Vienna Insurance : 2023 VIG Holding SFCR

SOLVENCY AND FINANCIAL CONDITION REPORT 2023

VIG Holding - Solo Company

Table of contents

SUMMARY	4
A. Business and performance	8
A.1 Business	8
A.2 Underwriting performance	11
A.3 Investment performance	13
A.4 Performance of other activities	13
A.5 Any other information	14
B. System of governance	15
B.1	General information on the system of governance	15
B.2	Fit and proper requirements	27
B.3	Risk management system including the own risk and solvency assessment	28
B.4	Internal control system	34
B.5	Internal Audit function	36
B.6	Actuarial function	37
B.7	Outsourcing	37
B.8	Any other information	38
C. Risk profile	39
C.1 Underwriting risk	40
C.2 Market risk	42
C.3 Credit risk	44
C.4 Liquidity risk	45
C.5 Operational risk	45
C.6 Other material risks	47
C.7 Any other information	49

D. Valuation for solvency purposes	51
D.1 Assets	51
D.2 Technical provisions	53
D.3 Other liabilities	56
D.4 Alternative methods for valuation	57
D.5 Any other information	57
E. Capital management	58
E.1	Own funds	58
E.2	Solvency Capital Requirement and Minimum Capital Requirement	63
E.3	Use of the duration-based equity risk sub-module in the calculation of the Solvency Capital
Requirement	65
E.4	Differences between the standard formula and any internal model used	65
E.5	Non-compliance with the Minimum Capital Requirement and non-compliance with the Solvency
Capital Requirement	67
E.6	Any other information	67
ANNEX	68
Glossary	68
Notice	71
Quantitative reporting templates	72

SUMMARY

This is the solvency and financial condition report (SFCR) of VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe (VIG Holding) for the 2023 financial year. This SFCR has been prepared based on the EU Directive 2009/138/EC and Delegated Regulation (EU) 2015/35.

VIG Holding, together with its individual companies, is the leading insurance group in Austria and the CEE region. Wiener Städtische Wechselseitiger Versicherungsverein - Vermögensverwaltung - Vienna Insurance Group (WSTW) is the main shareholder of Vienna Insurance Group AG Wiener Versicherung Gruppe with a share of 70%.

This report on the solvency and financial condition of VIG Holding as a solo company is in accordance with the legal requirements. The regulatory solvency and financial condition report for VIG Insurance Group is available on the VIG Holding website (www.vig.com).

Chapter A presents the business activities and performance of VIG Holding. VIG Holding's main activity is managing its insurance companies. VIG Holding also operates as an insurer and reinsurer, dealing with the international corporate and large customer business and mainly acting as an international reinsurance company for its subsidiaries.

In 2023, VIG Holding generated a premium volume before reinsurance of TEUR 1,669,758 (2022: TEUR 1,499,318). The

underwriting result in accordance with UGB/VAG was TEUR 32,298 (2022: TEUR 48,124). The combined ratio is a key figure used in property and casualty insurance and defined as the ratio of administrative expenses and claim payments to net earned premiums. VIG Holding had a ratio of 101.2% in 2023 (2022: 98.7%) net (after deduction of reinsurance portions), which is over 100% due to the combined ratio of the indirect business.

Due to interest rate developments on the capital market, on 21 April 2023 VIG Holding prematurely repurchased a portion of the subordinated bond from 2015, with the repurchase rate amounting to around 46% (EUR 185.6 million) of the original total nominal amount (EUR 400 million). The outstanding volume of the subordinated bond from 2015 in the amount of EUR 214.4 million can be called for the first time in March 2026.

With effect from 9 October 2023, VIG Holding called the outstanding volume of EUR 284.4 million of the subordinated bond from 2013.

The purchase agreement that was concluded on 29 November 2020 for the VIG Group acquisition of the companies of the Dutch company Aegon N.V. in Hungary, Poland, Romania and Türkiye has been successfully closed. The VIG Group finalised the acquisition of the Hungarian Aegon companies in March 2022. Consequently, the Hungarian state holding Corvinus holds a 45% stake in Aegon Hungary. The acquisition of the Turkish AEGON insurance company was closed in April 2022 and the acquisition of the Aegon companies in Poland and Romania was also completed in May 2023.

