09.03.2017 |
- € 500 million investment and innovation programme launched in 2016
- Merger of companies operating in Austria finalised
- Focus on core business: disinvestment in Italy
- In 2016, premiums written fell by 3.1 per cent to € 5,048.2 million due to a decrease in capital-intensive single premiums in life insurance – recurring premiums increased by 2.3 per cent
- EBT slightly better than anticipated at € 225.5 million (minus 43.3 per cent)
- Excellent capital position – ECR at the upper end of the target range more than 180 per cent
- Dividend to be increased for the fifth time in a row to 49 cents per share (2015: 47 cents)
- Slight increase in premiums and EBT anticipated for 2017
UNIQA CEO Andreas Brandstetter on the 2016 financial year: “2016 was a good and future-oriented year for us. It was a good year because we grew and acquired customers in the areas in which we wanted to achieve this. It was a future-oriented year because we opted for a significant, long-term and value-adding innovation and investment programme instead of maximising short-term profits. These investments are based on our excellent capital base and our strong balance sheet.
In 2016, we also strengthened our focus on the core business in Austria and the CEE. We have merged our operating companies in Austria and created a functional Group structure, significantly reduces the size of the Management Board and withdrew from Italy.
Overall, the decrease in EBT is not as significant as announced the year before despite the loss of Italy’s contribution to earnings. As a result, 2016 was an intensive year for us: we achieved our goals, became more efficient and flexible, made savings, and invested in the future. This is why we will propose a dividend increase for the fifth time in a row.”
EBT slightly better than anticipated at € 225.5 million; dividend to be increased
At € 225.5 million – based on preliminary figures – EBT was just above the target, generating at least half of the record result of 2015 (incl. Italy: € 422.8 million/excl. Italy: € 397.8 million). This is a solid result in light of the prolonged low interest rate environment, investments of around € 60 million and the loss of Italy’s contribution to earnings, which had not yet been included in the forecast at the beginning of 2016.
Based on the annual result and strong capitalisation, the Management Board will propose to the Supervisory Board and Annual General Meeting to continue, as planned, with the progressive dividend policy in recent years and further increase the dividend for the fifth time in a row from 47 cents in the previous year to 49 cents per share for the 2016 financial year.
Merger completed sooner than planned
UNIQA has completed the reorganisation of the Group’s structure, which was announced in March 2016, sooner than planned. The merger of the four main insurers operating in Austria, entered in the Commercial Register at the beginning of October, was completed after only seven months. At the same time, the Group structure was streamlined, Management Board mandates in Austria were reduced from 22 to 10 and Group-wide responsibilities for Personal and Property Insurance and Finance/Risk were implemented as a result of the functional Group structure.
Withdrawal from Italy, investments in core business
As part of the focus on the core business in Austria and the CEE region, which was determined as part of the long-term growth strategy in 2011, UNIQA 2.0, UNIQA resolved to sell the Group’s Italian company in 2016. As a result, UNIQA is pulling out of a country that is not included in its core markets and selling a profitable company that still has an increasingly capital-intensive life insurance business segment based on current conditions.
In the summer of 2016, UNIQA implemented the announced acquisition of a 75 per cent share in the “Goldenes Kreuz” private clinic in Vienna via its wholly owned subsidiary PremiQaMed. UNIQA is a clear market leader in the life insurance business in Austria and is further investing in the core business of health.
Largest investment programme, decision to modernise business processes and IT landscape, initial investments in start-ups
As part of the biggest innovation and investment programme in the company’s history, UNIQA will invest a total of € 500 million to redesign the business model, build up the staff expertise required and obtain the necessary IT systems until 2025.
A key step towards the transformation of the business was made in 2016 with the decision to successively modernize business processes and the IT landscape. Following extensive analyses, UNIQA selected IBM as the general contractor for the modernisation of the IT landscape in December, with msg life, innovas and Guidewire acting as subcontractors. With this decision to modernise the IT landscape, UNIQA is already laying the foundations to achieve more speed and flexibility with more tailored and simpler solutions based on customer requirements.
