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Uniqa Insurance Group AG

Interim / Quarterly Report Aug 23, 2017

764_ir_2017-08-23_6c052f53-554e-4a64-826a-08e0fff659d2.pdf

Interim / Quarterly Report

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HALF-YEAR FINANCIAL REPORT 2017 / UNIQA GROUP

Think safer,better, longer living.

Consolidated Key Figures

In € million 1 – 6/2017 1 – 6/2016 Change
Premiums written 2,531.8 2,447.2 + 3.5 %
Savings portions from unit-linked and index-linked life insurance
(before reinsurance) 266.8 177.4 + 50.4 %
Premiums written, including savings portions
from unit-linked and index-linked life insurance 2,798.6 2,624.6 + 6.6 %
of which property and casualty insurance 1,441.6 1,354.5 + 6.4 %
of which health insurance 522.5 505.4 + 3.4 %
of which life insurance 834.4 764.7 + 9.1 %
of which income from regular premiums 691.8 688.0 + 0.6 %
of which single premiums 142.6 76.7 + 85.9 %
Premiums written, including savings portions
from unit-linked and index-linked life insurance 2,798.6 2,624.6 + 6.6 %
of which UNIQA Austria 1,930.7 1,924.8 + 0.3 %
of which UNIQA International 837.1 679.7 + 23.2 %
of which reinsurance 621.5 612.5 + 1.5 %
of which consolidation – 590.8 – 592.4 – 0.3 %
Premiums earned (net) 2,314.9 2,229.6 + 3.8 %
of which property and casualty insurance 1,253.9 1,165.6 + 7.6 %
of which health insurance 511.6 495.0 + 3.4 %
of which life insurance 549.4 569.1 – 3.5 %
Savings portions from unit-linked and index-linked life insurance
(after reinsurance) 268.8 167.0 + 61.0 %
Premiums earned, including savings portions
from unit-linked and index-linked life insurance 2,583.7 2,396.6 + 7.8 %
Insurance benefits1) –1,749.0 –1,708.4 + 2.4 %
of which property and casualty insurance – 816.5 – 755.1 + 8.1 %
of which health insurance – 435.5 – 424.7 + 2.5 %
of which life insurance2) – 497.0 – 528.6 – 6.0 %
Operating expenses3) –645.7 –630.8 + 2.4 %
of which property and casualty insurance – 396.7 – 376.3 + 5.4 %
of which health insurance – 82.3 – 85.9 – 4.1 %
of which life insurance – 166.7 – 168.6 – 1.1 %
Investment income 233.5 252.4 –7.5 %
Earnings before taxes 95.5 86.6 + 10.2 %
Profit/(loss) for the period 42.3 91.3 – 53.6 %
Consolidated profit/(loss) 41.3 90.3 –54.3%
Investments 19,684.4 20,235.8 –2.7 %
Shareholders' equity 2,997.6 3,259.1 – 8.0 %
Equity, including non-controlling interests 3,013.5 3,284.1 –8.2 %
Insured sum in life insurance 76,038.5 72,398.4 + 5.0 %

1) Including expenditure for deferred profit participation and premium refunds

2) Including expenditure for (deferred) profit participation

3) Less reinsurance commissions and share of profit from reinsurance ceded

Foreword by the CEO

Dear shareholders,

UNIQA achieved satisfactory pre-tax earnings of €95.5 million in the first half of 2017, corresponding with an increase of 10.2 per cent on the previous year. The premiums written including savings portions from unit-linked and index-linked life insurance rose by a good 6.6 per cent in the first six months of 2017. This means that we are above our projections. We are growing in Central and Eastern Europe in line with our strategy, with significant gains here both in property and casualty insurance as well as in unit-linked and index-linked life insurance. At the same time, as expected, the life insurance business is declining in Austria in line with the overall market, as the low interest rate environment is suppressing demand from our customers. Health insurance on the other hand increased across the Group by a solid 3.4 per cent.

The fact that, due to the reduction in acquisition costs, we were able to improve the technical result by 57.2 per cent to €71.7 million in the first half of 2017 is just as encouraging, despite expenditures as part of our investment programme. We also managed to slightly reduce the combined ratio to 96.8 per cent, partially owing to improved earnings in Poland and Southeastern Europe. On the other hand, the low interest rate environment continued to put a strain on investment income. Although the decline slowed at 7.5 per cent compared with the previous year, we still had to post an €18.9 million fall here to €233.5 million.

Overall, the improvements in our operational success factors provide evidence that we are on the right track. Premium volumes, combined ratio and cost ratio – all showed a positive trend. However, a one-off charge related to the formation of a provision in connection with the sale of the Italian companies reduced consolidated profit/(loss) to €41.3 million in the first half of 2017. Nevertheless, UNIQA is still expecting some year-on-year improvement in earnings before taxes for the financial year 2017, and intends to increase the dividend per share slightly in 2017.

Sincerely,

Andreas Brandstetter CEO UNIQA Group

Vienna, August 2017

Group Management Report

  • ● PREMIUMS WRITTEN (INCLUDING SAVINGS PORTIONS) ROSE BY 6.6 PER CENT TO €2,798.6 MILLION
  • ● COMBINED RATIO IMPROVED TO 96.8 PER CENT
  • ● TECHNICAL RESULT INCREASED BY 57.2 PER CENT TO €71.7 MILLION
  • ● EARNINGS BEFORE TAXES INCREASED BY 10.2 PER CENT IN THE FIRST HALF OF 2017 TO €95.5 MILLION
  • ● EARNINGS OUTLOOK FOR 2017 CONFIRMED

Economic environment

The economy gained significant momentum in the first half of 2017, both in Austria and in the entire eurozone. Growth in annual GDP in the Austrian economy accelerated to 2.2 per cent in the second quarter of 2017, and as such was able to keep up with the rest of the eurozone (2.1 per cent) for the first time in several years. While household consumption is expanding on a relatively steady basis, corporate investments are now also accelerating. There is also more support being provided by the global economy, which is in turn supporting the demand for exports. The mood among consumers and companies is positive, something which is probably also linked to the favourable developments on the European labour markets. The unemployment rate is falling slowly but steadily in the eurozone, reaching 9.1 per cent in June 2017, its lowest point since 2009.

The uncertainties which many financial investors associated with the elections in several European countries (the Netherlands, France, the UK) in the first half of 2017 have abated. The focus has once again shifted back to the central banks. Although the monetary policy of the European Central Bank (ECB) remains ultra-loose, there are signs of a slow but gradual return to normalisation in the medium to long term. Key interest rates will, however, remain around the zero mark for a while, and the large-scale bond sales (quantitative easing) of €60 billion per month will continue until at least the end of the year. In the meantime the US Federal Reserve ("the Fed") continued its cycle of raising interest rates, raising the prime rate by 25 basis points to 1.25 per cent in June 2017. As a further step towards normality, the Fed also intends to begin efforts soon to cut back the central bank's balance sheet that has grown massively since the 2008–2009 financial crisis. Given the strength of the economy, the subdued rates of inflation represent the dilemma facing the central banks mandated with achieving inflationary targets. The rate of inflation is projected to be 1.6 per cent in the eurozone in 2017. In June 2017 the ECB's forecast was for a decline to 1.3 per cent for 2018 and to 1.6 per cent for 2019. Following this, any normalisation of monetary policy is expected to be very slow.