On 30 November 2023, VIG increased its indirect participation in the Hungarian ALFA insurance company (formerly AEGON) and UNION insurance company from 55% to 90%. The Hungarian government retains its 10% stake in the Hungarian business via the state-owned holding company Corvinus.

In June 2023, the Czech company Global Assistance CZ implemented a pilot project in Croatia and, in collaboration with Frantisek Paum, owner of PAME-AUTO s.r.o., established Global Assistance Croatia, which will offer its customers car assistance services in Croatia, particularly during the summer. This means VIG Insurance Group now has nine assistance companies that provide customer support and service in twelve countries.

Together with energy utility company Wien Energie, the association VIG Energiegemeinschaft was established on 28 November 2023 as an institution for a citizens' energy community. This makes it possible for participating members in Austria to exchange electricity produced by their own photovoltaic systems and wind turbines, thus supporting its members' security of supply and environmental protection. In a later phase, membership will also be open to employees of the VIG Group.

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Chapter B contains a description of the governance system of VIG Holding, the core elements of which comprise the Supervisory Board, the Managing Board, the governance and other key functions as well as the risk management system and internal control system (ICS).

After presenting the compensation policy and fit and proper requirements, the risk management system (including the Risk Management function), own risk and solvency assessment (ORSA), internal control system (including the Compliance function), Internal Audit function and Actuarial function are also described. Furthermore, the measures implemented by the company in the area of outsourcing and the critical and important functions and activities that are outsourced are described.

The VIG Holding governance system includes all the processes needed to effectively and efficiently manage and supervise the company and is appropriate with respect to the nature, size and complexity of the company. There were changes in the members of the VIG Holding Supervisory Board in the reporting period. In addition, organisational changes were made in the area of the risk management system as an important part of the governance system during the reporting year.

Chapter C describes the VIG Holding risk profile. As the parent company of the international VIG Insurance Group, its risk profile is dominated by investment and currency risks. These risks are of a strategic nature and are consciously accepted. Due to its activities as an insurer and reinsurer, VIG Holding is also exposed to a minor amount of underwriting risk, which is handled using effective risk management. The table below provides an overview of VIG Holding's material risks based on the partial internal model (PIM), which is also used for risk measurement to determine the regulatory solvency position.

Risks based on the PIM		31 December 2023
Solvency Capital Requirement (SCR)		2,601,759
Market risk		2,534,714
Counterparty default risk		102,229
Life underwriting risk		5,225
Health underwriting risk		26,448
Non-life underwriting risk		281,847
Intangible asset risk		0
Operational risk	51,760

Other risks not included in the solvency calculation are qualitatively assessed as part of the risk management process.

Chapter D describes the valuation of the assets and liabilities for solvency purposes, which is primarily governed by the European Framework Directive (2009/138/EC) and the Delegated Regulation (EU) 2015/35. The underlying principle thereof is the evaluation of the economic situation of an undertaking on the basis of current market prices. For this purpose, an economic balance sheet that shows the balance sheet items according to their market values must be prepared. The material items of the economic balance sheet, the assets and the technical provisions, are presented. The quantitative and qualitative valuation differences between the market valuation and the values presented in the annual financial statements prepared in accordance with UGB/VAG are described.

In Chapter E, the economic own funds and the Solvency Capital Requirement (SCR) of VIG Holding are explained. A comparison of the economic own funds and the SCR gives the SCR ratio. In order to ensure that the risks are covered, this ratio must be more than 100%. If it falls short of this threshold, the interests of policy holders are at major risk and regulatory measures will follow.

The economic own funds are derived from the valuation of the balance sheet for solvency purposes and represent the amount available to the company to cover the SCR. VIG Holding had TEUR 10,363,273.30 in total eligible own funds as of 31 December 2023.