In addition to its involvement with various innovative start-ups, UNIQA is also supporting weXelerate, one of the largest start-up hubs to be launched from the summer of 2017 at the Vienna Design Tower, a building owned by UNIQA.
Digitalisation means adding value for customers in their environment
In the context of the innovation programme, UNIQA developed a digital lab in 2016 in order to seek and create customer-oriented solutions based on customer requirements using the latest working methods. This initially resulted in digital advisory tool, allowing for a fun approach in customer service. UNIQA’s mobile app will be launched in the summer, offering customers multi-sector mobile solutions. At the same time, the full integration of Raiffeisen Versicherung’s insurance products is being promoted as part of the Raiffeisen Banking Group’s new digital banking services.
Changes in the ownership structure
In December 2016, UNIQA Privatstiftung acquired UNIQA shares from RZB, corresponding to a share of 17.64 per cent in UNIQA’s share capital. As a result, UNIQA Privatstiftung’s share increased to 49 per cent and is thus UNIQA’s largest shareholder. As a result, RZB/RBI’s share in UNIQA fell to 10.87 per cent. Thanks to UNIQA Privatstiftung’s acquisition, UNIQA will remain an independent company with strong Austrian major shareholders in the future and Raiffeisen will continue to be an important and stable major shareholder with a share of over 10 per cent. The sales collaborations between UNIQA, the Raiffeisen Banking Group in Austria and Raiffeisen Bank International AG in 14 countries in Central and Eastern Europe remain unaffected and will be continued. In the summer of 2016, the sales collaborations between UNIQA and the Raiffeisen Banking Group in Austria were extended early until 2022.
Outlook for the 2017 financial year
Despite significant future investments and persistently difficult conditions, such as low interest rates, falling investment income and political uncertainty in individual markets, UNIQA anticipates slight growth in premiums and earnings for the 2017 financial year.
The progressive dividend policy with annual increases in the dividend per share is to be continued in future.
Key Group figures adjusted for the disposal of business units in Italy
Based on the UNIQA Insurance Group’s resolution in December 2016 to sell its Italian subsidiaries, the figures for the 2015 and 2016 financial years have been adjusted for the Italian business in accordance with international accounting standards. 1)
In 2016, premiums written – including the savings portion of unit- and index-linked life insurance – fell by 3.1 per cent to € 5,048.2 million (2015: € 5,211.0 million).
This decline is attributable to a significant decrease in single premiums in the life insurance business in Austria. In total, premiums in the life insurance business dropped by 15.6 per cent to € 1,526.1 million in 2016 (2015: € 1,807.5 million).
At € 1,003.7 million, premiums in the health insurance business exceeded the one-billion mark for the first time. This equates to an increase of 4.1 per cent (2015: € 964.4 million). Premiums written in property and casualty insurance also grew by 3.2 per cent to € 2,518.4 million (2015: € 2,439.2 million).
Looking at the development by region, premiums written in the international business rose by 7.5 per cent to € 1,399.9 million (2015: € 1,302.8 million). At the same time, premiums written in Austria decreased by 6.5 per cent to € 3,631.5 million due to the decrease in the capital-intensive single premium business (2015: € 3,883.5 million).
Retained premiums earned in accordance with IFRS (i.e. not including the savings portion of unit- and index-linked life insurance) decreased by 4.5 per cent to € 4,443.0 million (2015: € 4,651.1 million).
Net insurance benefits fell by 7.8 per cent to € 3,385.6 million in the 2016 financial year (2015: € 3,671.3 million). Due to the decrease in single premiums, insurance benefits dropped significantly – particularly in the life insurance segment – by 25.8 per cent to € 991.4 million (2015: € 1,335.9 million).
