Economic outlook
UNIQA expects the economic environment to continue to improve in 2014. The euro zone emerged from recession in the past year. Economists are forecasting moderate growth in real GDP of around 1 per cent in 2014. With sentiment among households and companies slowly improving, UNIQA expects private consumption and capital expenditure to make a stronger contribution to growth. This is also likely to benefit the insurance industry. Economic experts are forecasting GDP growth of 1.5 per cent for Austria in 2014.
UNIQA also expects the economic upturn to continue in CEE in 2014. Growth for the region as a whole is forecast at around 2 per cent. The improved economic conditions in the euro zone are particularly beneficial for those EU member states in the CEE region that have a large export sector. Although wage development remains moderate, purchasing power and domestic demand are being boosted by the low level of inflation.
An escalation of the security crisis in Ukraine would primarily affect Russia. The risk of contagion for the wider region appears to be comparatively low at present. Growth prospects in Romania and Bulgaria have improved generally. In Croatia and Serbia, UNIQA is focusing on the long-term catch-up potential in connection with the economic reforms initiated as part of the former country’s accession to the EU last year and the latter country’s ongoing accession negotiations. UNIQA also expects the smaller nations of Southeastern Europe to see a slight economic upturn in 2014.
Austrian insurance market
In the 1st quarter of 2014, the Austrian legislature has cut the contractual minimum commitment period for insurance-tax-privileged single premiums in life insurance back to ten years. However, this is limited to persons above the age of 50. This should result in an increase in single premium business in Austria.
Despite this, UNIQA expects moderately positive development in the Austrian insurance market. Growth in line with the multi-year trend is expected in the health insurance business especially.
International insurance markets
Expectations for premium growth in the CEE region in 2014 are only cautiously optimistic. The effects of current political crises such as in Ukraine cannot yet be estimated with confidence. Similarly, motor vehicle insurance in particular is subject to intensive price pressure in some countries, especially in Romania. Nevertheless, UNIQA will consistently implement its strategic growth and profitability programmes and thus grow faster than the market.
In the longer term, the markets in the CEE region continue to offer major growth potential. The catch-up requirements with regard to insurance products are made apparent by indicators such as a significantly below-average insurance density relative to developed markets in the region.
Profit on ordinary activities
For 2014, the UNIQA Group has set itself the objective of significantly increasing its profit on ordinary activities once again compared with 2013. This assumes that the capital market environment will be stable, that economic development will continue to improve and that losses caused by natural disasters will remain within a normal range.
