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Victoriaplatz 1
D-4000 Düsseldorf
Federal Republic of Germany
Fax: (211)477 2222

Public Company
Incorporated: 1853 as Allgemeine Eisenbahn-Versicherungs Gesellschaft
Employees: 8,700
Assets: DM22.10 billion (US$13.08 billion)
Stock Exchanges: Berlin Düsseldorf

VICTORIA Holding AG is the fourth-largest insurance group in Germany, offering coverage in all branches of life and non-life insurance. During its history, VICTORIA has been responsible for several innovations in the German insurance industry, despite a generally cautious approach to development. Any major changes have been carried out only after the most careful consideration. VICTORIA has been accused of being slow to adapt, but its conservative policy has helped it to reach its current position in the German insurance world.

VICTORIA is the result of the combination of several insurance companies whose names have changed over more than 135 years. It became a public limited company on September 26, 1853, under the name of the Allgemeine Eisenbahn-Versicherungs-Gesellschaft (the General Railway Insurance Company). Railway insurance was an innovation introduced by Otto Crelinger, a banker and member of the board of the Berlin-Potsdam Railway Company.

In 1843 Otto Crelinger applied for a royal license to found a railway transport insurance company, claiming that it is a peculiarity of steam transport that it carries risks which in part cannot be anticipated and in part cannot be avoided, even with the greatest of care, and which are certainly of a more diverse and dangerous nature than those involved in any form of land transport up until now. It was Crelingers idea to include the insurance charge in the fare and thus to insure all passengers automatically for a sum of between £150 and £450 (1,000 to 3,000 taler).

It took ten years for permission to be granted by King Friedrich Wilhelm IV of Prussia. This delay resulted to some extent from initial fears that insurance of this type might encourage railway companies to neglect safety standards. However, Crelingers request was granted finally, and he became the first managing director of the company that was later to become VICTORIA. His company extended coverage for railway transport to related insurance against death, accidents, or fire on the railways, but it remained primarily a transport insurer. Its transport insurance turned out to be very popular and was extended to apply to land and inland waterway transport in 1858.

In 1861 the company became involved in life insurance, introducing the innovative product of a life insurance policy with premium refunds. This policy proved to be a major success. One year after its introduction, the companys total life insurance premium income exceeded one million taler, which was quite a considerable sum. Ever since then, the companys main strength has been in life insurance.

In 1875 the company took the name of VICTORIA zu Berlin Allgemeine Versicherungs-Actien-Gesellschaft (VICTORIA of Berlin General Insurance PLC), a step that underlined the companys diversification into general insurance. The premium refunds were extended to various other types of insurance, such as accident insurance in 1883.

Under the leadership of Otto Gerstenberg, VICTORIA focused its attention still further upon the general public. Gerstenbergs career with the company started in 1873, when he joined as a mathematician. In 1888 he became general manager and from 1913 to 1931 was president of the board. From 1892 onwards the company offered popular insurance (Volks-versicherung) to its customers. This was a type of life insurance new to Germany, a plan that VICTORIA took from the United Kingdom after studying the Prudentials policies in London. Anyone could take out this type of insurance without the need for a doctors examination. The insurance payments were low and were collected weekly by 2,600 uniformed employees. This type of popular insurance became extremely successful. The companys particular attachment to popular insurance was to last until the 1970s, when, due to a buoyant economy and the provisions of the welfare state, insurance of this kind became obsolete. Under Gerstenbergs management, VICTORIA had become Germanys largest life insurance company by the turn of the century and Europes largest by 1913.

At the same time VICTORIA branched out further, with the founding of the affiliated VICTORIA Feuer-Versicherung AG (the VICTORIA Fire Insurance Company, VFC) in 1904 being of major significance. VFCs activities included insuring not only against fire, but also against burglary, floods, accident, liability, and all kinds of car insurances. It grew quickly and became VICTORIAs second most important area of business. To this day VFC is VICTORIAs most important subsidiary with several subsidiaries of its own.

Before World War I, VICTORIA had become a multinational enterprise. It extended its activities to all north, east, and west European countries, excluding the United Kingdom, and to the Balkans. World War I was extremely damaging to VICTORIA. The losses from the withdrawal of foreign investments were minor compared with those resulting from all the claims made during the war and, worse still, from the hyperinflation that followed.

