria, Croatia, Bosnia-Herzegovina, Bulgaria, the Czech Republic, Estonia, Hungary, Kosovo, Latvia, Lithuania, Moldova, Montenegro, North Macedonia, Poland, Romania, Serbia, Slovakia, Slovenia and Ukraine. Note that differences may exist be­tween this definition and the definition of CEE used by other companies, financial institutions (e.g. IMF, OECD, WIFO, IHS), etc.

There are branch offices in some countries that are man­aged by companies assigned to other reportable segments.

Claims incurred but not reported

Losses that are reported in the current financial year but occurred in the previous year. A reserve is formed for these losses each year as at the balance sheet date (= Incurred But Not Reported (IBNR) reserve).

Combined ratio (net)

The combined ratio is calculated as the sum of underwriting income and expenses, net payments for claims and insur­ance benefits, including the net change in underwriting provisions, and acquisition and administrative expenses, divided by net earned premiums in the property and ca­su­alty balance sheet unit.


The financial statements of the parent company and those of the subsidiaries are combined when the consolidated financial statements are prepared. During this process, intra­group equity interests, interim results, receivables and payables and income and expenses are eliminated.

Deposits on assumed and ceded reinsurance business

Deposits on assumed reinsurance business are under­writing claims of the reinsurance company against the direct insurer. When business is ceded, the direct insurer retains a portion of the reinsurer's share of premiums and claims as security. This security portion is shown as a deposit on as­sumed reinsurance business in the reinsurer's balance sheet. The direct insurer recognises a deposit on ceded re­insurance business in the identical amount.

Derivative financial instruments (derivatives)

Derivatives are financial instruments whose value depends on the price of an underlying asset. Derivatives can be clas­sified systematically according to the nature of the under­lying assets (interest rates, share prices, currency rates or commodity prices). Options, futures, forwards and swaps are examples of derivative financial instruments.

Direct business

Insurance business where a direct legal relationship exists between the insurance company and policyholder.

Earnings per share (undiluted/diluted)

The ratio of consolidated profit for the year divided by the average number of shares issued. The diluted earnings per share include convertible securities that have been exer­cised, or are still available for exercise, in the calculation of the number of shares and profit for the year. The convertible securities consist of convertible bonds and stock options.

Embedded value

The embedded value represents the economic value of the insurance business and is comprised of future profits from the insurance portfolio. Profits from future new business are not included. It therefore corresponds to the distributable profits after taxes and takes into account the risks con­tained in the business.

Environmental Social Governance (ESG)

ESG stands for the Environment, Social and (responsible) Governance sustainability criteria. The term describes the degree to which a company takes these factors into ac­count, as well as an investment approach that can be used to select potential investments.

Equity method

This method is used to account for shares in associated companies. As a rule, the value recognised corresponds to the Group's proportional share of the equity in these companies or groups of companies. For cur­rent valuation, the value recognised is adjusted using a proportional share of changes to equity. The shares in the result for the year are allocated to the Group result and disbursed profit distributions are deducted.

Expenses for claims and insurance benefits

The expenses for claims and insurance benefits item is comprised of the payments for insurance claims, expenses for claims investigation, claims settlement (claims settle­ment expenses), and claims prevention, and the change in the associated provisions.

Fair value

The value of a financial instrument that is observable in the market or can be calculated using a theoretical pricing model that takes into account factors on which the price depends.

Financial assets available for sale

Available-for-sale financial assets include securities that were not acquired with the intention of being held to maturity, or for short-term trading purposes. They are re­cognised at fair value as of the balance sheet date. Fluc­tuations in market value are recognised directly in equity.

Financial assets held to maturity

These financial assets comprise debt securities that are intended to be held to maturity. They are measured initially at acquisition cost and are subsequently measured at amor­tised cost. In the case of permanent impairment, a write-down is recognised in profit or loss.

Financial result

The financial result consists of income and expenses from investments, interest expenses and other expenses. This in­cludes, for example, income from financial instruments, loans, property and participations, as well as bank interest and expenses incurred in the financial area, such as depreciation of property, write-downs of financial instru­ments to listed market prices, bank fees or interest ex­penses for financing.