The economic headwind is also strengthening in Central and Eastern Europe (CEE). The first half of 2017 was characterised by positive economic surprises, and the region (with the exception of Russia) is projected to see economic growth rates of more than 3 per cent again on average over the year. The national economies in Central Europe (Poland, Slovakia, Czech Republic and Hungary) are benefiting both from continued expansion of private consumption and from a recovery in corporate investments and increased activity in the construction sectors. As expected, one positive effect on gross fixed capital formation stems from the increased access to EU funds from the current budgetary framework (2014–2020). The recovery in the demand for exports has also most recently benefitted the small open national economies. Unemployment rates have fallen significantly to new lows last seen before the financial crisis in 2008–2009. The Czech Central Bank ended its policy of pegging the Czech koruna to the euro in April 2017, and raised its key rate for the first time in early August, by 20 basis points to 0.25 per cent. The transition to a flexible exchange rate has proceeded without any major volatility so far.

Romania once again recorded one of the highest growth rates in Europe in the first quarter of 2017 with a rise in GDP of 5.6 per cent. The Ukrainian economy has stabilised following the perfect storm in 2014–2015. The economy has been recovering there since last year. Demand among Russian households is showing initial signs of recovery following the heavy falls in real income during the recession. Russia's overall growth in GDP does, however, remain somewhat below the average for the CEE region as a whole. Southeastern Europe is gaining momentum, primarily as a result of the recovery in Bulgaria, Croatia and Serbia. Unemployment rates in the western Balkans are generally higher than in the region as a whole, although they are also showing signs of a downward trend.

UNIQA GROUP

Standard & Poor's confirms UNIQA Group rating

The international rating agency Standard & Poor's (S&P) confirmed the rating for the UNIQA Insurance Group AG of "A-" in early June 2017. The outlook also remains unchanged at "stable".

Changes in premiums

Premiums written including savings portions from unit-linked and index-linked life insurance rose at the UNIQA Group in the first half of 2017 by 6.6 per cent to €2,798.6 million (1–6/2016: €2,624.6 million) due to solid growth in all lines of business. While recurring premiums grew by 4.2 per cent to €2,656.0 million (1–6/2016: €2,547.9 million), single payment premiums in life insurance increased by 85.9 per cent to €142.6 million (1–6/2016: €76.7 million).

Premiums earned, including net saving portions of the premiums from unit-linked and index-linked life insurance totalling €268.8 million (1–6/2016: €167.0 million), grew in the first half of 2017 by 7.8 per cent to €2,583.7 million (1–6/2016: €2,396.6 million). The volume of premiums earned (net, in accordance with IFRSs) rose by 3.8 per cent to €2,314.9 million (1–6/2016: €2,229.6 million).

Premiums written in property and casualty insurance grew in the first six months of 2017 by 6.4 per cent to €1,441.6 million (1–6/2016: €1,354.5 million). Premiums earned (net, in accordance with IFRSs) even increased by 7.6 per cent to €1,253.9 million (1–6/2016: €1,165.6 million).

In health insurance, premiums written in the reporting period increased by 3.4 per cent to €522.5 million (1–6/2016: €505.4 million). Premiums earned (net, in accordance with IFRSs) also grew by 3.4 per cent to €511.6 million (1–6/2016: €495.0 million).

In life insurance, premiums written including savings portions from unit-linked and indexlinked life insurance rose overall in the first six months of 2017 by 9.1 per cent to €834.4 million (1–6/2016: €764.7 million). Single premium business increased in the first half of 2017 by 85.9 per cent to €142.6 million (1–6/2016: €76.7 million) as a result of very strong growth in Poland. Recurring premiums rose by 0.6 per cent to €691.8 million (1–6/2016: €688.0 million). The Annual Premium Equivalent (APE) in life insurance therefore increased by 1.5 per cent to €706.1 million (1–6/2016: €695.7 million). The APE calculation accounts for 10 per cent of single premiums, because the average term of single premiums in Europe is ten years. Annual fluctuations are smoothed out as a result in this calculation. In the first half of 2017, the riskpremium portion accounted for in the premiums in unit-linked and index-linked life insurance was €14.8 million (1–6/2016: €18.0 million). The insured capital in life insurance totalled €76,038.5 million as at 30 June 2017 (30 June 2016: €72,398.4 million). Including the net savings portions of the premiums from unit-linked and index-linked life insurance, premiums earned in life insurance rose by 11.2 per cent to €818.3 million in the first six months of 2017 (1–6/2016: €736.0 million). In Austria, because of the downward trend, the volume of premiums earned (net, in accordance with IFRSs) fell by 3.5 per cent to €549.4 million(1–6/2016: €569.1 million).

Insurance benefits

The total amount of insurance benefits (net) earned by the UNIQA Group in the first half of 2017 increased by 2.4 per cent to €1,749.0 million (1–6/2016: €1,708.4 million). Insurance benefits before consideration of reinsurance rose by 1.9 per cent to €1,778.2 million (1–6/2016: €1,745.2 million).

Insurance benefits (net) earned in property and casualty insurance increased by 8.1 per cent to €816.5 million (1–6/2016: €755.1 million) as a result of increases in current year claims in Austria. The claims rate after reinsurance increased slightly in the first six months of 2017 to 65.1 per cent (1–6/2016: 64.8 per cent). The combined ratio after reinsurance improved to 96.8 per cent (1–6/2016: 97.1 per cent). Before consideration of the reinsurance, the combined ratio amounted to 93.1 per cent (1–6/2016: 94.2 per cent).

In health insurance, the (net) insurance benefits (including the change in the insurance provision) grew less strongly in the first half of 2017 than the volume of premiums earned, by 2.5 per cent to €435.5 million (1–6/2016: €424.7 million).

In life insurance, however, they decreased by 6.0 per cent to €497.0 million, because of the voluntary decline in single premium business and traditional life insurance in Austria (1–6/2016: €528.6 million).

Operating expenses

Total operating expenses, less reinsurance commission received, rose in the first six months of 2017 by 2.4 per cent to €645.7 million (1–6/2016: €630.8 million). Expenses for the acquisition of insurance rose by 1.7 per cent – and thereby significantly less than the volume of premiums earned – to €443.0 million (1–6/2016: €435.4 million). The reinsurance commission received amounting to €11.1 million (1–6/2016: €10.9 million) has already been deducted from the acquisition costs. Other operating expenses (administrative costs) rose in the first half of 2017 by 3.8 per cent to €202.7 million (1–6/2016: €195.4 million) as a result of expenses amounting to around €16 million in connection with the innovation and investment programme. The overall cost ratio, i.e. the ratio of total operating expenses to the premiums earned, including the net savings portions from the premiums from unit-linked and index-linked life insurance, fell to 25.0 per cent, taking into account the reinsurance commission received (1–6/2016: 26.3 per cent).

In property and casualty insurance, operating expenses less reinsurance commissions received rose in the first half of 2017 by 5.4 per cent to €396.7 million (1–6/2016: €376.3 million). Contributing factors included investments amounting to around €8 million and increased commission in connection with the growth in premiums written. The cost ratio after reinsurance in this line of business amounted to 31.6 per cent (1–6/2016: 32.3 per cent).

In health insurance, operating expenses less reinsurance commission received fell by 4.1 per cent to €82.3 million (1–6/2016: €85.9 million). The cost ratio after reinsurance improved to 16.1 per cent (1–6/2016: 17.4 per cent).