Economic historians have characterized the interwar period as a time of relative stagnation. This was certainly VICTORIAs experience. The company had to adapt to new economic conditions. Fearing the negative impact of political events, VICTORIA acted with characteristic caution. In 1923 it founded two subsidiaries in the Rhine, VICTORIA am Rhein Allgemeine Versicherungs-Actien-Gesellschaft, offering life insurance, and VICTORIA am Rhein Feuer- und Transport-Versicherungs AG for fire and transport insurance. In the same year French and Belgian troops occupied the Ruhr district, causing widespread fear that this region would be separated from the rest of Germany. In founding its VICTORIA am Rhein subsidiaries, the company had safeguarded its interests.

All these changes were time-consuming and expensive to implement. Only by 1927 had VICTORIAs assets returned to the level at which they had started at the turn of the century. However, VICTORIA still remained ahead of its competitors. In 1932 it accounted for 80% of all the premiums collected from abroad by German insurance companies. This situation was in line with its prewar status. The tradition of popular insurance continued as well and was strengthened in 1939 by the acquisition of VICTORIAs rival in this field, Vorsorge.

In 1938, after the Treaty of Munich, which brought the Sudetenland in Czechoslovakia under Nazi rule, VICTORIA took over the activities of a Prague company in that region. World War II, however, caused VICTORIA major setbacks. Not only did it have to cope with unfavorable conditions in western Germany, but it also lost its main geographical area of activity, central and eastern Germany, as well as its direct foreign investments. Furthermore, VICTORIAs head offices in Berlin were destroyed.

By its 100th anniversary in 1953, however, VICTORIA had recovered its standing. During the 1950s, it steadily strengthened its position in the insurance market. Once more, its policy was one of cautious growth. By this stage the company chiefly operated from Düsseldorf, Berlin having become an isolated outpost of the free market economy. Although the company retained an office in Berlin, new offices were built in Düsseldorf in 1952. Four years later, the two affiliated companies of VICTORIA am Rhein were merged with the two VICTORIA zu Berlin companies.

The 1960s were years of economic prosperity for West Germany. VICTORIA showed steady and rapid growth. During the decade, its annual premium income tripled and two important steps were taken. VICTORIA bought the Deutscher Automobil Schutz Allgemeine Rechtsschutz-Versicherung AG (DAS), a relatively small company specializing in legal expenses insurance. DAS gradually expanded to become Europes largest company in its particular area of insurance. The second important step for VICTORIA was a return to overseas expansion. The company made direct investments in the Netherlands, Austria, Portugal, and Spain. Furthermore, VICTORIA took part in the International Group Program, formulated by the U.S. insurance company John Hancock Mutual Life. The program was aimed at multinational enterprises wishing to offer uniform insurance to all their employees worldwide. A similar scheme, the International Network of Insurance, was started in 1979. Through these ventures VICTORIA became the leading German insurer in such international insurance networks.

The 1970s saw a further tripling in VICTORIAs premium income, despite the overall downturn in the world economy. In 1971 VICTORIA branched out into health insurance. It bought 10% of the German Gilde-Versicherung AG from the U.K. Sun Alliance group. Rumors spread that the Sun group would draw VICTORIA into its orbit. These were vigorously denied by VICTORIAs chief executive, Heinz Schmöle, who emphasized his groups determination to remain independent.

Past events were remembered and prompted Shmöles denials when VICTORIAs shares were subjected to considerable speculation during the winter of 1969-1970. In the 1920s VICTORIA had found itself the object of one of the first German attempts at a hostile takeover bid in Germany. This attemptby the Michael groupwas unsuccessful, but caused anxiety at VICTORIA. Again in 1983 a group led by two large German competitors, tried unsuccessfully to buy a majority shareholding in VICTORIA. Although VICTORIA made a tempting target, chief executive Dr. Jannott stated in 1989 that rumors of takeovers did not worry the company at all. VICTORIAs shareholders are diverse, Münchener Rück being the largest of 8,000 shareholders with its 12% stake.

VICTORIA has made little effort to diversify outside insurance. Its acquisition in 1970 of a 25% stake in the paper company Zellstoff AG was sold off a little later. The only investment it retained outside insurance was in a small shipping company.