General Data Protection Regulation (GDPR)

Regulation (EU) 2016/679 on the protection of natural per­sons with regard to the processing of personal data entered into force on 25 May 2018 and was therefore immediately applicable in the European Union. The GDPR standardises the provisions applicable to the processing of personal data by private-sector companies and public bodies in the entire EU. The main objectives of the GDPR are data security and strengthening the fundamental rights and freedoms of natural persons. The GDPR was imple­mented in Austria by the Austrian Data Protection Amend­ment Act of 2018 (Datenschutz-Anpassungsgesetz 2018), which extensively amended the Austrian Data Protection Act of 2000 (Datenschutzgesetz 2000).

Gross domestic product (GDP)

GDP is a measure of the economic output of a country. All goods and services produced or provided within a country (by citizens or foreigners) during a specified period, are eval­uated at current prices (market prices) or constant prices (prices in a certain base year). By using a constant price level in the calculations, price increases can be eliminated so that the figures presented over time are independent of inflation. GDP at constant prices is also known as real GDP.


In insurance terminology, "gross/net" means before or after reinsurance has been deducted ("net" is also used to mean "for own account" or "retention"). In connection with income from participations, the term "net" is used when related ex­penses have already been deducted from income (e.g. write-offs or losses from disposals). Therefore, (net) in­come from participations equals the profit or loss from these interests.

Income from investments and interest income

Income from investments and interest income is comprised of income from participations (of which affiliated companies), income from property, income from other investments, write-ups, gains from disposals, and other income and in­ter­est income.

Indirect business

Insurance business where the company acts as a reinsurer.

Insurance density

Annual per capita insurance premiums, used as an indicator for the state of development of a country's insurance sector.

Insurance Distribution Directive (IDD)

Directive 2016/97/EU, also referred to as the Insurance Distribution Directive, has been applicable within the European Union since 1 October 2018. The IDD affects all as­pects of the insurance business, including the recruiting of insurance distributors entailing training and advanced training, product development, the advisory process in­clud­ing wide-ranging duties to provide information, the distribu­tion of standardised information sheets, the handling of con­flicts of interest and compensation.

Insurance supervisory authority

The Austrian insurance supervisory authority is a part of the Austrian Financial Market Authority (FMA) that was estab­lished as an independent authority in April 2002. Its super­vision extends to private-sector insurance companies with registered offices in Austria.

International Accounting Standards (IAS)

The IAS are international accounting standards – also see International Financial Reporting Standards.

International Financial Reporting Standards (IFRS)

The IFRS are international financial reporting standards. Since 2002, the designation IFRS has stood for the overall framework of all standards adopted by the International Ac­counting Standards Board (IASB). Standards that were pre­viously adopted, however, are still cited as IAS.

Loss reserve

A reserve for losses that have already been incurred but have not yet been settled. These losses can be divided into two categories: reserves for reported but not yet settled claims ("Reported But Not Settled", "RBNS"), and reserves for claims that have been incurred but have not yet been reported, or the correct amount has not been reported ("Incurred But Not (Enough) Reported", "IBNR", "IBNER").

Market capitalisation (stock market value)

This equals the value of a stock corporation calculated by multiplying the current stock exchange price by the total num­ber of shares issued.

Mathematical reserve

A reserve calculated according to mathematical principles for future insurance payments in the life and health insur­ance balance sheet units. In the health insurance balance sheet unit, this is also referred to as an ageing reserve.

Net earned premiums

The portion of premiums written that is allocated to the re­ported financial year.


Non-life insurance includes the property and casualty insur­ance and health insurance segments.


Nordics includes the countries of Denmark, Norway, Sweden and Finland. VIG Holding is represented by branches in Denmark, Norway and Sweden. The EU freedom to provide services allows customers to also be served in Finland. Note that differences may exist between this definition and the definition of Nordics or Northern Europe used by other companies, financial institutions (e.g. IMF, OECD, WIFO, IHS), etc.

Operating return on equity (operating RoE)

Operating RoE measures the profitability of the Group by expressing the business operating result as a ratio of the capital employed. This ratio is calculated by dividing the business op­er­ating result by the average shareholders' equity. Share­holders' equity adjusted for a provision for unrealised gains and losses is used for this purpose.

Organic growth

Organic growth means the growth of a company resulting from the company's own financial strength. Such growth is therefore not the result of purchasing other companies.

