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 under the items , “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 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.

Acquisition costs

In € thousand

Land and buildings for own use

Usage rights from land and buildings for own use

Other property, plant and equipment

Usage rights from other property, plant and equipment

Total

At 1 January 2018

408,767

0

236,817

0

645,583

Currency translation

–1,250

0

–150

0

–1,401

Additions

3,838

0

28,712

0

32,550

Disposals

–2,791

0

–14,585

0

–17,376

Reclassifications

2,811

0

–1,084

0

1,726

At 31 December 2018

411,374

0

249,709

0

661,083

At 1 January 2019

411,374

0

249,709

0

661,083

Currency translation

–364

25

269

9

–61

Change in basis of consolidation

0

–25

275

–9

240

Additions

6,141

70,977

20,696

1,773

99,588

Disposals

–2,511

–394

–21,964

–16

–24,884

Reclassifications

–56

0

–10,556

0

–10,612

At 31 December 2019

414,585

70,584

238,429

1,757

725,355

Accumulated depreciation and impairment losses

In € thousand

Land and buildings for own use

Usage rights from land and buildings for own use

Other property, plant and equipment

Usage rights from other property, plant and equipment

Total

At 1 January 2018

–165,367

0

–169,606

0

–334,973

Currency translation

395

0

20

0

415

Additions from depreciation

–10,723

0

–16,182

0

–26,904

Additions from impairment

–158

0

0

0

–158

Disposals

1,990

0

11,414

0

13,403

Reclassifications

–1,939

0

127

0

–1,812

Reversal of impairment

0

0

8

0

8

At 31 December 2018

–175,801

0

–174,219

0

–350,021

At 1 January 2019

–175,801

0

–174,219

0

–350,021

Currency translation

170

0

–102

0

68

Change in basis of consolidation

0

0

11

0

11

Additions from depreciation

–10,874

–10,254

–15,004

–659

–36,791

Additions from impairment

–13

0

0

0

–13

Disposals

471

317

12,364

16

13,167

Reclassifications

0

0

4

0

4

Reversal of impairment

0

0

1

0

1

At 31 December 2019

–186,048

–9,937

–176,947

–643

–373,575

Carrying amounts

In € thousand

Land and buildings for own use

Usage rights from land and buildings for own use

Other property, plant and equipment

Usage rights from other property, plant and equipment

Total

At 1 January 2018

243,400

0

67,210

0

310,610

At 31 December 2018

235,573

0

75,489

0

311,062

At 31 December 2019

228,537

60,647

61,482

1,114

351,780

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

Fair values

In € thousand

Property and casualty insurance

Health insurance

Life insurance

Total

At 31 December 2018

205,776

30,386

165,722

401,884

At 31 December 2019

208,991

31,076

185,784

425,851

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

Amounts recognised in consolidated financial statements

In € thousand

2019

Amounts recognised in the consolidated income statement

 

Interest on lease liabilities

1,074

Expenses relating to short-term leases

1,717

Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets

5,200

Amounts recognised in the consolidated statement of cash flows

 

Cash outflows for leases

–10,628

Reconciliation of lease obligations

In € thousand

 

Future lease payments from operating leases at 31 December 2018

20,636

Omission of short-term leases

–1,717

Omission of leases for low-value assets

–13,001

Estimate for termination and extension option

66,477

Lease liability at 1 January 2019

72,396

Operating expenses
This item includes acquisition expenses, portfolio management expenses and the expenses for implementing reinsurance. The operating expenses remain for the company’s own account following deduction of the commissions and profit participation received from the reinsurance business ceded.
Insurance benefits
Total of insurance benefit payments and changes in the claims provision during the financial year in connection with direct insurance and reinsurance contracts (gross). This involves net insurance benefits when reduced by the amount ceded to reinsurance companies. This does not include claims settlement expenses and changes in the provisions for claims settlement expenses.
Duration
Duration refers to the weighted average term of an interest-rate-sensitive investment or of a portfolio and is a measure of risk for the sensitivity of investments in the event of changes to interest rates.