Sound Growth

UNIQA goes East

Despite the fact that UNIQA was forced to temporarily set aside its medium-term profit targets in the face of uncertainties stemming from of the financial market crisis, Austria’s leading insurance group still views international expansion as key to its future. The primary target markets are the dynamically growing democracies in Central, Eastern and South Eastern Europe, which offer high potential due to their still relatively underdeveloped insurance density and penetration in all sectors.

In implementation of this strategy, the Group is investing considerable financial resources and management capacities in developing the markets in the Eastern and South Eastern regions of Europe. With this internationalisation of its business as well as Group profits, the Group aims not only to improve the spread of risk but also to establish the basis for sustained, yield-conscious growth and to secure its independence even in an environment that has recently become significantly more difficult.

Increasing contributions from international markets

Including the activities of the Group focused on profitable insurance niches in Western Central Europe in the countries of Germany, Switzerland, Liechtenstein and Italy, the share of international premiums in 2008 totalled over 38%, a value that should be increased further in the future. The Austrian market remained a firm foundation for the Group with a rise in premium revenue by 2.3% to €3.6 billion and a share in Group premiums of 62%.

The Bulgarian world-class track and field athlete Ivet Lalova also helps to promote awareness of the successful UNIQA brand outside of Austria.

Takeover of UNITA considerably strengthens the position in Romania

In a single stroke, this move brought UNIQA a property insurance market share of over 7% in one of the most important markets of Eastern Europe. Founded in 1990 and headquartered in Bucharest, UNITA achieved a premium volume in 2008 of approximately €142 million. The company’s roughly 960 employees serve over 250,000 customers. Sales are made via a comprehensive network of 41 branch offices, over 500 in-house sales employees and more than 7,900 agents as well as roughly 295 brokers and leasing companies.

With around 22 million inhabitants, Romania is one of the three largest markets in the CEE region and one of the fastest-growing economies in the EU. By acquiring one of the largest insurance companies in the country, UNIQA has established an excellent starting position for participating in this dynamic environment.

The Romanian insurance industry has also experienced rapid growth in recent years, although it still harbours great potential as it closes the gap relative to Western Europe and even the other countries of Eastern Europe. For example, insurance penetration (premiums as a percentage of gross domestic product) was still 1.8% in 2008 compared with 9.0% for Western Europe, 5.8% for Austria and 2.7% for the entire region of Central and Eastern Europe.

In further expanding its business here, the Group will rely on close cooperation with the local Raiffeisen banks.

New headquarters for UNIQA Biztosító

The new headquarters of UNIQA Biztosító in Budapest should be completed in spring of 2009.

The successful internationalisation of the UNIQA Group is also being expressed in the advertising.

Germany: Mannheimer continues on its growth course

UNIQA Group has been present in Germany since 2004 with successful target group specialist Mannheimer Versicherungsgruppe, which garnered special attention in 2008 with a number of innovations. The spectrum ranges from a transparent tracking system that significantly reduces throughput times to an attractive, new target group programme in health insurance and new sales channels for occupational pensions. With a new online broker portal that supplies a Web code to over 800 independent brokers in Germany, Mannheimer is the first insurance company in Germany to offer its sales partners such practically-oriented support for the intensified statutory consulting and transparency requirements.

Liechtenstein: Private Insuring Competence Center

The foreign subsidiary UNIQA Lebensversicherung AG, located in Vaduz, has established itself within the Group as a private insuring competence centre. The private insuring programme offers a unique upgrade for investments: The opportunity to bring a personal portfolio into a life insurance policy, whereby the bank and portfolio manager can continue to exercise their usual functions.

Joint venture in the United Arab Emirates

In the past year, UNIQA has expanded its activities eastward even beyond the borders of Europe. A new personal insurance company was founded in cooperation with the property insurer Al Buhaira National Insurance Co, located in the Emirate of Sharjah. The new company is located in Dubai and operates under the name “Takaful Al-Emarat”, providing health and life insurance policies that satisfy Islamic law. UNIQA holds a 15% stake in the company, another 20% is held by Al Buhaira and 10% of the shares were subscribed by leading founding members. The remaining 55% was offered to the public in an IPO.

As one of the leading insurance companies in the region, Al Buhaira brings its market knowledge and local network to the table, while UNIQA supports the new insurer with its broad know-how in the areas of life and health insurance. High potential exists for Takaful Al-Emarat in the introduction of mandatory health insurance for all expatriates working in the Emirates – which accounts for roughly 80% of all workers – and the high growth in the life insurance sector. UNIQA also benefits by acquiring know-how in the structuring of “Islamic” products, which are also in demand in some markets of Eastern and South Eastern Europe.

Special rules apply to insurance policies under Islamic law, which forbids interest and betting. They are based on the idea of a community of insured that shares the risks and also takes part in the profit of the insurance company. For this reason, these insurance policies must be configured as a shared fund similar to a mutual cooperative insurance company.

International expansion supported by the EBRD

The internationalisation of the UNIQA Group is actively supported by the European Bank for Reconstruction and Development (EBRD). In November 2007, the EBRD expanded the cooperation it has maintained with UNIQA since 1998 by increasing the scope of the framework agreement from €70 million to €150 million. This provides new financial means for the acquisition of minority investments by the EBRD in existing UNIQA subsidiaries in Central and Eastern Europe up until the end of 2017.

Profit Improvement Programme

The UNIQA Group’s Profit Improvement Programme 2007–2010 should bring about an increase in profits in the core insurance business (excluding the financial investments segment) of €200 million by the year 2010. Within the framework of comprehensive and specifically planned measures, the claim and cost ratios should continue to be noticeably reduced further, structures should be compressed, redundancies within the Group eliminated and certain tasks cost-effectively outsourced to international Group companies. UNIQA remains well on course in implementation of this programme. The proportional goals for the year 2007 were met, and the planned actions within the core business were also implemented in 2008.

Standard & Poor’s confirms a solid financial structure

The continued financial strength of the UNIQA Group despite the capital market crisis was confirmed by the international rating agency Standard & Poor’s (S&P) in December 2008 with an A rating with stable outlook. Key justifications for this rating were the significant competitive position and convincing sales capacities in Austria as well as the organic growth in Central and Eastern Europe that exceeds the market average. The accelerated internationalisation and the solid operational performance of the Group were also important factors.

S&P substantiates the stable outlook with the expectation of continued strong capital resources, increasing cost-efficiency and strong operational performance. The rapidly expanding business success of the Group outside of Austria also played an important role. S&P sees the greatest growth potential for UNIQA in continued intensification of its activities in the markets of Eastern and South Eastern Europe. Based on investments in the organic growth of the international companies, additional acquisitions and the Preferred Partnership with local Raiffeisenbank organisations, S&P also expects our above-average growth in the sales and profit contributions to continue into the future.