Dear ladies and gentlemen, dear shareholders,
The 2019 financial year, which formed the keystone of the UNIQA 2.0 strategic programme that we unveiled back in 2011, was a pleasing one in every respect:
1. Profit from ordinary activities of €296 million exceeded our expectations and matched the previous year’s figure even though that had included some €47 million in extraordinary income from the sale of our shares in Casinos Austria AG. Another particularly positive development here was the fact that the growth markets in the CEE region are making an ever-increasing contribution to Group earnings – an impressive €71 million in 2019. By contrast, the environment of persistently low interest rates is having a negative impact, most notably on the longer-term life and health insurance market in Austria. This pushed our domestic market’s contribution to profit from ordinary activities down to €169 million in 2019.
2. The trend in the operating business was shaped by premium growth marginally above our expectations at 1.2 per cent (+2.6 per cent in property and casualty insurance, +4.1 per cent in health insurance and –3.7 per cent in life insurance) as well as a further improvement in the combined ratio to 96.4 per cent in net terms. This brings us one step closer to our objective of reaching 95 per cent in 2020.
3. Our investing activities also proved robust, generating net investment income of €585 million, or a total return of 2.8 per cent. This is a very pleasing result for 2019 with interest rates still so low.
4. Despite the noticeable impact of this low-interest-rate environment, our solvency ratio (SCR) stood at 216 per cent at the end of 2019, i.e. before factoring in any effects from the acquisition of the AXA Group’s subsidiaries in Poland, the Czech Republic and Slovakia.
“… we will certainly treat the many rapid changes facing our industry with respect. Nevertheless, we are also conscious of the many attractive opportunities …”
Ladies and gentlemen, the 2019 financial year does not only mark the final keystone of our long-term UNIQA 2.0 programme unveiled in 2011. It also lays the foundations for the new phase of our strategy – UNIQA 3.0 – from 2020 to 2024. Why will these next five years be so especially important for UNIQA?
Over the past nine years, the global insurance business has seen a revolution on an unprecedented scale: in 2016 Solvency II completely rewrote the rulebook for our industry. The interest rate situation has been causing a large number of European companies fundamental problems for a few years now, forcing some of them into drastic action. Technological developments in areas such as digitalisation and artificial intelligence have propelled their way into our sector at breathtaking speed. Ultra-nimble insurtech and fintech companies are mounting a daily assault on traditional insurers. The boundaries separating insurance from other industries such as automotive, data science and health are disappearing. Young, talented individuals fresh out of school or university have a wealth of attractive job opportunities to choose from all over the world, and the really good ones amongst them rarely give insurers a second thought. On top of this, the expectations of our customers are evolving rapidly – the benchmark for top-quality service fit for the modern age is being pushed upwards on a daily basis by individuals’ experiences in their personal lives.
We have changed too in these nine years. We have become a different UNIQA. A much better one, we would like to think. We have grown, because we have kept our brand promise and because we have doubled our customer numbers by 7.5 million to some 15 million – despite the withdrawal from the German and Italian markets, and taking account of our planned transaction with France’s AXA Group. We have changed a lot of processes, taking a few wrong turns along the way. We have embarked on some major projects, including a complex and cost-intensive transformation of our business and IT landscape that will take several years. And we have significantly improved our capital base and thus our earnings capacity, primarily through our IPO in October 2013.
However, this will not be enough to maintain excellence over the long term – all the more so in the wake of the coronavirus crisis, which is currently placing question marks over any attempt to predict the future. Nevertheless, we will be making our existing business model much better and leaner once again while also having to make disruptive innovations available to our customers more quickly. In other words, we will undergo another transformation, just as we have been doing since 2011 as part of UNIQA 2.0. Our strategic programme for the next five years, UNIQA 3.0, is designed to give us the signposts and milestones for this journey.
“We remain confident that, once again, we will emerge from this period of uncertainty with renewed strength.”
We will create the necessary structural framework by September 2020, which will take retroactive effect from 1 January 2020 in terms of the balance sheet: we are streamlining our Group structure by merging UNIQA Österreich Versicherungen AG with UNIQA International AG. This “New UNIQA Österreich Versicherungen AG”, which will be responsible for all the Group’s primary insurance business, will remain a wholly owned subsidiary of the listed company UNIQA Insurance Group AG. Unlike now, however, UNIQA Insurance Group AG will be purely a holding company and will cease all its operating activities. UNIQA Insurance Group AG and “New UNIQA Österreich Versicherungen AG” will share the same Supervisory Board and Management Board.
We intend to present the details of UNIQA 3.0 to you towards the end of 2020. However the next few weeks and months play out, we will certainly treat the many rapid changes facing our industry with respect. Nevertheless, we are also conscious of the many attractive opportunities presenting themselves to financial service providers – enabling them to offer their customers added value that sets them clearly apart from their competitors and a brand promise that they can trust.
Ladies and gentlemen, the impact of the coronavirus crisis has made the full force of its presence felt for every single one of us over the past few weeks. Every day brings new information, new findings and new changes. We would ask for your understanding if some passages in this foreword, which has been revised several times, give the impression, when you come to read them, that the developments surrounding COVID-19 have overtaken us again since our editorial deadline. That actually might have been the case.
It is difficult to make predictions, especially about the future. This statement, meant ironically, fits the current situation very well. For us too, the circumstances we find ourselves in are bringing an unfamiliar level of vagueness to our forecasts. However, we remain confident that, once again, we will emerge from this period of uncertainty with renewed strength.
I would like to conclude by giving you my heartfelt thanks, on behalf of everyone who works at UNIQA, for your interest and trust in our Group. I hope that we will continue to play a small part in making sure that not only our customers but also, and in particular, you, our shareholders, live safer, better and longer lives.
Vienna, April 2020
on behalf of the Group Executive Board