Auditor’s Report

Report on the Consolidated Financial Statements

Audit Opinion

We have audited the consolidated financial statements of UNIQA Insurance Group AG, Vienna, and its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 December 2023, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of cash flows and the consolidated statement of changes in equity for the financial year then ended, and the notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements comply with legal requirements and give a true and fair view of the financial position of the Group as at 31 December 2023, and of its financial performance and cash flows for the financial year then ended in accordance with International Financial Reporting Standards as adopted by the EU (IFRSs) and the additional regulations of section 245a Austrian Company Code and the supplementary provisions of section 138 para. 8 Austrian Insurance Supervision Act.

Basis for Opinion

We conducted our audit in accordance with Regulation (EU) No. 537/2014 (hereinafter EU Regulation) and Austrian Generally Accepted Standards on Auditing. Those standards require the application of the International Standards on Auditing (ISAs). Our responsibilities under those provisions and standards are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements” section of our report. We are independent of the Group in accordance with Austrian Generally Accepted Accounting Principles and professional requirements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained until the date of the auditor’s report is sufficient and appropriate to provide a basis for our opinion by this date.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the financial year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have structured key audit matters as follows:

• Description
• Audit approach and key observations
• Reference to related disclosures

1. Measurement of goodwill as well as of other intangible assets

• Description

Goodwill in the amount of EUR 368,229k as well as intangible assets still under development in the amount of EUR 6,915k, which mainly relate to software development in the course of the renewal of the Group-wide IT systems, are tested for impairment at least once a year and additionally whenever there is an indication for impairment.

The impairment tests carried out for this purpose require the Management Board to make discretionary decisions, estimates and assumptions, which particularly includes budgeted cash flows in the individual cash-generating units, future market conditions, growth rates and capital costs. Changes in these assumptions as well as in the methods used may have a material impact on measurement.

• Audit approach and key observations

We:

• evaluated the implemented processes and work flows regarding measurement as well as tested selected key controls,
• compared the accounting and measurement methods with the accounting provisions of IAS 38 and IAS 36,
• examined whether the calculation method of the impairment test is appropriate and assessed the significant discretionary decisions and assumptions,
• verified the derivation of the capital costs and juxtaposed it to a calculation we made ourselves and
• compared the company planning approved by the Management Board and Supervisory Board with the cash flows included in the impairment test.

The accounting and measurement methods applied are in accordance with IFRSs. We consider the underlying assumptions and measurement parameters to be plausible and reasonable.

• Reference to related disclosures

Refer to chapter “Use of discretionary decisions and estimates” under General information in the notes as well as “7. Intangible assets” in the notes to the consolidated financial statements

2. Measurement of the contractual service margin at the transition date to IFRS 17 

• Description

The International Financial Reporting Standard on Insurance Contracts (IFRS 17) is effective for annual reporting periods beginning on or after 1 January 2023 (date of initial application). In principle, IFRS 17 is applicable retrospectively as of the transition dated 1 January 2022. 

UNIQA has measured its insurance portfolio at the transition date mainly applying the modified retrospective approach or the fair value approach. Insurance contracts, assets and deferred acquisition costs are identified and measured as if IFRS 17 had always been applied, with differences to existing amounts recognised in equity. 

The reduction of consolidated equity at the transition date amounting to EUR 771,265k mainly results from the first-time recognition of the contractual service margin due to initial application of IFRS 17.

• Audit approach and key observations

We:

• compared the accounting and measurement methods with the accounting provisions of IFRS 17, 
• evaluated the appropriateness of the calculation methods at the transition date and examined the significant discretionary decisions and assumptions especially regarding the availability of historical data and the appropriateness of permissible simplifications, 
• verified the completeness and appropriateness of the data for calculating the contractual service margin at the transition date. 

The accounting and measurement methods applied are in accordance with IFRSs. We consider the underlying assumptions and measurement parameters to be plausible and reasonable.

• Reference to related disclosures

Refer to chapter “Insurance contracts – transition options” under General information in the notes to the consolidated financial statements and to the “Consolidated Statement of Changes in Equity”.

3. Measurement of liabilities from insurance contracts in life insurance and health insurance pursuant to the variable fee approach (VFA)

• Description

UNIQA mainly applies the variable fee approach for measuring insurance contracts in life insurance and health insurance. This approach is applied to insurance contracts if defined criteria are met. Differences to the general measurement model only arise in subsequent measuring. 

Contracts that involve profit participation in life insurance and health insurance are not divided into annual cohorts, using the option provided by EU law. 

Insurance contracts in life insurance and health insurance are initially measured by an estimation of future cash flows connected to the fulfilment of the contract. In doing so, significant discretionary decisions especially regarding non-financial assumptions such as mortality, longevity, invalidity or morbidity, customer behaviour (cancellation) or development of medical costs are to be considered. 