The eligible economic own funds are broken down as follows into the individual own funds classes (tiers):

		Eligible own funds to meet the SCR
Tier 1 - unrestricted		9,200,050
Tier 1 - restricted		263,038
Tier 2		900,185
Tier 3		0
Total	10,363,273

The SCR corresponds to the capital required for the company to withstand a one-in-200-years event. To calculate the SCR, VIG Holding uses the standard formula prescribed by the European regulator for most risks.

VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe

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To calculate the SCR in the areas of non-life and property, a partial internal model is used as it better reflects the specific risk profile in these areas. The Austrian Financial Market Authority (FMA) has reviewed the model and approved its use. VIG Holding had a statutory Solvency Capital Requirement of TEUR 2,601,759 as of the reporting date 31 December 2023.

This results in a solid SCR ratio of around 398.3% for VIG Holding.

Besides the SCR, the company is also required to determine a Minimum Capital Requirement (MCR), which represents the last supervisory threshold intervention before the company's operating licence is withdrawn. According to the statutory requirements, the Minimum Capital Requirement determined for VIG Holding was TEUR 650,440 as of 31 December 2023.

Only basic own funds are used to cover the Minimum Capital Requirement. In addition, the Tier 2 subordinated liabilities exceed the quantitative limit of Tier 2 own funds. This category is therefore limited to 20% of the MCR. The eligible own funds for covering the MCR thus amount to TEUR 9,593,176 and are broken down into the following own funds classes (tiers):

		Eligible own funds to meet the MCR
Tier 1 - unrestricted		9,200,050
Tier 1 - restricted		263,038
Tier 2		130,088
Tier 3		-
Total	9,593,176

Overall, VIG Holding is considered to meet the relevant legal requirements and is able to cover the Solvency Capital Requirement and the Minimum Capital Requirement with the respective eligible own funds.

The annex prescribed by law contains an excerpt from the quantitative reporting templates (QRT) that must be submitted to the regulator by insurance companies quarterly and annually. The aim of disclosing these quantitative key figures is to increase transparency.

Pursuant to Article 2 of Implementing Regulation 2015/2452 of the Commission, figures that relate to monetary amounts are shown in thousands of euros (TEUR) in this report. Calculations, however, are done using exact amounts, including digits not shown, which may lead to rounding differences.

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DECLARATION BY THE MANAGING BOARD

We confirm to the best of our knowledge that the Solvency and Financial Condition Report of VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe, which has been prepared in accordance with the provisions of the Austrian Insurance Supervision Act and corresponding directly applicable rules at the European level, gives a true picture of the solvency and financial condition of the company and that it describes the business development, governance system, risk profile and assets, liabilities, and own funds of the solvency balance sheet.

Vienna, 26 March 2024

The Managing Board:

Hartwig Löger	Peter Höfinger	Liane Hirner
General Manager (CEO),	Deputy General Manager,	CFRO, Member of the Managing Board
Chairman of the Managing Board	Deputy Chairman of the
	Managing Board

Gerhard Lahner	Gábor Lehel	Harald Riener
COO, Member of the Managing Board	CIO, Member of the Managing Board	Member of the Managing Board

VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe

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A. Business and performance

This report contains all the information required by law regarding the solvency and financial condition of VIG Holding

VIENNA INSURANCE GROUP AG

Wiener Versicherung Gruppe

Schottenring 30, 1010 Vienna

Commercial register 75687 f, Vienna Commercial Court

Tel: [phone]

www.vig.com

for the 2023 financial year. Important information regarding the solvency and financial condition of VIG Holding is communicated to the public to ensure transparency.

The competent supervisory authority for the company and VIG Insurance Group is the

Austrian Financial Market Authority (FMA)

Otto-Wagner-Platz 5, 1090 Vienna

Tel: [phone]

www.fma.gv.at

The audit of the accuracy of this report and the information contained therein was performed by

KPMG Austria GmbH

Wirtschaftsprüfungs- und Steuerberatungsgesellschaft

Porzellangasse 51, 1090 Vienna

Tel: [phone]

www.kpmg.at

A.1 BUSINESS

VIG Insurance Group is an international insurance group headquartered in Vienna. VIG Insurance Group stands for stability and expertise in providing financial protection against risks. The roots of the Group reach back to the year 1824. This 200 years of experience and a focus on the core competence of providing insurance represent a solid and secure foundation for the around 32 million customers of VIG Insurance Group.