In life insurance, operating expenses less reinsurance commissions received decreased by 1.1 per cent to €166.7 million (1–6/2016: €168.6 million). The cost ratio after reinsurance fell to 20.4 per cent (1–6/2016: 22.9 per cent) as a result of this and of the heavy increase in premium revenue in unit-linked and index-linked life insurance.

Investments

The UNIQA Group's investment portfolio (including investment property, equity-accounted financial assets and other investments) fell slightly to €19,684.4 million as at 30 June 2017 compared to the last reporting date (31 December 2016: €20,024.8 million).

Investment income fell in the first half of 2017 by 7.5 per cent to €233.5 million (1–6/2016: €252.4 million) as a result of ongoing low interest rates as well as negative currency effects in the amount of €40 million. Write-downs of fixed-income securities in the reporting period were overcompensated by gains on disposals of securities. The equity method accounting of the 14.3 per cent holding in construction group STRABAG SE resulted in a negative contribution to earnings in the amount of €–10.3 million in the first half of 2017 (1–6/2016: €–14.2 million).

Earnings before taxes

The UNIQA Group's technical result improved in the first half of 2017 by 57.2 per cent to €71.7 million (1–6/2016: €45.6 million). However, operating profit remained unchanged at €125.3 million due to the lower investment income (1–6/2016: €125.3 million). This also includes an increase in other expenses to €43.0 million (1–6/2016: €35.9 million). Earnings before taxes increased at the UNIQA Group by 10.2 per cent to €95.5 million (1–6/2016: €86.6 million) as a result of falling finance costs.

Net profit for the first six months of 2017 amounted to €42.3 million (1–6/2016: €91.3 million). This includes a loss from discontinued operations (after tax) amounting to €–33.4 million (1–6/2016: €23.7 million) as a result of purchase price adjustments within the scope of the sale of the Italian group companies. Consolidated profit/(loss) (i.e. profit or loss for the period attributable to the shareholders of UNIQA Insurance Group AG) thus decreased by 54.3 per cent to €41.3 million (1–6/2016: €90.3 million). Earnings per share amounted to €0.13 (1–6/2016: €0.29).

Annualised operating return on equity (earnings before taxes and amortisation of goodwill and impairment losses in relation to average equity including non-controlling interests, and excluding the accumulated gains/losses on the valuation of financial instruments available for sale) remained stable in the first half of 2017 at 7.5 per cent after factoring out the Italian group companies (1–6/2016: 7.5 per cent). The annualised return on equity (after tax and noncontrolling interests) for the reporting period was 2.7 per cent (1–6/2016: 5.6 per cent).

Group equity and total assets

Equity attributable to the shareholders of UNIQA Insurance Group AG amounted to €2,997.6 million as at 30 June 2017 (31 December 2016: €3,186.3 million). Non-controlling interests came to €15.9 million (31 December 2016: €26.5 million). The total consolidated statement of financial position fell to €28,697.1 million as at 30 June 2017 as a result of the sale of the Italian group companies (31 December 2016: €33,639.2 million).

Cash flow

Net cash flow from operating activities amounted to €441.3 million in the first half of 2017 (1–6/2016: €306.0 million). Cash flow from the UNIQA Group's investment activities amounted to €–42.3 million (1–6/2016: €–210.9 million) in line with investment of the revenues received in the reporting period; net cash flow from financing activities amounted to €–154.6 million due to dividend payments (1–6/2016: €–146.4 million). Overall, cash and cash equivalents fell slightly by €44.8 million to €794.2 million (1–6/2016: €839.0 million).

Employees

The average number of employees (full-time equivalents) at the UNIQA Group fell in the first six months of 2017 to 12,806 (1–6/2016: 13,442). These included 4,404 (1–6/2016: 5,141) field sales employees. The number of administrative employees increased to 8,402 (1–6/2016: 8,301).

OPERATING SEGMENTS

UNIQA Austria

The half-year financial report 2016 included an adjustment in the segment reporting of the UNIQA Group. In addition to UNIQA Austria, the UNIQA Austria segment now also includes the figures for the former Raiffeisen Insurance segment.

Premiums written including savings portions from unit-linked and index-linked life insurance at UNIQA Austria increased slightly in the first half of 2017 to €1,930.7 million (1–6/2016: €1,924.8 million). Recurring premiums rose by an encouraging 1.8 per cent to €1,915.4 million (1–6/2016: €1,880.9 million). Single payment premiums conversely reduced significantly by 65.1 per cent to €15.3 million (1–6/2016: €43.9 million). Premiums earned including the net savings portions of the premiums from unit-linked and index-linked life insurance rose by 1.0 per cent to €1,497.2 million (1–6/2016: €1,482.1 million). The volume of premiums earned (net, in accordance with IFRSs) increased slightly by 0.7 per cent to €1,380.1 million (1–6/2016: €1,369.9 million).

Premiums written in property and casualty insurance rose, because of the continuing growth in vehicle and property insurance, by 3.4 per cent to €891.9 million (1–6/2016: €862.7 million), and in health insurance UNIQA Austria also recorded strong premium growth of 2.6 per cent to €493.2 million (1–6/2016: €480.4 million).

Premiums written in life insurance, including savings portions of unit-linked and indexlinked life insurance, decreased in the UNIQA Austria segment as a result of the planned contraction in single premium business, falling by 6.2 per cent to €545.7 million (1–6/2016: €581.7 million). Recurring premiums fell slightly by 1.4 per cent to €530.4 million (1–6/2016: €537.8 million). Single premiums fell significantly, however, by 65.1 per cent to €15.3 million (1–6/2016: €43.9 million). Premium volumes in the area of unit-linked and index-linked life insurance at UNIQA Austria fell by 5.4 per cent to €131.4 million in the first half of 2017 (1–6/2016: €138.9 million).

Insurance benefits (net) fell by 0.5 per cent to €1,174.0 million in the UNIQA Austria segment in the first six months of 2017 (1–6/2016: €1,180.1 million). In property and casualty insurance, the combined ratio after reinsurance improved slightly to 93.4 per cent (1–6/2016: 93.5 per cent).

Operating expenses less reinsurance commissions received fell by 3.3 per cent to €278.4 million in the first half of 2017 (1–6/2016: €288.0 million). Following this, the cost ratio after reinsurance fell to 18.6 per cent (1–6/2016: 19.4 per cent).

Investment income fell in the first six months of 2017 by 31.3 per cent to €192.6 million as a result of lower liquidation proceeds and currency losses (1–6/2016: €280.3 million). Earnings before taxes decreased in the UNIQA Austria segment by 41.8 per cent to €85.7 million in the first half of 2017 (1–6/2016: €147.1 million).

UNIQA International

In the UNIQA International segment, premiums written, including savings portions from unitlinked and index-linked life insurance, rose by 23.2 per cent in the first six months of 2017 to €837.1 million, as a result of major contracts in Ukraine and Liechtenstein and strong life insurance growth in Poland (1–6/2016: €679.7 million). Single premiums increased strongly to €127.2 million (1–6/2016: €32.8 million). Recurring premiums also rose by 9.7 per cent to €709.9 million (1–6/2016: €646.9 million). This meant that the international companies contributed a total of 29.9 per cent overall in the first half of 2017 (1–6/2016: 25.9 per cent) to total Group premiums. Premiums earned including the net savings portions of the premiums from unit-linked and index-linked life insurance increased by 28.4 per cent to €575.9 million (1–6/2016: €448.4 million). The volume of premiums earned (net, in accordance with IFRSs) rose by 7.7 per cent to €424.1 million (1–6/2016: €393.7 million).

