Glossary

A

• Acquisition costs

  The amount paid to acquire an asset in cash or cash equivalents of another form of compensation at the time of acquisition, plus costs directly attributable to the purchase.

• Affiliated companies

  The parent company and its subsidiaries are affiliated companies. Subsidiaries are entities controlled by UNIQA.

• Amortised cost

  Amortised cost refers to the purchase price of an asset adjusted for depreciation and amortisation expense.

• Asset allocation

  The structure of the investments, i.e. the proportional composition of the overall investments made up of the different types of investment (e.g. equities, fixed-income securities, equity investments, land and buildings, money market instruments).

• Asset liability management

  Management concept whereby decisions related to company assets and the equity and liabilities are coordinated. Strategies related to the assets and the equity and liabilities are formulated, implemented, monitored and revised with this in a continuous process in order to attain the financial objectives given the risk tolerances and restrictions specified.

• Associated companies

  Associates are all the entities over which UNIQA has significant influence but does not exercise control or joint control over their financial and operating policies. This is generally the case as soon as there is a voting share of between 20 and 50 per cent or a comparable significant influence is guaranteed legally or in practice via contractual regulations.

B

• Best estimate

  Calculation based on the best estimate. This is the probability-weighted average of future cash flows taking into account the expected present value and using the relevant risk-free yield curve.

C

• Contractual service margin (CSM)

  The contractual service margin represents the expected future profit that an insurer will recognise as it provides insurance contract services for a specific group of insurance contracts.

• Corporate governance

  Corporate governance refers to the legal and factual framework for managing and monitoring companies. Corporate governance regulations serve to ensure transparency and thereby boost confidence in responsible company management and controls based around added value.

D

• Direct insurance/insurance business acquired by the company itself

  This relates to those contracts that a direct insurer enters into with private individuals or companies. The opposite of this is insurance acquired as a reinsurer (indirect business) for business acquired from another primary insurer or a reinsurer.

• Directly attributable expenses

  Directly attributable expenses are expenditures that can be clearly allocated to a specific insurance contract. Examples include sales commissions and the administrative expenses for this contract.

• 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.

E

• Equity method

  Investment in associates is accounted for using this method. The value carried corresponds to the Group’s proportional equity in these companies. In the case of shares in companies that prepare their own consolidated financial statements, their Group equity is assessed accordingly in each case. Within the scope of ongoing measurement, this value must be updated to incorporate proportional changes in equity with the share of net income/(loss) being allocated to consolidated profit/(loss).

F

• Fair value

  The fair value is the price that would be collected in an ordinary business transaction between market participants for the sale of an asset or that would be paid for transferring a liability.

G

• General measurement model (GMM)

  General measurement model under IFRS 17 that is generally to be applied if the premium allocation model or the variable fee approach are not to be applied.

I

• IASs

  International Accounting Standards.

• IFRSs

  International Financial Reporting Standards. Since 2002 the term IFRSs has applied to the overall concept of standards adopted by the International Accounting Standards Board. Standards already adopted beforehand continue to be referred to as International Accounting Standards (IASs).

• Insurance revenue

  The insurance revenue reflects the portion of the total consideration received, adjusted for the time value of money and investment components, that is allocated to the insurance benefits provided in the period, which are caused by the reduction in the LRC for the period.

• Insurance service expenses

  The insurance service expenses reflect the expenditures for the services rendered in the period (which correspond to the insurance income) as well as the losses from groups of oner-ous contracts and the subsequent reversal of such losses and changes.

• Insurance service result

  The insurance service result is the difference between the insurance income and the insurance expenses (for example benefits, directly attributable costs) and indicates whether the insurance business is operationally profitable.

L

• Liability for incurred claims (LIC)

  Reserve for claims incurred but not yet paid.

• Liability for remaining coverage (LRC)

  Technical provision under IFRS 17 for the obligation to provide additional benefits arising from the business existing on the reporting date.

M

• Minimum capital requirement (MCR)

  The minimum level of security below which the eligible basic own funds should not fall. The MCR is calculated using a formula in relation to the solvency capital requirement.

N

• Non-controlling interests

  Shares in profit/(loss) that are not attributable to the Group but rather to companies outside the Group that hold shares in affiliated companies.

O

• Own risk and solvency assessment (ORSA)

  The company’s own forward-looking risk and solvency assessment process. It forms an integral part of corporate strategy and the planning process – but is also part of the overall risk management strategy.

P

• (Partial) internal model

  Internally generated model developed by the insurance or reinsurance entity concerned and at the instruction of the FMA to calculate the solvency capital requirement or relevant risk modules (on a partial basis).

• Premium allocation approach (PAA)

  The premium allocation approach is a simplified, less complex measurement approach under IFRS 17 that is only permissible if certain criteria are met. This measurement model is primarily used in short-term property insurance.

• Profit participation

  Policyholders have a reasonable right under statutory and contractual regulations to the company’s surplus profits generated in life and health insurance. The level of this profit participation is determined again each year.

R

• Reinsurance

  An insurance company insures part of its risk via another insurance company.

• Remeasurement reserve

  Unrealised gains and losses resulting from the difference between the fair value and amortised cost are recorded directly in equity in the items “Measurement of equity and debt instruments”, “Remeasurements from defined benefit obligations” and “Measurement of insurance and reinsurance contracts” after deduction of deferred taxes.

• Retrocession

  Retrocession means reinsurance of inward reinsurance and is used as a risk policy instrument by professional reinsurance companies as well as in active reinsurance by other insurance companies.

• Risk appetite

  Conscious assumption and handling of risk within risk-bearing capacity.

• Risk limit

  Limits the level of risk and ensures that, based on a specified probability, a certain level of loss or a certain negative variance from budgeted values (estimated performance) is not exceeded.

S

• Solvency capital requirement (SCR)

  The solvency capital requirement refers to 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.

• Solvency II

  European Union Directive on publication obligations and solvency rules for the equity base of an insurance company.

• Solvency

  An insurance company’s equity base.

• Standard model (formula)

  Standard formula for calculating the solvency capital requirement.

• Stress test

  Stress tests are a special form of scenario analysis. The objective is to provide a quantitative statement on the loss potential for portfolios in the event of extreme market fluctuations.

• Subordinated liabilities

  Liabilities that can only be repaid following the rest of the liabilities in the event of liquidation or bankruptcy.

• Supplementary capital

  Paid-in capital that is provided to the insurance company for a minimum of five years with a waiver of the right to cancel under the relevant agreement, and for which interest may only be paid provided that this is covered by the annual net profit.

T

• Tiers

  Classification of the basic own fund components into Tier 1, Tier 2 and Tier 3 capital using the own funds list in accordance with the criteria specified in the EU implementing regulation. If a component of basic own funds is not included in the list, an entity must carry out its own assessment and decide on a classification.

V

• Value at risk

  Risk quantification method. This involves the calculation of the expected value of a loss that may arise in the event of unfavourable market developments with a probability specified within a defined period.

• Variable fee approach (VFA)

  The VFA was introduced to take account of the special characteristics of insurance contracts with direct participation features. This is primarily used for business with profit participation in health and life insurance.