In the 2016 financial year, total consolidated operating expenses less reinsurance commissions received and profit shares from the reinsurance business increased by 8.1 per cent to € 1,286.4 million due to expenses of around € 60 million in connection with the innovation and investment programme (2015:€ 1,190.4 million). Acquisition expenses less reinsurance commissions received and profit shares from the reinsurance business of € 21.3 million (2015: € 19.1 million) rose by 3.0 per cent to € 869.4 million (2015: € 844.2 million). Other operating expenses rose by 20.4 per cent to € 417.0 million (2015: € 346.3 million). This increase is mainly attributable to the initiated investment programme.
As a result of these developments, the consolidated cost ratio after reinsurance also climbed to 26.6 per cent in the year under review (2015: 23.7 per cent).
The combined ratio in property and casualty insurance after reinsurance saw a slight increase to 98.1 per cent at Group level (2015: 97.9 per cent) despite a higher loss ratio due to a rise in costs resulting from the innovation and investment program. Adjusted for investments, the combined ratio amounted to 97.1 per cent.
In 2016, investments, including investments of unit- and index-linked life insurance, fell by € 4,000.5 million to € 25,415.6 million as against the end of the last reporting period due to the disposal of Italian Group companies (31 December 2015: € 29,416.1 million). Net investment income declined by 19.5 per cent to € 588.9 million due to the low interest rate environment and the significant decrease in gains on the disposal of real estate (2015: € 732.0 million).
Operating earnings decreased by 31.6 per cent to € 318.8 million (2015: € 466.2 million).
Earings before taxes decreased by 43.3 per cent to € 225.5 million (2015: € 397.8 million). This was particularly due to the decline in the investment result and significant future investments.
The UNIQA Group’s equity increased by € 41.7 million to € 3,186.3 million (31 December 2015: € 3,144.5 million).
The economic capital ratio is expected to be at the upper end of the target range between 155 per cent and 190 per cent. The disposal of the Italian subsidiaries will have a positive impact, while declining interest rates will have a negative impact. UNIQA also anticipates a significant improvement for carrying amounts in life and health insurance (VIF) and the new business margin (NBV). Key economic indicators concerning solvability and the market-consistent embedded value (MCEV) will be published on 21 April 2017.
The average number of employees at the UNIQA Group fell to 12,855 (2015: 14,113).
The UNIQA Group’s companies served more than 10 million customers in 19 markets at the end of 2016. After the legal closing of the disposal of these core Italian companies, the UNIQA Group will serve 9.6 million customers in 18 markets.
1) Earnings from the disposal and the business results of Italian Group companies for 2016 are reported in the income statement as “discontinued operations” under earnings before taxes. As a result, all of the information in this report does not include Italy.
Note
All the figures for the 2016 financial year are based on unaudited preliminary data. On 21 April, the final annual report with audited figures will be published on the Group’s website at www.uniqagroup.com.
Forward-looking statements
This press release contains statements referring to the future development of the UNIQA Group. These statements present estimates which were reached on the basis of all of the information available to us at the present time. If the assumptions on which they are based do not occur, the actual results may deviate from the results currently expected. As a result, no liability is accepted for this information.
UNIQA
The UNIQA Group is one of the leading insurance groups in its core markets of Austria and Central and Eastern Europe (CEE). 20,000 employees and exclusive sales partners serve more than 10 million customers in 19 countries. UNIQA is the second-largest insurance group in Austria with a market share of around 22 per cent. UNIQA operates in 15 markets in the CEE growth region: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Kosovo, Macedonia, Montenegro, Poland, Romania, Russia, Serbia, Slovakia and Ukraine. The UNIQA Group also includes insurance companies in Italy, Switzerland and Liechtenstein. At the beginning of December 2016, as part of its process on concentrating on its core business in Austria and CEE, UNIQA resolved the sale of its Italian group companies. It is anticipated that the closing will take place in the first six months of 2017.