In Central Europe (CE) – i.e. Poland, Slovakia, the Czech Republic and Hungary – the premium volume written, including savings portions from unit-linked and index-linked life insurance, rose in the first six months of 2017 by 28.9 per cent to €537.2 million (1–6/2016: €416.7 million). In the region of Eastern Europe (EE), comprising Romania and Ukraine, an increase of 20.9 per cent to €89.8 million was recorded (1–6/2016: €74.3 million). In contrast, the premium volume written, including savings portions from unit-linked and index-linked life insurance, in Southeastern Europe (SEE) – Albania, Bosnia and Herzegovina, Bulgaria, Kosovo, Croatia, Macedonia, Montenegro and Serbia – increased by 1.7 per cent to €143.8 million (1–6/2016: €141.3 million). In Russia (RU), the volume of premiums written grew by 38.4 per cent to €36.2 million (1–6/2016: €26.2 million). In Western Europe (WE) – Liechtenstein and Switzerland – they increased by 42.5 per cent to €30.1 million (1–6/2016: €21.1 million).

Premiums written in the UNIQA International segment in property and casualty insurance rose by 9.7 per cent to €523.0 million as a result of the strong growth in other property insurance (1–6/2016: €476.5 million). This meant the contribution of Group companies outside Austria to overall premiums in property and casualty insurance amounted to 36.3 per cent (1–6/2016: 35.2 per cent).

Premiums written in health insurance rose in the first half of 2017 by 17.7 per cent to €29.5 million (1–6/2016: €25.1 million). As such, the segment was responsible for 5.6 per cent (1–6/2016: 5.0 per cent) of health insurance premiums in the UNIQA Group.

In the international life insurance business, the premiums written, including savings portions from unit-linked and index-linked life insurance, rose in the first six months of 2017 by 59.8 per cent to €284.7 million (1–6/2016: €178.1 million), largely driven by strong growth in single premiums in unit-linked and index-linked life insurance in Poland. Single payment premiums almost quadrupled to €127.2 million (1–6/2016: €32.8 million) and recurring premiums also rose by 8.3 per cent to €157.4 million (1–6/2016: €145.3 million). UNIQA International's share of overall life insurance premiums in the UNIQA Group was 34.1 per cent (1–6/2016: 23.3 per cent). Premiums from unit-linked and index-linked life insurance rose strongly in the international area by 165.8 per cent to €150.2 million (1–6/2016: €56.5 million).

Insurance benefits (net) in the UNIQA International segment increased in the first half of 2017 by 5.5 per cent to €241.4 million (1–6/2016: €228.7 million). In property and casualty insurance, the combined ratio after reinsurance improved to 95.2 per cent (1–6/2016: 98.0 per cent). In the CE region, benefits rose by 6.3 per cent to €117.0 million (1–6/2016: €110.1 million), and in the EE region they rose by 32.5 per cent to €28.5 million (1–6/2016: €21.5 million). In SEE, they fell by 11.5 per cent to €62.6 million (1–6/2016: €70.7 million). In Russia, benefits amounted to €28.2 million in the first half of 2017 (1–6/2016: €22.1 million). In Western Europe, the volume of benefits reached €5.1 million (1–6/2016: €4.3 million).

In the UNIQA International segment, operating expenses less reinsurance commissions received rose by 4.8 per cent to €176.0 million (1–6/2016: €168.0 million). The cost ratio after reinsurance fell to 30.6 per cent (1–6/2016: 37.5 per cent). In CE, costs rose by 2.7 per cent to €86.3 million (1–6/2016: €84.0 million), and in EE they rose by 25.6 per cent to €28.3 million (1–6/2016: €22.6 million). In SEE, they increased by 5.5 per cent to €43.7 million (1–6/2016: €41.5 million). Costs showed an increase in the first six months of 2017 in Russia to €6.4 million (1–6/2016: €5.7 million), and in Western Europe to €3.5 million (1–6/2016: €2.3 million). In administration (UNIQA International AG) on the other hand, costs fell by 35.2 per cent to €7.7 million (1–6/2016: €12.0 million).

Investment income decreased by 6.5 per cent to €27.8 million in the UNIQA International segment (1–6/2016: €29.7 million). Earnings before taxes increased by 13.4 per cent to €21.1 million (1–6/2016: €18.6 million).

Reinsurance

Premiums written in reinsurance amounted to €621.5 million in the first half of 2017 (1–6/2016: €612.5 million). Premiums written in property and casualty insurance rose by 1.7 per cent to €598.6 million (1–6/2016: €588.7 million). In health insurance, they amounted to €1.0 million (1–6/2016: €0.3 million) and in life insurance to €21.9 million (1–6/2016: €23.4 million).

Net insurance benefits in the reinsurance segment rose by 5.5 per cent to €359.3 million (1–6/2016: €340.7 million). Operating expenses, less reinsurance commission received, increased by 4.9 per cent to €173.1 million (1–6/2016: €165.0 million). Investment income rose by 40.6 per cent to €17.6 million (1–6/2016: €12.5 million). Earnings before taxes in the reinsurance segment fell by 25.9 per cent to €14.9 million (1–6/2016: €20.1 million).

Group functions

In the Group functions segment, operating expenses less reinsurance commissions received rose in the first half of 2017 by 32.7 per cent to €27.1 million as a result of investments from the innovation programme (1–6/2016: €20.4 million). Investment income amounted to €22.2 million (1–6/2016: €–32.6 million). Finance costs decreased in the reporting period, due to the repayment of subordinated capital bonds (Tier 2), by 12.4 per cent to €29.4 million (1–6/2016: €33.5 million). Earnings before taxes amounted to €–26.3 million (1–6/2016: €–77.6 million).

CAPITAL MARKET

UNIQA shares – key figures
In €
1 – 6/2017 1 – 6/2016 Change
UNIQA share price as at 30 June 8.16 5.37 + 52.0 %
High 8.30 7.45
Low 7.09 5.04
Market capitalisation as at 30 June (in € million) 2,504.8 1,654.9 + 51.4 %
Earnings per share 0.13 0.29 – 54.1 %
Average number of shares in circulation 306,965,261 308,180,350

The favourable performance with corporate profits, a positive economic position and the continued expansionary monetary policy ensured that the mood remained genial as a whole on the stock markets in the first half of 2017. The political uncertainties that still remain have left no more than a short-term mark on the markets in at most. The MSCI World Index, which measures share price movements in the industrialised countries, rose by 9.4 per cent, while the MSCI Emerging Markets Index even rose by 17.2 per cent over the first half of 2017. The strong economic performance in the USA and hopes of significant tax cuts under the new administration resulted in a strong rise in share prices: both the Dow Jones Industrial (DJI) and the NASDAQ Composite have reached historic highs several times so far over the course of the year. Moderate rises in interest rates by the US Federal Reserve only led to minor adjustments in share prices in each case in mid-March and mid-June.

The rise in share prices was rather more modest in Europe – the Euro Stoxx 50 rose by 4.6 per cent in the first half of 2017. An upward trend similar to that in the USA by the middle of the second quarter was accompanied by a correction of almost 6 per cent in the last few weeks of the reporting period as compared with the highest value for the year. This correction is based on the fact that the high growth rates in the eurozone increased worries of interest rates rises by the ECB. There are also fears of a slowdown in the strength of the export economy as a result of the current strength of the euro.

