- UNIQA Group becomes first Austrian insurance group to publish a report on its economic solvency position in line with Solvency II
- Economic capital ratio (ECR) according to internal approach of a sound 161 per cent in 2013
- UNIQA does not assess government bonds as risk-free and additionally secures these assets with capital
- Gradual implementation of the UNIQA 2.0 long-term strategy programme, change in interest rate levels and capital increase due to re-IPO strengthen economic capital
The UNIQA Group has become the first Austrian insurance group to publish a report on its economic solvency position (ECR report) with the key figures of the economic capital model. The economic view meets the requirements of Solvency II – the upcoming stricter capital requirements for European insurance companies which will be effective from 2016.
The economic capital ratio of the UNIQA Group, which serves as an indicator of capitalisation, amounted to 161% as at 31 December 2013 and was thus at a sound level in accordance with the company’s risk strategy. The economic capital ratio is the ratio of economic capital (€4,442 million) to the economic capital requirements (€2,762 million) in line with the internal capital approach. Economic capital combines tier 1 capital (core capital) and tier 2 capital (supplementary capital), while the economic capital requirements represent the theoretical requirements for capital in the event of an extreme stress scenario.
UNIQA CRO, Kurt Svoboda, comments: “UNIQA is already very well prepared for Solvency II and all of the conditions. Our capital ratio is in the optimum target range, as we can absorb stress scenarios and also cover our cost of capital. This confirms that UNIQA is excellently geared towards the existing business model. With these results, we are well on the way to fulfilling not just the regulatory requirements but also the Standard & Poor’s requirements for a target rating of ‘A to AA’.”
Regarding the continuing discussion about the assessment of government bonds under Solvency II, Svoboda comments: “UNIQA has been classifying government bonds as not risk-free for some time already and therefore secures them with capital, including in the internal ECR model. This means that we are stricter than is stipulated in the standard model of the European supervisory authority EIOPA (European Insurance and Occupational Pensions Authority). This obviously pushes down our capital ratio slightly, but – in our opinion and as confirmed by current economic reports – it reflects the real risk situation much better.”
UNIQA 2.0 strategy takes effect
As part of the UNIQA 2.0 long-term strategy programme, UNIQA has already initiated a large number of measures that are geared towards the stricter capital requirements effective from 2016.
For example, in recent years UNIQA has stepped up sustainable asset-liability management, thereby significantly reducing market risk and above all interest rate risk.UNIQA also implemented a comprehensive risk/return approach a few years ago and is geared towards Solvency II in terms of corporate governance, too.
Solvency II represents challenge for European insurance companies
The introduction of Solvency II from 1 January 2016 will not only bring stricter capital requirements for the European insurance sector. In addition, insurance companies will have to fulfil requirements such as using complex calculation methods to quantify the risk involved, following specific investment rules, gearing governance towards the regulations, establishing principles for the internal control system, implementing an adequate risk management method and complying with extensive documentation and disclosure requirements.
Svoboda comments: “The new standards and capital requirements must be fulfilled from the start of 2016. We have tackled these challenges at a very early stage. In addition to developing our economic capital model and our risk management measures, we have also implemented a large part of the additional requirements already, particularly in relation to governance.”
B & W Deloitte GmbH has conducted an independent review of the Own Funds and Economic Capital Requirement.
This press release contains statements concerning UNIQA’s future development. 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 2.0 is a long-term strategy programme that the company has been implementing since May 2011. UNIQA has set itself the target of increasing its customer base to 15 million by 2020 and improving its EBT by up to € 350 million between 2012 and 2015. In doing this, the company is focusing on its core business as a primary insurer in its core markets of Austria and Central and Eastern Europe (CEE). The business model is geared towards profitable growth and long-term value added in these markets. UNIQA intends to boost profitability at UNIQA Austria, increase productivity at Raiffeisen Versicherung in Austria and leverage the growth potential in the CEE region and is implementing a systematic risk/return approach.
The UNIQA Group is one of the leading insurance groups in its core markets of Austria and Central and Eastern Europe (CEE). 22,000 employees and exclusive sales partners serve around 9.3 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.