Ladies and Gentlemen,
With 2020 approaching, our long-term strategic programme, UNIQA 2.0, which we presented to you in the middle of 2011, is slowly coming to an end. The penultimate full financial year for UNIQA 2.0 was 2018, which was a solid year:
- Firstly, we are continuing to keep a watchful eye on the solid foundation that is our “common UNIQA House” 1), i.e. our balance sheet and our capital position. Our solvency capital ratio (SCR) remains – also compared internationally – at a strong 248 per cent. Our even stricter internal measure, the economic capital ratio (ECR), is at 205 per cent, well above the defined target range of 190 per cent. As a result, UNIQA now has surplus capital amounting to around €700 million. We would like to use it to invest in sustainably profitable growth; inorganic growth would also be an option, but not at any cost. In terms of premiums, we clearly prefer disciplined yield optimisation over simple growth. If it is not possible to invest in inorganic growth under sensible financial conditions, we shall also provide you with alternatives on how to allocate the funds when we present our future strategy for 2021 and beyond.
- Secondly, we are making progress on our five Group initiatives, which form the “first floor” of our “House”:
In 2018, our Group’s changes in premiums were better than anticipated, with a slight increase of 0.3 per cent in our three business lines (property and casualty insurance, life insurance and health insurance).
The technical result is also higher than that of last year. This is because we are disciplined in terms of cost management and underwriting, and have experienced a year featuring low levels of natural disasters. Our net combined ratio, one of our most important financial indicators, reached 96.8 per cent and continues to improve, thus progressively approaching our objective of 95 per cent in 2020.
As our capital earnings have developed according to plan, including the extraordinary income of €47.4 million from the sale of our participation to Casinos Austria, our net earnings before taxes have increased to €295 million. Another added bonus is that the contributions of our subsidiaries in CEE are increasing step by step and in line with our strategy. For reasons related to diversification, we would like to develop a second geographical powerhouse over the next few years in addition to our high-performing Austrian subsidiary. With a tax rate of around 20 per cent, our net income has risen to €243 million. For this reason, at our annual general meeting we will suggest that dividends to shareholders be raised by 2 cents to €0.53 per share. As a result, the pay-out ratio will fall to approximately 67 per cent.
“Change is occurring faster and faster, meaning that we must noticeably pick up our pace if, in the digital era, we are to remain relevant to our customers.”
- Thirdly, we are working intensively on the optimisation of our investment and human resources, located on the “second floor” of our “House”. This “floor” symbolises the future of our industry: AI-related innovation, robotics, digital offers for customers and new business models. Not only do we have to finance these developments with income generated through our basic business, but these are developments which also regularly demand the valuable knowledge and precious time of our employees on the “first floor”. However, if these employees dedicate most of their time to daily business or the multitude of regulatory requirements such as IDD, the GDPR or IFRSs 9/17, accounting standards that will be binding from 2022, there will be a delay in implementing these innovative projects, or they will not be implemented to the fullest extent.
Which is why we are looking to optimise our large project portfolio and to find a good mix of projects addressing regulatory requirements, investments for our business operations and real projects for the future. This is something we do literally every single day. In this context it was a blow to us when Alexander Bockelmann, the member of our Group Executive Board who was in charge of Digitalisation until the end of January 2019, transferred to an international Swiss competitor. But that demonstrates the challenge we are facing: on the one hand, our company boasts many exceptionally talented employees from around the globe, but on the other hand we will have to offer them even more leeway as well as better options for personal development. What preoccupies me the most is the question as to how we can comply with all the regulatory requirements effortlessly and excellently whilst conducting our core business as effortlessly and excellently as possible and still have enough resources to allocate towards innovative projects that really benefit our clients. This also worries me because change is occurring faster and faster, meaning that we must noticeably pick up our pace if, in the digital era, we are to remain relevant to our customers.
In the last full year of UNIQA 2.0, our long-term strategic programme, we are working intensely on that very subject: our future. We will be presenting you with the detailed version of these plans in the middle of 2020. With “Performance Gap” as our motto, we are working on significantly improving our profitability, our ROE and our ability to pay out dividends sustainably. Simply put, the production and sales costs of our products are currently too high due to deliberately accelerated investments in the future viability of our company that started in 2016. At 25.9 per cent, our cost ratio is above that of our global top peers. We want to lower it progressively and sustainably without making poor savings-related decisions about the most important investments in our future.
“Our vision is to develop into an integrated health provider step by step.”
At the same time, we are using “Opportunity Gap” as a motto to work towards offering our customers more innovative solutions relevant to them more quickly, particularly in the field of healthcare. Our vision is to develop into an integrated health provider step by step.
Finally, ladies and gentlemen, for the seventh year in a row I would like to reiterate our intention to continue to pay out a higher dividend per share every year – on the basis of continuously growing income, our extremely strong capital position and sustainable cash flow. At the same time, I would like to thank you on behalf of all our employees for your interest in our exciting and exceptionally well-positioned company. My colleagues from the Management Board and I wish to tackle the challenges ahead optimistically and to shape the future of our company in a daring way. We continue to delight in doing whatever we can to ensure that not only our customers, but also especially you as a shareholder benefit from safer, better, longer living.
CEO UNIQA Insurance Group AG
1) Please see the illustration in the strategy section Shaping the future: 2016 – 2020. The UNIQA House symbolises various aspects of the UNIQA 2.0 strategy as well as its main activities.