Around 300 VIG Holding employees were assisting the Managing Board with managing and steering the participations in insurance companies at the end of 2023. An overview of the affiliated companies and participations of VIG Holding and the direct interest in capital can be found in the annex to this report.

The VIG insurance companies are primarily managed and monitored by their respective Supervisory Boards, in which members of the Managing Board of VIG Holding are always represented. Group-wide guidelines and policies are defined in the management areas of VIG Holding to assist with the management of participations in insurance companies and are also used in VIG Holding as a separate company. The management areas include Planning and Controlling, Opportunity Management, Asset Management (incl. Real Estate), Reinsurance, Compliance incl. AML, Risk Management, Internal Audit, Actuarial Services, VIG IT, Data Analytics, Group Finance & Regulatory Reporting, Process & Project Management and Human Resources.

In addition to the responsibility for managing its participations in insurance companies, VIG Holding's area of activities also includes cross-border corporate and international reinsurance business.

In the area of reinsurance, VIG Holding manages and assists its subsidiaries with all the reinsurance matters. Pooling different risks ensures an effective balancing of risks at the VIG Insurance Group level that in turn ensures optimal external reinsurance protection for VIG Insurance Group as a whole. This is intended to provide continuous protection for all of the companies in VIG Insurance Group against the negative effects of large losses and negative changes in the insurance portfolios.

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VIG Holding also bundles together and coordinates large customer business that extends outside the borders of Austria. Custom-tailored professional insurance solutions are particularly important for international corporate customers. For this reason, VIG Holding has established a separate insurance platform, Vienna International Underwriters (VIU), especially for business customers. Its extensive network offers professional tailor-made international customer support in this area by experts in Austria and the entire CEE region.

The following charts show a simplified Group structure of the VIG insurance companies.

VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe

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Ownership structure

The main shareholder of VIG Holding is Wiener Städtische Wechselseitiger Versicherungsverein - Vermögensverwaltung - Vienna Insurance Group (a mutual insurance company headquartered at Schottenring 30, 1010 Vienna), which holds around 72% of the shares (directly and indirectly). The remaining shares of approximately 28% are in free float.

SIGNIFICANT BUSINESS EVENTS

CAPITAL MEASURES

Due to interest rate developments on the capital market, on 21 April 2023 VIG Holding prematurely repurchased a portion of the subordinated bond from 2015, with the repurchase rate amounting to around 46% (EUR 185.6 million) of the original total nominal amount (EUR 400 million). The outstanding volume of the subordinated bond from 2015 in the amount of EUR 214.4 million can be called for the first time in March 2026.

With effect from 9 October 2023, VIG Holding called the outstanding volume of EUR 284.4 million of the subordinated bond from 2013.

AEGON CEE

The purchase agreement that was concluded on 29 November 2020 for the VIG Group acquisition of the companies of the Dutch company Aegon N.V. in Hungary, Poland, Romania and Türkiye has been successfully closed. The VIG Group finalised the acquisition of the Hungarian Aegon companies in March 2022. Consequently, the Hungarian state holding Corvinus holds a 45% stake in Aegon Hungary. The acquisition of the Turkish AEGON insurance company was closed in April 2022 and the acquisition of the Aegon companies in Poland and Romania was also completed in May 2023.

On 30 November 2023, VIG increased its indirect participation in the Hungarian ALFA insurance company (formerly AEGON) and UNION insurance company from 55% to 90%. The Hungarian government retains its 10% stake in the Hungarian business via the state-owned holding company Corvinus.

GLOBAL ASSISTANCE CROATIA

In June 2023, the Czech company Global Assistance CZ implemented a pilot project in Croatia and, in collaboration with Frantisek Paum, owner of PAME-AUTO s.r.o., established Global Assistance Croatia, which will offer its customers car

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