10. Property, plant and equipment

Property, plant and equipment are accounted for using the cost model.

Gains on the disposal of property, plant and equipment are recorded under the item “Other insurance income”, while losses are recorded under “Other technical expenses”.

If the use of a property changes and an owner-occupied property becomes an investment property, the property is reclassified as investment land and buildings with the carrying amount at the date of the change.

Property, plant and equipment are depreciated on a straight line basis over a useful life for buildings of 5 to 80 years and for technical systems and operating and office equipment of 2 to 20 years. Depreciation methods, useful lives and residual values are reviewed on every reporting date and adjusted if necessary. The depreciation charges for property, plant and equipment are recognised in profit/(loss) for the period on the basis of allocated operating expenses under the items “Insurance benefits”, “Operating expenses” and “Net investment income” so that the expenses and earnings are distributed on the basis of their causation.

Leases

For the first-time application of IFRS 16 (Leases), UNIQA uses the modified retrospective method.

There are around 1,200 contracts throughout the entire Group which fall within the scope of the standard and for which UNIQA is lessee. Nearly all contracts are simple standard contracts. They mainly relate to real estate and in part to operating and office equipment. A significant portion of the capitalised rights of use consists of a small number of contracts concluded for an indefinite period for which estimates had to be made regarding their duration and the exercise of termination options. The terms used to calculate these contracts are up to 60 years. The average contract term of the remaining contracts is between three and five years.

The discount rate used to determine the liability is composed of the risk-free interest rate adjusted by the country risk, creditworthiness, quality of the collateral and an amortisation factor. The weighted average of the discount rate applied to the first-time recognition of the lease liability amounts to 1.5 per cent.

Non-lease components included in the leases will not be allocated. Leases with a contractual term of less than twelve months and low value assets were not recognised.

The fair values of the land and buildings for own use are derived from expert reports and are comprised as follows:

Other property, plant and equipment refers mainly to technical systems and operating and office equipment.