Stock exchanges in the emerging markets performed extremely well in the first half of 2017, as reflected in the positive national economic structural conditions in many key markets. The Eastern European index CECE for instance rose 17.1 per cent over the course of the first six months of 2017. This was a result of the region's excellent economic situation and high competitiveness.

Financial calendar

16 November 2017 First to Third Quarter Report 2017

The impressive price performance on the Vienna Stock Exchange in the previous two quarters continued in the first two quarters of 2017. The ATX has risen by 48.2 per cent since mid-2016 and achieved a value of 3,106.66 points as at the halfway point in 2017. Growth has therefore been at 18.6 per cent over the course of 2017. This was the first time since the 2008 economic crisis that a quarter ended with an index value of more than 3,000 points.

The UNIQA share price rose sharply in the second quarter of 2017. It reached a high of €8.30 on 23 May 2017. The share price reached €8.16 on 30 June 2017. It continued to climb and was listed at €8.42 on 7 August 2017. Compared with the 2016 year-end value (€7.20), this means an increase of 16.9 per cent.

EVENTS AFTER THE REPORTING DATE

With regard to storms in July and August 2017, a severe hailstorm occurred on 10 July 2017 constituting a significant weather event for UNIQA. The hailstorm, that spread over Vienna, the eastern part of Lower Austria and Burgenland, caused damages of around €12 million. The damages primarily affected comprehensive motor insurance as well as household and homeowner insurance.

Information on UNIQA shares

Ticker symbol: UQA Reuters: UNIQ.VI Bloomberg: UQA AV ISIN: AT0000821103 Market segment: Vienna Stock Exchange – prime market Trade segment: Official market Indices: ATX, ATX FIN, MSCI Europe Small Cap Number of shares: 309,000,000

OUTLOOK

Based on the strong performance in the first half of 2017, UNIQA now expects overall growth of at least 3 per cent in premiums written for 2017. Growth of more than 3.0 per cent is expected in property and casualty insurance premiums in 2017, driven by both Austria and CEE. In line with the long-term trend, UNIQA is anticipating growth of more than 3.0 per cent in health insurance, generated primarily by business in Austria. In contrast, demand is expected to remain sluggish for life insurance in Austria due to the low interest rate environment. For CEE on the other hand, UNIQA expects significant growth in life insurance for 2017, driven by the strength of the single premium business in Poland.

In 2016, UNIQA began the largest investment programme in the company's history, and in the coming years we will be investing around €500 million in redesigning the business model, developing the required staff competencies and necessary IT systems. This significant investment in the future will impact earnings before taxes in the financial year 2017 to a similar extent as in 2016. In addition, a further decrease in net investment income is to be expected as a consequence of the continuing low interest rate environment. However, net investment income will not go down as much as it did in 2016.

Conversely, UNIQA is striving to improve the combined ratio (after reinsurance) in 2017 to 97.5 per cent. This means increasing profitability for the core business in property and casualty insurance.

Overall, despite the storm damage in July and August, UNIQA is expecting a slight year-onyear improvement in earnings before taxes for the financial year 2017. Despite ongoing investments and the challenging low interest rate environment, UNIQA intends to continue increasing its annual distribution per share over the next few years as part of a progressive dividend policy.

Consolidated Statement of Financial Position

Assets Notes 30/6/2017 31/12/2016
In € million
Property, plant and equipment 322.0 265.2
Intangible assets 1 1,516.5 1,492.4
Investments
Investment property 2 1,270.0 1,350.0
Financial assets accounted for using the equity method 519.6 521.3
Other investments 2 17,894.8 18,153.5
Unit-linked and index-linked life insurance investments 4,896.1 4,879.9
Reinsurers' share of technical provisions 336.8 324.4
Reinsurers' share of technical provisions for unit-linked and index-linked life insurance 310.4 318.6
Receivables, including insurance receivables 746.4 638.7
Income tax receivables 75.7 65.9
Deferred tax assets 5.3 5.6
Cash and cash equivalents 794.2 549.9
Assets in disposal groups held for sale 3 9.3 5,073.7
Total assets 28,697.1 33,639.2
Equity and liabilities
In € million
Notes 30/6/2017 31/12/2016
Total equity
Portion attributable to shareholders of UNIQA Insurance Group AG
Subscribed capital and capital reserves 1,789.9 1,789.9
Treasury shares – 16.6 – 16.6
Accumulated results 1,224.3 1,413.0
2,997.6 3,186.3
Non-controlling interests 15.9 26.5
3,013.5 3,212.8
Liabilities
Subordinated liabilities 2
846.2
846.0
Technical provisions 17,533.2 17,609.2
Technical provisions for unit-linked and index-linked life insurance 4,877.2 4,846.6
Financial liabilities 2
43.9
45.5
Other provisions 807.6 798.7
Liabilities and other items classified as liabilities 1,210.3 1,042.2
Income tax liabilities 83.3 79.1
Deferred tax liabilities 281.9 296.7
Liabilities in disposal groups held for sale 3
0.0
4,862.2

25,683.6 30,426.4

Total equity and liabilities 28,697.1 33,639.2

Consolidated Income Statement

In € million Notes 1 –6/2017 1 –6/2016 4 –6/2017 4 –6/2016
Premiums earned (net) 2,314.9 2,229.6 1,157.3 1,089.7
Technical interest income 165.8 170.8 86.8 87.4
Other insurance income 9.4 11.6 3.4 6.7
Insurance benefits 6 – 1,749.0 – 1,708.4 – 890.4 – 842.8
Operating expenses 5 – 645.7 – 630.8 – 314.7 – 314.4
Other technical expenses – 23.7 – 27.2 – 11.2 – 11.7
Technical result 71.7 45.6 31.3 14.9
Investment income 7 233.5 252.4 157.7 144.6
Net investment income 508.9 434.1 267.1 200.3
Expenses from investments – 270.7 – 172.6 – 131.2 – 61.3
Financial assets accounted for using the equity method – 4.8 – 9.1 21.8 5.6
Other income 28.9 34.0 – 1.9 21.8
Reclassification of technical interest income – 165.8 – 170.8 – 86.8 – 87.4
Other expenses – 43.0 – 35.9 – 23.0 – 20.5
Non-technical result 53.6 79.7 46.0 58.5
Operating profit/(loss) 125.3 125.3 77.3 73.4
Amortisation of goodwill and impairment losses – 2.8 – 5.2 – 1.4 – 3.6
Finance costs – 27.0 – 33.6 – 13.6 – 16.6
Earnings before taxes 95.5 86.6 62.3 53.2
Income taxes – 19.8 – 19.0 – 13.9 – 12.2
Profit/(loss) for the period from continuing operations 75.7 67.6 48.4 41.0
Profit/(loss) from discontinued operations (after tax) –33.4 23.7 –36.1 17.1
Profit/(loss) for the period 42.3 91.3 12.3 58.1
of which attributable to shareholders of UNIQA Insurance Group AG 41.3 90.3 12.2 57.2
of which attributable to non-controlling interests 1.0 0.9 0.1 0.9
Earnings per share (in €)1) 0.13 0.29 0.04 0.19
Earnings per share from continuing operations 0.24 0.22 0.16 0.13
Earnings per share from discontinued operations – 0.11 0.07 – 0.12 0.05
Average number of shares in circulation 306,965,261 308,180,350 306,965,261 308,180,350

1) Diluted earnings per share equate to undiluted earnings per share. This is calculated on the basis of the consolidated profit/(loss).

