Capital – the foundation
Customer confidence in our ability to meet our liabilities at any time forms the basis of our business. A balance sheet that is strong and balanced is therefore a strategic must for UNIQA.
We have set ourselves the objective of attaining an economic capital ratio (ECR) within a fluctuation margin (target range) of between 155 and 190 per cent. This allows us to ensure that UNIQA always remains solvent, including under structural conditions that have deteriorated significantly, and is also able to make the most of any opportunities in the insurance business at all times.
With this objective in mind, we have consistently improved our capital position since 2011. As a result, UNIQA is now among the leading companies in European insurance in two aspects: not only is the achieved capital ratio very solid, the calculation used to determine it is also very conservative compared to our European competitors. For example, UNIQA doesn’t apply any of the temporary regulations, and additionally deposits all government bonds with risk capital.
Our strong capital position supports our existing business, but above all puts us in a position to look intensively for growth opportunities, since it is becoming increasingly difficult to invest excess capital at an appropriate rate of return. With our strong capital base we can easily finance not only the organic growth that we expect above all in CEE, but we are also in a position to generate additional external growth through acquisitions. Here, however, we set strict standards and assume that potential acquisitions will strategically complement our existing business, show significant size and generate economic value.
Capital – the foundation
Supported by a solid operating performance, UNIQA was able to increase the solvency capital requirement (SCR) to a very strong 250 per cent. We have recently been relying on a partial internal model (PIM) for the purposes of determining the capital requirements in property and casualty insurance. This was approved by the Financial Market Authority after intensive internal preparation and assessment at the end of the year.
The economic capital ratio (ECR) at the end of 2017 was 210 per cent, well below the regulatory amount. The reason for this is primarily the consideration of risk associated with the investment in government bonds in the ECR. In the case of the SCR, however, certain government bonds are classified as risk-free.