Ladies and Gentlemen, dear Shareholders,
For three reasons, 2017, the sixth full year of our long-term strategy programme UNIQA 2.0, was a good year for your UNIQA Insurance Group AG, as you will learn below.
Firstly, we have further strengthened the foundation of our "house" 1), i.e. our balance sheet and capital position. Above all, due to the sale of our Italian subsidiaries and the capital this released, our SCR quote has increased to a strong – even in an international comparison – 250 per cent. Our even stricter internal measure, the economic capital quote ECR, is sitting at 210 per cent as at the end of 2017; well above the target range of 190 per cent. As a result, UNIQA now has surplus capital amounting to around € 700 million. Over the next few years, we want to use it prudently, to selectively invest in sustainably profitable growth when the opportunity arises.
1) The "UNIQA house" symbolises the third phase (2016–2020) of the UNIQA 2.0 strategy programme, which began in 2011. This figure can be found in the chapter Shaping the future: 2016 – 2020 of this report.
“In terms of premium volume, we grew by 4.9 per cent in 2017 – not just stronger than expected, but stronger than most of the insurance industry in Europe.”
Secondly, we are constantly making progress on our five Group initiatives, which we presented in March 2016 and which form the “first floor” of our “house”. Supported by the economic tailwind, the demand for insurance products in both our core regions has seen good growth. Thanks to the attractiveness of the UNIQA brand, we benefit exceptionally from this: in terms of premium volume, we grew organically by 4.9 per cent in 2017 – not just stronger than expected, but stronger than most of the insurance industry in Europe.
- We significantly improved the long-term profitability of the life insurance line in the low-interest-rate environment by selling (Italy) or ceasing (Austria) capital-intensive business. We are now accelerating the supply of products that focus on hedging biometric risks.
- Despite an above-average claim load, we have continued to develop the property and casualty insurance line, in line with our strategy. In 2017, the entire primary and reinsurance industry was hit hard by natural catastrophes; UNIQA losses amounted to around €50 million above the average for the previous years. Nevertheless, we were able to further improve the combined ratio to 97.5 per cent – an encouraging step on our way towards the desired 95 per cent in 2020.
- The health insurance business line performed well at a high profitability level. When it comes to health insurance, we earn an attractive pre-tax margin of around 350 basis points on the technical reserves.
- The implementation of the UIP (UNIQA Insurance Platform), our new component-based core system, links the expected high capital with human resources. The project requires a great deal of attention and time, but is progressing according to plan. Beginning in summer 2018, the production of our new life insurance products in bank sales in Austria will start running on the new platform.
- The regulation of our business also requires extensive IT resources. We are implementing new, EU-wide regulations, such as the new insurance distribution guideline IDD or the EU General Data Protection Regulation, just as diligently today as we prepare for the new accounting regulation, IFRS 9 and 17, which takes effect in 2021. This project alone is likely to debit us with more than €30 million – much more than the introduction of Solvency II.
- The thorough renewal of all business processes in our largest sales market in Austria under the working title TOM (Target Operating Model).
“The revolutionary changes in the insurance industry make our industry one of the most exciting in the world at the moment.”
Thirdly, on the “second floor” of our “house”, where we are building the future of our Company around digitalisation and innovation, we are getting better and better at using our resources – already limited due to the UIP’s large appetite – more effectively. In the short-term, we want to significantly improve the customer experience at selected relevant brand touchpoints – not just in the digital customer experience, but also in the existing, analogue world. In the long-term, we are working intensely on the future of the four ecosystems: Health, Mobility, Smart Home and Finance/Risk Management, where we are also investing in select start-ups through our own corporate venture entity. In 2017, we also took into account the special significance of this sector and the associated new working methods with three personnel adjustments: as a member of the Group Management Board, Alexander Bockelmann is responsible for Digitalisation and Innovation throughout the Group, Sabine Usaty-Seewald (Customers and Markets) and Peter Humer (Sales) strengthen the UNIQA Austria Management Board.
On the subject of personnel changes: following the inauguration of Hartwig Löger, who was CEO of UNIQA Austria until December, as the Austrian Federal Minister of Finance, Kurt Svoboda, CFO/CRO of UNIQA Insurance Group AG, temporarily took on this role. In the medium-term, however, he will not maintain this dual role.
Finally, ladies and gentlemen, I would like to reiterate our intention to continue to pay out a higher dividend per share every year – not from the substance of our Company, but on the basis of continuously growing income, our extremely strong capital position and sustainable cash flow.
I would also like to thank you all on behalf of all of our employees for your interest in our Company. The revolutionary changes in the insurance industry – the low interest rates, technological developments, transition of the business model, disruptive competitors and ever-changing customer needs – make our industry one of the most exciting in the world at the moment. My colleagues on the Board and I are, therefore, happier than ever working for you, and hope that we are making a small contribution towards ensuring that our customers, and you as well, enjoy safer, better and longer living.
CEO UNIQA Insurance Group AG