Consolidated Statement of Comprehensive Income

In € million 1 –6/2017 1 –6/2016
Profit/(loss) for the period 42.3 91.3
Items not reclassified to profit or loss in subsequent periods
Revaluations of defined benefit obligations
Gains (losses) recognised in equity 0.3 – 10.3
Gains (losses) recognised in equity – deferred tax – 0.1 2.3
Gains (losses) recognised in equity – deferred profit participation 0.1 1.1
Other income from financial assets accounted for using the equity method
Gains (losses) recognised in equity 2.2 4.0
2.4 –2.9
Items reclassified to profit or loss in subsequent periods
Currency translation
Gains (losses) recognised in equity 8.1 – 7.6
Recognised in the consolidated income statement 0.0 0.0
Valuation of financial instruments available for sale
Gains (losses) recognised in equity – 190.5 770.8
Gains (losses) recognised in equity – deferred tax 9.9 – 69.9
Gains (losses) recognised in equity – deferred profit participation 150.0 – 516.6
Recognised in the consolidated income statement – 183.4 – 37.4
Recognised in the consolidated income statement – deferred tax 23.7 1.0
Recognised in the consolidated income statement – deferred profit participation 96.8 35.6
Other income from financial assets accounted for using the equity method
Gains (losses) recognised in equity 2.3 0.0
–83.1 175.8
of which from discontinued operations – 16.9 31.7
Other comprehensive income –80.7 172.9
Total comprehensive income –38.3 264.1
of which attributable to shareholders of UNIQA Insurance Group AG – 36.9 260.5
of which attributable to non-controlling interests – 1.5 3.6

Consolidated Statement of Cash Flows

In € million 1 –6/2017 1 –6/2016
Profit/(loss) for the period 42.3 91.3
Impairment losses, amortisation of goodwill and other intangible assets, and depreciation of property, plant
and equipment 20.0 22.8
Impairment losses/reversal of impairment losses on other investments 109.5 74.1
Gain/loss on the disposal of investments – 3.2 – 35.4
Change in deferred acquisition costs – 12.1 – 8.4
Change in securities at fair value through profit or loss – 42.1 160.0
Change in direct insurance receivables – 49.5 – 20.7
Change in other receivables – 56.1 96.5
Change in direct insurance liabilities 12.4 – 33.0
Change in other liabilities 167.6 121.1
Change in technical provisions 136.2 – 31.6
Change in defined benefit obligation – 7.1 – 5.6
Change in deferred tax assets and deferred tax liabilities 8.3 – 32.5
Change in other statement of financial position items 115.0 – 92.4
Net cash flow from operating activities 441.3 306.0
of which from discontinued operations 258.2 281.1
Proceeds from disposal of intangible assets and property, plant and equipment 1.1 1.6
Payments for acquisition of intangible assets and property, plant and equipment – 23.8 – 10.6
Proceeds from disposal of consolidated companies 294.0 0.0
Proceeds from disposal and maturity of other investments 2,439.8 2,502.4
Payments for acquisition of other investments – 2,737.3 – 2,846.8
Change in unit-linked and index-linked life insurance investments – 16.2 142.5
Net cash flow from investing activities –42.3 –210.9
of which from discontinued operations 35.3 – 281.4
Dividend payments – 153.9 – 145.9
Payments from other financing activities – 0.7 – 0.4
Net cash flow from financing activities –154.6 –146.4
of which from discontinued operations 0.0 0.0
Change in cash and cash equivalents 244.4 –51.2
of which from discontinued operations 293.5 – 0.4
Change in cash and cash equivalents due to movements in exchange rates – 0.1 0.2
Cash and cash equivalents at beginning of year 549.9 890.1
Cash and cash equivalents at end of period 794.2 839.0
Income taxes paid (Net cash flow from operating activities) – 14.5 – 15.7
Interest paid (Net cash flow from operating activities) – 11.5 – 12.4
Interest received (Net cash flow from operating activities) 252.0 274.2
Dividends received (Net cash flow from operating activities) 12.5 18.5

Consolidated Statement of Changes in Equity

Accumulated
In € million Subscribed capital and
capital reserves
Treasury shares Valuation of financial
instruments available
for sale
Revaluations of defined
benefit obligations
At 1 January 2016 1,789.9 –10.9 391.8 –180.6
Change in basis of consolidation
Dividends to shareholders
Total comprehensive income 181.2 –6.9
Profit/(loss) for the period
Other comprehensive income 181.2 – 6.9
At 30 June 2016 1,789.9 –10.9 573.0 –187.4
At 1 January 2017 1,789.9 –16.6 453.7 –187.0
Change in basis of consolidation 0.0 – 45.5
Dividends to shareholders
Total comprehensive income –91.4 0.2
Profit/(loss) for the period
Other comprehensive income – 91.4 0.2
At 30 June 2017 1,789.9 –16.6 316.8 –186.8
Differences from
currency translation
Other accumulated
results
Portion attributable to
shareholders of UNIQA
Insurance Group AG
Non-controlling
interests
Total
equity
–172.5 1,326.7 3,144.5 21.9 3,166.4
– 1.1 – 1.1 0.5 – 0.5
– 144.8 – 144.8 – 1.1 – 145.9
–8.1 94.3 260.5 3.6 264.1
90.3 90.3 0.9 91.3
– 8.1 4.0 170.2 2.7 172.9
–180.6 1,275.2 3,259.1 24.9 3,284.1
–174.0 1,320.3 3,186.3 26.5 3,212.8
44.7 – 0.7 – 6.3 – 7.0
– 151.0 – 151.0 – 2.9 – 153.9
8.5 45.8 –36.9 –1.5 –38.3
41.3 41.3 1.0 42.3
8.5 4.5 – 78.2 – 2.5 – 80.7
–165.4 1,259.8 2,997.6 15.9 3,013.5

