6. Risk report
As Solvency II came into force on 1 January 2016, the definitions and methods used to calculate available own funds, as well as capital requirements and management standards, have been replaced by Solvency II standards.
Risk capital requirements and available own funds have been calculated according to Solvency II regulations since 1 January 2016. In order to guarantee a smooth transition from the Solvency I regulations previously in place, UNIQA has been completing parallel calculations since 2008. One consequence of these efforts is an early Group-wide introduction of the new methods and processes, which is why any loopholes and shortcomings have been identified at an early stage and could be rectified in good time. Initial implementation of the new methods required under Solvency II were covered by the Day 1 Report, which – in accordance with the requirements under Section 375 of the Delegated Regulation (EU) 2015/35 of the Commission from October 2014 – required qualitative and quantitative information on the opening valuations of the assets and liabilities, minimum and solvency capital requirements and the eligible own funds, as at 1 January 2016. Further reporting under Pillar III is addressed by the Solvency and Financial Condition Report as well as by the Regular Supervisory Report, as required under Section 241 et seq. of the Insurance Supervisory Act 2016.
Internal capital adequacy
UNIQA defines its risk appetite on the basis of an economic capital model (ECM). The cover for quantifiable risks by means of eligible own funds (capital ratio) should be between 155 per cent and 190 per cent, according to risk preferences, with a target value set at 170 per cent.
Details for the reporting date of 31 December 2016, including a detailed analysis of changes, can be found in the ECM report.
Standard and Poor’s model
In addition to regulatory and internal provisions, the Group also takes into account the capital requirements specified by an external rating agency to ensure that the Group’s credit quality is presented objectively and can be compared with other entities. Therefore, UNIQA is regularly rated by the rating agency Standard &Poor’s, which gives UNIQA Insurance Group AG a rating of “A–”. UNIQA Österreich Versicherungen AG and UNIQA Re AG each have a rating of “A”; UNIQA Versicherung AG in Liechtenstein is rated with “A–”. The supplementary capital bonds issued in 2013 (€ 350.0 million Tier 2, first call date 31 July 2023) and 2015 (€ 500.0 million Tier 2, first call date 27 July 2026) are rated “BBB” by Standard & Poor’s. The agency rates the outlook for all the companies as stable. UNIQA includes the impact on its rating in its capital planning process, with the objective of improving the rating over the long term as the corporate strategy is implemented.