Foreword by the CEO

CEO Andreas Brandstetter (Photo)

Dear ladies and gentlemen,
dear shareholders,

In the 2023 financial year, the new accounting standard IFRS 9/17 was applied for the first time at listed European insurance companies. You will find the most important differences from the familiar IFRS 4 approach in the chapter IFRS 9/17, hopefully presented clearly and understandably. To simplify the comparison with our previous period’s operating performance, we have presented the relevant key financial figures for 2022 in this annual report as if the new IFRS 9/17 regulations had already been in force at that time.

Earnings before taxes and net profit both up

2023, the third and next-to-last year of our “UNIQA 3.0 – Seeding The Future” strategic programme, was a financially successful one:

With growth in premiums written of 9.7 per cent, earnings before taxes increased to €426.4 million – the comparable figure for the previous year was €272.3 million, or €421.7 million according to the previous IFRS 4 method. The contribution from international business was again high and rose to a pleasing €230 million, while that of our reinsurance company UNIQA Re in Zurich totalled €70 million.

After deducting taxes and an amount of €19.3 million for the discontinued business line “Russia”, consolidated profit increased by 18.3 per cent to €302.7 million. With equity growing to €2.710 billion and a return on equity of 14.1%, we will be able to propose a dividend of €0.57 per share, an increase of €0.02, to the Annual General Meeting on 3 June 2024. This corresponds to a payout ratio of 58 per cent. The UNIQA Group’s solvency capital requirement (SCR) ratio rose by nine percentage points to 255 per cent.

Urgently needed social reforms

In 2023, the insurance industry engaged in dialogue with European and national legislators on urgently needed reforms aimed at ensuring prosperity for as many people as possible and growth for our economy in global competition and thus the future viability of Europe, but these efforts did not meet with the desired success.

We are a company with around 16,000 employees and were able to recruit around 2,100 new colleagues in the reporting period alone. In the two previous years, this figure was only marginally lower. This means that the composition of UNIQA’s staff is undergoing a significant change. One thing continues to unite us: we want to make a tangible contribution to ensuring that the 16.7 million customers in 17 countries in Central and Eastern Europe who have chosen to entrust us with a piece of their security are “living better together” through the power of our community. There are three main problem areas where we are looking for concrete solutions for our customers:

Firstly, in view of demographic developments, attractive offers for careful and considered private pension provision are essential to enable the people of Europe, and therefore also our customers, to age with dignity and without poverty. This is particularly true for women, whose pensions in Austria are on average around 30 per cent lower than those of men. Unfortunately, the talks on reforming the second and third pillars have so far been fruitless.

Secondly, in addition to the social systems, most of Europe’s healthcare systems are also buckling under pressure. This is also the case in Austria, where healthcare spending exceeded €50 billion for the first time last year – but unfortunately only two per cent of this was spent on prevention. We can hardly discern any reforms in the public sector, which is why, in the interests of our customers, we are focusing on investing in our own healthcare infrastructure via the recently founded Mavie Holding. Over the next few years, we will invest €245 million in our private hospitals, in our own network of doctors, in the majority acquisition of the largest Polish telemedicine provider with around 500,000 patients (completed last December), in the Austrian market leader MavieWork, which offers our corporate customers occupational healthcare and psychosocial coaching for their employees, and in 24/7 care at home.

Thirdly, the drastic consequences of global climate change once again made themselves felt in 2023 in the form of a significantly higher claim load, particularly in Austria. In addition to high levels of psychological stress, the economic consequences for our customers are often dramatic. The payments of €153 million for storm-related benefits that we made to customers in Austria alone last year are, in many cases, not enough by far to cover the actual financial damage suffered. The Austrian insurance industry has therefore been proposing a model similar to that in Switzerland or Belgium for years, in which a small premium of a few euros per month is automatically included in every fire insurance policy in order to receive compensation for the entire replacement value of the destroyed property in the event of damage caused by natural catastrophes. This is an overdue reform that would turn petitioners for public funds into responsible contractual partners of insurance companies. While citizens are currently dependent on grants from the disaster fund, which usually only compensates 20 to 30 per cent of the damage incurred, in future there would be a clearly regulated entitlement to full compensation for the replacement value.

The fact that UNIQA was able to improve the gross combined ratio before reinsurance by more than two percentage points to 89.4 per cent at Group level in the 2023 financial year, despite the high benefits paid for storm damage in Austria, is primarily due to the excellent technical performance of our international portfolio. In our companies in the CEE region, the gross combined ratio is 85.6 per cent.

Strong investment performance

Our second lever for providing customers with better long-term protection against natural catastrophes is asset management. The European insurance industry is the continent’s largest institutional investor and manages investments totalling around €11 trillion. The faster we succeed in transforming more and more of these investments into truly sustainable green investments on the basis of a clear taxonomy, the more likely it is that the Paris and other climate targets will be achieved. We are therefore actively involved in the Net-Zero Asset Owner Alliance, which brings together the world’s largest insurers, reinsurers and pension funds and has set itself the goal of reducing the carbon emissions of their investment portfolios to net zero by 2050. We are also a member of the Green Finance Alliance of the Austrian Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology, which provides for a voluntary commitment by financial companies to comply with specific criteria aligned with the Paris climate targets. The fulfilment of these criteria is evaluated annually.

Regarding the performance in asset management itself: while impairments on Russian and Ukrainian bonds heavily impacted the result of our investments in the 2022 financial year, developments in 2023 were positive. At €588.8 million, net investment income was significantly higher than the previous year’s reference value of €179.8 million. This was primarily due to high current income from various asset classes.

We made new investments of around €2.5 billion in the 2023 financial year, around €1 billion more than in the previous year. The new money yield was 4.7 per cent, and the average return on our entire portfolio was 2.8 per cent. The investment portfolio increased by 5.4 per cent to €20.432 billion, of which just over 10 per cent is already invested in green assets.

A bright outlook

The risk of increased geopolitical turmoil and the associated uncertainties on the capital markets will continue to accompany us this year, as will interest rate volatility and high inflation-related pressure on our costs and claims payments.

We are nevertheless optimistic, dear ladies and gentlemen, about the prospect of achieving a further improvement in our core insurance business in the 2024 financial year, the last year of our “UNIQA 3.0 – Seeding the Future” strategic programme. As the burden from storm-related claims will remain high and our costs for purchasing external reinsurance cover will increase as a result, this means that we will have to increase the profitability of the rest of our portfolio. We are confident that we will succeed in this and that you, our shareholders, will be able to participate progressively in the success of our company, in other words with an annually increasing dividend per share. The payout ratio is intended to remain unchanged at up to 60 per cent.

We are proud to have the opportunity work towards these goals for you with our usual passion and enjoyment. We thank you for your trust and hope to be able to provide you with another satisfactory report on our business performance in a year’s time.

Vienna, April 2024

Andreas Brandstetter
on behalf of the Management Board

Return on equity (ROE)
The return on equity is the ratio of the profit/(loss) to the average equity, after deducting non-controlling interests in each case.
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Solvency capital requirement (SCR)
The eligible own funds that insurers or reinsurers must hold to enable them to absorb significant losses and give reasonable assurance to policyholders and beneficiaries that payments will be made as they fall due. It is calculated to ensure that all quantifiable risks (such as market risk, credit risk, life underwriting risk) are reliably taken into account. It covers both current operating activities and the new business expected in the subsequent twelve months.
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