Own Risk and Solvency Assessment (ORSA)

Under Article 45 of Directive 2009/138/EC, every insurance company must perform the Own Risk and Solvency As­sess­ment (ORSA) as part of its risk management system.

Personal insurance

Personal insurance includes all insurance that covers per­sonal risks (such as life insurance, health insurance and accident insurance).


Agreed fee paid in exchange for assumption of risk by an insurance company.

Premiums written

Direct business premiums written are comprised of set premiums, plus policyholder collateral payments, but not including insurance or fire service taxes, reduced by premiums cancelled during the financial year. In indirect business, the premiums written correspond to the pre­miums that the ceding insurer has indicated for offset.

Present value

Current value of future cash flows, calculated by discount­ing the future cash flows with a certain discount rate.

Price-earnings ratio (PE ratio)

A financial ratio for evaluating shares. The PE ratio is the ratio of the share price to the earnings per share in a ref­erence period, or to the expected earnings per share in a future period. If the reference period is defined as one year, the PE ratio is the end-of-year price divided by the earnings per share in that year.

Profit participation

See profit-related premium refunds.

Profit-related premium refunds

The policyholder's profit participation in the profit of the insur­ance class in question (mandatory for traditional life insurance).

Profit-unrelated premium refunds

Contractually accorded refund of premiums to the policy­holder.

Provision for unearned premiums

Unearned premiums are the portion of premiums written that were specified for the period following the balance sheet date and are therefore not included in the income for the reported financial year. These premiums are used to cover obligations arising after the balance sheet date.


A rating is an evaluation on a scale of the creditworthiness of a debtor (countries, companies, etc.) often carried out by a specialised rating agency. Also see Standard and Poor's.


Reinsurance is when an insurance company insures a portion of its risk with another insurance company.

Single premium

A single premium is a special type of premium payment for life insurance in which a self-chosen amount is paid as a single premium at the beginning of the policy.

Solvency II

Solvency II is a legal directive applicable in Europe for the capi­tal adequacy of insurance companies. It concerns meth­ods for risk-based management of the overall solvency of in­sur­ance companies and also includes qualitative elements (e.g. internal risk management).

Special markets

There is a distinction between special markets that are re­portable segments under IFRS 8 and special markets ac­cord­ing to the country portfolio for the VIG 25 strategic pro­gramme. The ten special markets according to the coun­try portfolio include: Denmark, Germany, Liechtenstein, Italy, Nor­way, Türkiye, Georgia, Belarus, France and Sweden. The Spe­cial Mar­kets reportable segment includes Germany, Georgia, Liechten­stein and Türkiye.

There are branch offices in some countries that are man­aged by companies assigned to other reportable seg­ments.

Standard & Poor's (S&P)

S&P is an internationally recognised rating agency. It analyses and evaluates companies, countries and bonds, among other things. It uses its own rating scale, which ranges from AAA for the highest category to CC for the lowest when rating the financial strength of insurance com­panies. The ratings can be modified by adding a plus or m­inus sign.

Stress test

Stress tests are a special form of scenario analysis. The objective is to arrive at a quantitative assessment of the potential losses incurred by portfolios in the event of ex­treme market fluctuations.


Underwriters are responsible for evaluating risks in the insurance industry, and have the authority to underwrite risks. They estimate the probability and size of a loss, cal­culate insurance premiums and establish policy terms.

Underwriting provisions

Underwriting provisions consist of the provision for outstanding claims, mathematical reserve, unearned pre­miums, provisions for profit-related and profit-unrelated premium refunds, the equalisation provision and other under­writing provisions.

Unit- and index-linked life insurance

Insurance where the investment in financial instruments is made at the policyholder's risk. The financial instruments in this area are valued at fair value, with the underwriting reserves shown at the value of the financial instruments.

Value-at-risk (VaR)

The VaR concept is a procedure used to calculate potential los­ses arising from changes in the price of a trading position. This loss potential is expressed using a specific confidence limit (e.g. 98 %), and is calculated based on market-related price changes.

Value of new business

The present value of future annual surpluses that can be gener­ated from new policies concluded in the current finan­cial year.

VIG or VIG Insurance Group

As a rule, this term refers to all consolidated VIG (insurance) com­panies. If a statement refers exclusively to the activities of the Holding, the term VIG Holding is used.


Volatility refers to the fluctuations in securities prices, currency prices and interest rates.