VICTORIA has never tended to run large advertising campaigns or give special offer premiums. Instead, it has built its success on a reputation for reliability and efficient service. The group focuses on private customers, from whom more than 70% of group premium income derives. Today VICTORIA, together with DAS, has a network of nearly 200 local branches throughout Germany, dealing with up to 7,000 claims per day. In the field of car insurance, the company prides itself on its ability to settle claims within seven days.

In 1989 VICTORIA underwent major restructuring after a decade of careful planning. It was the first restructuring in over 135 years of the groups history and was intended to increase VICTORIAs competitiveness. Under German law, the Spartentrennungsprinzip prevents life, health, damages, accident, legal, or credit insurance from being offered together by a single company. Insurers wishing to provide cover in these different areas are forced to create a separate company for each, with one company in charge. VICTORIA was unusual among Germany insurance groups in having a life insurance company at its head, because life insurance had dominated VICTORIAs activities, especially in its first 60 years. Other insurance groups in Germany were headed either by damages insurance companies, by reinsurance companies, or by holding companies. There was always a danger that with a life insurance company at the head of the VICTORIA group, it might suffer badly from losses in other group companies dealing with damages insurance or reinsurance, which by their nature carry considerably greater financial risk.

The VICTORIA group therefore created a holding company, VICTORIA Holding AG, bringing itself in line with other German insurance groups and allowing itself greater flexibility. VICTORIA Holding has majority shareholdings in three main enterprises, VICTORIA Life, VICTORIA Insurance, and VICTORIA Health, which in turn hold investments in several insurance companies in Germany and abroad.

The restructuring of the group is only one of the steps by which chief executive officer Jannott has tried to increase VICTORIAs competitiveness. On an international level he has strengthened VICTORIAs relationship with Japans Dai-Ichi Mutual Life and its investment in the United States in the Munich-American Reinsurance Company (MARC) group, in which VICTORIA has a 10% shareholding. The MARC groups capital has increased 11-fold since 1985. In Europe, VICTORIA has occasionally taken over small private firms such as the Greek company Olympiaki in 1989.

VICTORIA seems committed to slow but sure expansion. Its policy in Europe is to rely not on takeovers, but on building up the number of its customers and encouraging them to take on other insurance policies offered by the group. The main instrument for establishing international contact with customers is DAS, market leader in its field in most European countries.

Within Germany and in preparation for competition in Europe, many financial services companies have joined together to offer customers Allfinanz, or a financial supermarket, where a variety of financial services are made available under one roof, and to which customers can go both for banking and insurance. VICTORIA has denied wanting to become involved in Allfinanz. It has, however, developed close working ties with the Dresdner Bank over several decades, and holds a 25% stake in the building society Heimstatt Bauspar AG. Since January 1990 it has entered into close cooperation with the Bayerische Vereinsbank and Dresdner Bank. Each company arranges for its customers to benefit from services that the other offers. Jannott has stated that there should be no merging of the two companies roles and that VICTORIA will remain a specialized insurance company.

Principal Subsidiaries

VICTORIA Krankenversicherung AG (75%); VICTORIA Lebensversicherungs AG; VICTORIA Versicherung AG; VICTORIA Rückversicherung AG; VICTORIA Grundstückverwaltungs-Gesellschaft GbR; D.A.S. Deutscher Automobil Schutz Allgemeine Rechtsschutz-Versicherungs-AG (90%); VICTORIA International Aktiengesell-schaft für Beteiligungen; VICTORIA-Volksbanken Versicherungs-AG (Austria, 74.6%); Nieuwe Hollandse Lloyd Verzekerings-Groep N.V. (Netherlands); Landwehr Beheer N.V. (Netherlands).

Further Reading

VICTORIA Versicherung 1853-1928, Berlin, VICTORIA, 1928; 80 Jahre VICTORIA-Versicherung, VICTORIA Zeitung number 8/9, 1933; Hundert Jahre VICTORIA Versicherung, Berlin, VICTORIA, 1953; Die Hundertjahrfeier der VICTORIA-Versicherung, Berlin, VICTORIA, 1953; Im Zug der Zeilen, Düsseldorf, VICTORIA, 1978.

Harm G. Schroter

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