As a second step, cash flows are discounted in order to reflect the time value of money and the financial risks. In a third step a risk adjustment is calculated to take into account non-financial risks. The contractual service margin is calculated at the time of initial recognition and represents the as of yet unrealised profit for a group of insurance contracts. The contractual service margin for the life insurance and health insurance business amounts to EUR 5,204,409k as at 31 December 2023.

Based on defined coverage units, an amount of the contractual service margin is recognised in each period in profit or loss for a group of insurance contracts. The reversal of the contractual service margin in the reporting period amounts to EUR 286,903kand is recognised in the position non-technical income.

• Audit approach and key observations

We:

• compared the accounting and measurement methods with the accounting provisions of IFRS 17,
• examined the requirements for applying the variable fee approach as well as the option provided by EU law not to consider annual cohorts for insurance contracts in life insurance and health insurance,
• verified the underlying assumptions for calculating the estimate of future cash flows,
• verified the approach for determining interest rates for discounting cash flows as well as for determining the risk adjustment,
• compared the determined coverage units with the requirements of IFRS 17 and verified the appropriate reversal of the contractual service margin,
• examined the initial and subsequent measurement of liabilities from insurance contracts by verifying the calculation logic and the system environment in the newly implemented subsidiary ledger and
• verified the accuracy and measurement of additional significant closing entries not included in the subsidiary ledger.

The accounting and measurement methods applied are in accordance with IFRSs. We consider the underlying assumptions and measurement parameters to be plausible and reasonable.

• Reference to related disclosures

Refer to chapter “Insurance contracts – use of judgements and estimates” under General information in the notes to the consolidated financial statements as well as the table “Non-technical income”.

Other Information

Management is responsible for the other information. The other information comprises the information included in the Group Report 2023, but does not include the consolidated financial statements, the management report for the Group and our auditor’s report thereon.

We obtained the corporate governance report and the non-financial report prior to the date of this auditor’s report; with the rest of the Group Report 2023 expected to be made available to us after that date.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and the Audit Committee for the Consolidated Financial Statements

Management is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU (IFRSs) and the additional regulations of section 245a Austrian Company Code and the supplementary provisions of section 138 para. 8 Austrian Insurance Supervision Act, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Audit Committee is responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the EU Regulation and with Austrian Generally Accepted Standards on Auditing, which require the application of ISAs, will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the EU Regulation and with Austrian Generally Accepted Standards on Auditing, which require the application of ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

• identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risks of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with all relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, on measures taken to eliminate identified threats or on applied safeguards.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Comments on the Management Report for the Group

Pursuant to Austrian Generally Accepted Accounting Principles, the management report for the Group is to be audited as to whether it is consistent with the consolidated financial statements and as to whether the management report for the Group was prepared in accordance with the applicable legal regulations.

Management is responsible for the preparation of the management report for the Group in accordance with Austrian Generally Accepted Accounting Principles and the provisions of the Austrian Insurance Supervision Act.

We conducted our audit in accordance with Austrian standards on auditing for the audit of the management report for the Group.

Opinion

In our opinion, the management report for the Group was prepared in accordance with the applicable legal regulations, comprising the details in accordance with section 243a UGB, and is consistent with the consolidated financial statements.

Statement

Based on the findings during the audit of the consolidated financial statements and due to the obtained understanding concerning the Group and its circumstances no material misstatements in the management report for the Group came to our attention.

Additional Information in Accordance with Article 10 of the EU Regulation

We were elected as statutory auditor at the ordinary general meeting dated 23 May 2022. We were appointed by the Supervisory Board on 20 December 2022. Besides that, we were elected as auditor for the following financial year by the ordinary general meeting on 6 June 2023 and appointed by the Supervisory Board on 22 December 2023. We have audited the Company for an uninterrupted period since 31 December 2013.

We confirm that the audit opinion in the “Report on the Consolidated Financial Statements” section is consistent with the additional report to the Audit Committee referred to in Article 11 of the EU Regulation.

We declare that no prohibited non-audit services (Article 5 para. 1 of the EU Regulation) were provided by us and that we remained independent of the audited company in conducting the audit.

Responsible Engagement Partner

Responsible for the proper performance of the engagement is Werner Stockreiter, Austrian Certified Public Accountant.

Vienna

15 March 2024

PwC Wirtschaftsprüfung GmbH

Werner Stockreiter
Austrian Certified Public Accountant

signed

This report is a translation of the original report in German, which is solely valid. Publication and sharing with third parties of the consolidated financial statements together with our auditor’s report is only allowed if the consolidated financial statements and the management report for the Group are identical with the German audited version. This auditor’s report is only applicable to the German and complete consolidated financial statements with the management report for the Group. For deviating versions, the provisions of section 281 para. 2 UGB apply.