results

Segment Reporting

OPERATING SEGMENTS – CONSOLIDATED INCOME STATEMENT

UNIQA Austria UNIQA International Reinsurance
In € million 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
Premiums written (gross), including savings portions
from unit-linked and index-linked life insurance 1,930.7 1,924.8 837.1 679.7 621.5 612.5
Premiums earned (net), including savings portions
from unit-linked and index-linked life insurance 1,497.2 1,482.1 575.9 448.4 538.9 517.3
Savings portions in unit-linked and
index-linked life insurance (gross) 115.1 122.6 151.7 54.7 0.0 0.0
Savings portions in unit-linked and
index-linked life insurance (net)
117.1 112.3 151.7 54.7 0.0 0.0
Premiums written (gross) 1,815.6 1,802.1 685.4 624.9 621.5 612.5
Premiums earned (net) 1,380.1 1,369.9 424.1 393.7 538.9 517.3
Premiums earned (net) – intragroup – 315.2 – 317.7 – 179.9 – 156.6 523.4 525.5
Premiums earned (net) – external 1,695.3 1,687.6 604.0 550.3 15.5 – 8.2
Technical interest income 156.6 161.6 9.3 9.2 0.0 0.0
Other insurance income 1.9 1.9 8.6 8.1 0.3 0.3
Insurance benefits – 1,174.0 – 1,180.1 – 241.4 – 228.7 – 359.3 – 340.7
Operating expenses – 278.4 – 288.0 – 176.0 – 168.0 – 173.1 – 165.0
Other technical expenses – 9.6 – 13.6 – 16.7 – 15.8 – 6.2 – 4.9
Technical result 76.6 51.6 8.0 –1.5 0.6 7.0
Investment income 192.6 280.3 27.8 29.7 17.6 12.5
Net investment income 403.3 392.5 53.8 45.2 24.8 15.5
Expenses from investments – 210.8 – 123.7 – 26.2 – 15.6 – 7.2 – 3.0
Financial assets accounted for using the equity method 0.0 11.5 0.2 0.1 0.0 0.0
Other income 5.2 3.6 7.3 14.7 3.2 1.5
Reclassification of technical interest income – 156.6 – 161.6 – 9.3 – 9.2 0.0 0.0
Other expenses – 18.5 – 12.6 – 8.6 – 10.4 – 5.0 – 0.9
Non-technical result 22.7 109.8 17.2 24.7 15.7 13.0
Operating profit/(loss) 99.3 161.4 25.2 23.2 16.3 20.1
Amortisation of goodwill and impairment losses – 1.2 – 1.4 – 1.6 – 3.8 0.0 0.0
Finance costs – 12.5 – 12.9 – 2.4 – 0.8 – 1.4 0.0
Profit/(loss) for the period from continuing operations 85.7 147.1 21.1 18.6 14.9 20.1
Combined ratio
(property and casualty insurance, after reinsurance) 93.4 % 93.5 % 95.2 % 98.0 % 98.5 % 97.5 %
Cost ratio (after reinsurance) 18.6 % 19.4 % 30.6 % 37.5 % 32.1 % 31.9 %
Group function Consolidation Group
1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
0.0 0.0 – 590.8 – 592.4 2,798.6 2,624.6
0.0 0.0 – 28.3 – 51.2 2,583.7 2,396.6
0.0 0.0 0.0 0.0 266.8 177.4
0.0 0.0 0.0 0.0 268.8 167.0
0.0 0.0 – 590.8 – 592.4 2,531.8 2,447.2
0.0 0.0 – 28.3 – 51.2 2,314.9 2,229.6
0.0 0.0 – 28.3 – 51.2 0.0 0.0
0.0 0.0 0.0 0.0 2,314.9 2,229.6
0.0 0.0 0.0 0.0 165.8 170.8
0.3 2.5 – 1.7 – 1.2 9.4 11.6
6.3 4.8 19.4 36.3 – 1,749.0 – 1,708.4
– 27.1 – 20.4 8.9 10.6 – 645.7 – 630.8
– 0.4 – 0.3 9.2 7.4 – 23.7 – 27.2
–20.9 –13.5 7.4 1.9 71.7 45.6
22.2 – 32.6 – 26.6 – 37.5 233.5 252.4
65.8 52.4 – 38.8 – 71.5 508.9 434.1
– 45.2 – 86.3 18.7 56.1 – 270.7 – 172.6
1.6 1.3 – 6.5 – 22.0 – 4.8 – 9.1
13.4 10.3 – 0.2 3.9 28.9 34.0
0.0 0.0 0.0 0.0 – 165.8 – 170.8
– 11.7 – 8.3 0.8 – 3.6 – 43.0 – 35.9
24.0 –30.6 –26.0 –37.2 53.6 79.7
3.1 –44.1 –18.6 –35.3 125.3 125.3
0.0 0.0 0.0 0.0 – 2.8 – 5.2
– 29.4 – 33.5 18.7 13.8 – 27.0 – 33.6
–26.3 –77.6 0.1 –21.6 95.5 86.6
n/a n/a n/a n/a 96.8 % 97.1 %
n/a n/a n/a n/a 25.0 % 26.3 %

OPERATING SEGMENTS – CLASSIFIED BY BUSINESS LINE

Property and casualty insurance UNIQA Austria UNIQA International Reinsurance
In € million 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
Premiums written (gross) 891.9 862.7 523.0 476.5 598.6 588.7
Premiums earned (net) 482.7 457.5 270.7 252.5 528.1 506.3
Technical interest income 0.0 0.0 0.0 0.0 0.0 0.0
Other insurance income 1.3 1.4 5.7 5.4 0.2 0.2
Insurance benefits – 331.9 – 314.3 – 154.9 – 147.0 – 349.4 – 330.5
Operating expenses – 119.1 – 113.6 – 102.7 – 100.5 – 170.7 – 163.3
Other technical expenses – 0.1 – 3.4 – 15.6 – 14.4 – 4.4 – 3.0
Technical result 32.9 27.7 3.2 –4.0 3.8 9.7
Investment income 13.6 50.7 13.3 18.5 12.7 7.6
Net investment income 74.9 61.7 23.1 20.5 19.9 10.6
Expenses from investments – 61.4 – 11.1 – 10.0 – 2.2 – 7.2 – 3.0
Financial assets accounted for using the equity method 0.0 0.1 0.2 0.1 0.0 0.0
Other income 4.4 2.4 4.1 4.0 3.2 1.4
Reclassification of technical interest income 0.0 0.0 0.0 0.0 0.0 0.0
Other expenses – 13.0 – 9.9 – 6.6 – 5.6 – 5.0 – 0.9
Non-technical result 4.9 43.2 10.8 16.8 10.9 8.1
Operating profit/(loss) 37.9 70.9 14.0 12.9 14.7 17.8
Amortisation of goodwill and impairment losses 0.0 0.0 – 1.5 – 1.5 0.0 0.0
Finance costs 0.0 0.0 – 2.4 – 0.8 – 1.4 0.0
Profit/(loss) for the period from continuing operations 37.9 70.9 10.1 10.6 13.2 17.8
Health insurance UNIQA Austria UNIQA International Reinsurance
In € million 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
Premiums written (gross) 493.2 480.4 29.5 25.1 1.0 0.3
Premiums earned (net) 486.0 473.3 24.8 21.4 0.9 0.3
Technical interest income 40.2 38.4 0.0 0.0 0.0 0.0
Other insurance income 0.2 0.3 0.1 0.9 0.0 0.0
Insurance benefits – 424.8 – 415.5 – 16.3 – 13.9 – 0.6 0.0
Operating expenses – 63.1 – 71.0 – 11.3 – 10.5 – 0.4 0.0
Other technical expenses 1.5 – 0.3 – 0.1 – 0.1 0.0 0.0
Technical result 40.1 25.3 –2.8 –2.2 –0.1 0.3
Investment income 53.0 53.4 0.2 0.2 0.0 0.0
Net investment income 140.8 82.1 0.5 0.3 0.0 0.0
Expenses from investments – 87.7 – 32.6 – 0.4 – 0.1 0.0 0.0
Financial assets accounted for using the equity method 0.0 3.9 0.0 0.0 0.0 0.0
Other income 0.3 0.8 1.6 0.9 0.0 0.0
Reclassification of technical interest income – 40.2 – 38.4 0.0 0.0 0.0 0.0
Other expenses – 2.9 – 1.4 – 0.1 – 0.8 0.0 0.0
Non-technical result 10.2 14.4 1.6 0.3 0.0 0.0
Operating profit/(loss) 50.3 39.7 –1.1 –2.0 –0.1 0.3
Amortisation of goodwill and impairment losses 0.0 0.0 0.0 0.0 0.0 0.0
Finance costs 0.0 0.0 0.0 0.0 0.0 0.0
Profit/(loss) for the period from continuing operations 50.3 39.7 –1.1 –2.0 –0.1 0.3
Group function Consolidation Group
1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
0.0 0.0 – 571.8 – 573.4 1,441.6 1,354.5
0.0 0.0 – 27.7 – 50.8 1,253.9 1,165.6
0.0 0.0 0.0 0.0 0.0 0.0
0.3 2.5 – 1.4 – 0.9 6.1 8.6
0.1 0.1 19.6 36.5 – 816.5 – 755.1
– 11.9 – 9.2 7.8 10.3 – 396.7 – 376.3
– 0.2 – 0.2 6.2 4.4 – 14.1 – 16.6
–11.7 –6.8 4.5 –0.5 32.7 26.2
21.7 – 22.1 – 6.4 – 2.0 54.8 52.7
44.8 31.0 – 21.6 – 44.8 141.1 79.0
– 24.3 – 53.5 11.2 39.4 – 91.7 – 30.4
1.3 0.4 3.9 3.4 5.4 4.1
12.2 8.6 – 2.2 3.9 21.7 20.3
0.0 0.0 0.0 0.0 0.0 0.0
– 10.3 – 7.0 1.1 – 3.3 – 33.7 – 26.7
23.6 –20.4 –7.5 –1.4 42.7 46.3
11.9 –27.2 –3.0 –1.9 75.4 72.5
0.0 0.0 0.0 0.0 – 1.5 – 1.5
– 29.3 – 33.5 6.2 0.8 – 27.0 – 33.5
–17.4 –60.7 3.2 –1.1 47.0 37.6
Group function Consolidation Group
1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
0.0 0.0 – 1.1 – 0.5 522.5 505.4
0.0 0.0 – 0.2 – 0.1 511.6 495.0
0.0 0.0 0.0 0.0 40.2 38.4
0.0 0.0 0.0 0.0 0.3 1.2
6.2 4.7 0.0 0.0 – 435.5 – 424.7
– 7.8 – 4.5 0.3 0.1 – 82.3 – 85.9
– 0.1 – 0.1 0.0 0.0 1.4 – 0.5
–1.6 0.1 0.0 –0.1 35.6 23.4
– 1.7 – 2.4 – 7.2 – 11.1 44.3 40.2
0.7 1.1 – 3.4 – 2.3 138.5 81.3
– 2.7 – 3.5 0.5 0.4 – 90.3 – 35.7
0.3 0.0 – 4.2 – 9.2 – 3.9 – 5.3
1.3 1.5 1.6 0.0 4.8 3.2
0.0 0.0 0.0 0.0 – 40.2 – 38.4
– 0.8 – 0.6 0.4 0.0 – 3.4 – 2.8
–1.2 –1.4 –5.1 –11.1 5.5 2.2
–2.9 –1.3 –5.1 –11.1 41.1 25.6
0.0 0.0 0.0 0.0 0.0 0.0
– 0.1 – 0.1 0.0 0.0 – 0.1 – 0.1
–2.9 –1.4 –5.1 –11.1 41.0 25.5
Life insurance UNIQA Austria
UNIQA International
Reinsurance
In € million 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
Premiums written (gross), including savings portions
from unit-linked and index-linked life insurance 545.7 581.7 284.7 178.1 21.9 23.4
Premiums earned (net), including savings portions
from unit-linked and index-linked life insurance 528.4 551.3 280.4 174.4 9.9 10.6
Savings portions in unit-linked and
index-linked life insurance (gross) 115.1 122.6 151.7 54.7 0.0 0.0
Savings portions in unit-linked and
index-linked life insurance (net) 117.1 112.3 151.7 54.7 0.0 0.0
Premiums written (gross) 430.6 459.0 132.9 123.4 21.9 23.4
Premiums earned (net) 411.4 439.1 128.6 119.7 9.9 10.6
Technical interest income 116.3 123.2 9.3 9.2 0.0 0.0
Other insurance income 0.3 0.3 2.8 1.8 0.1 0.2
Insurance benefits – 417.3 – 450.4 – 70.2 – 67.8 – 9.3 – 10.3
Operating expenses – 96.1 – 103.4 – 62.0 – 56.9 – 2.0 – 1.7
Other technical expenses – 11.0 – 10.0 – 0.9 – 1.3 – 1.8 – 1.8
Technical result 3.6 –1.3 7.6 4.7 –3.1 –3.0
Investment income 126.0 176.2 14.3 11.1 4.9 4.9
Net investment income 187.6 248.7 30.2 24.4 4.9 4.9
Expenses from investments – 61.6 – 80.0 – 15.9 – 13.4 0.0 0.0
Financial assets accounted for using the equity method 0.0 7.5 0.0 0.0 0.0 0.0
Other income 0.5 0.5 1.6 9.8 0.0 0.0
Reclassification of technical interest income – 116.3 – 123.2 – 9.3 – 9.2 0.0 0.0
Other expenses – 2.6 – 1.4 – 1.9 – 4.0 0.0 0.0
Non-technical result 7.6 52.1 4.7 7.6 4.9 4.9
Operating profit/(loss) 11.2 50.8 12.3 12.4 1.8 1.9
Amortisation of goodwill and impairment losses – 1.2 – 1.4 – 0.2 – 2.3 0.0 0.0
Finance costs – 12.5 – 12.9 0.0 0.0 0.0 0.0
Profit/(loss) for the period from continuing operations –2.5 36.5 12.2 10.1 1.8 1.9

UNIQA INTERNATIONAL – REGIONS

Premiums earned (net) Investment income Insurance benefits Operating expenses from continuing operations Profit/(loss) for the period
In € million 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
Western Europe (WE) 7.5 7.5 0.1 0.1 – 5.1 – 4.3 – 3.5 – 2.3 0.5 1.6
Central Europe (CE) 215.7 198.8 15.2 17.0 – 117.0 – 110.1 – 86.3 – 84.0 19.8 16.0
Eastern Europe (EE) 56.7 48.6 3.5 5.7 – 28.5 – 21.5 – 28.3 – 22.6 0.9 4.8
Southeastern Europe (SEE) 109.9 113.0 5.3 9.2 – 62.6 – 70.7 – 43.7 – 41.5 6.7 6.2
Russia (RU) 34.3 25.9 6.2 – 2.3 – 28.2 – 22.1 – 6.4 – 5.7 5.0 2.2
Administration 0.0 0.0 – 2.5 0.0 0.0 0.0 – 7.7 – 12.0 – 11.7 – 12.1
Total 424.1 393.7 27.8 29.7 –241.4 –228.7 –176.0 –168.0 21.1 18.6

CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL REPORT 27

Group function
Consolidation
Group
1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
0.0 0.0 – 17.9 – 18.5 834.4 764.7
0.0 0.0 – 0.4 – 0.3 818.3 736.0
0.0 0.0 0.0 0.0 266.8 177.4
0.0 0.0 0.0 0.0 268.8 167.0
0.0 0.0 – 17.9 – 18.5 567.6 587.3
0.0 0.0 – 0.4 – 0.3 549.4 569.1
0.0 0.0 0.0 0.0 125.6 132.4
0.0 0.0 – 0.3 – 0.3 3.0 1.9
0.0 0.0 – 0.3 – 0.1 – 497.0 – 528.6
– 7.4 – 6.8 0.9 0.2 – 166.7 – 168.6
– 0.1 – 0.1 3.0 3.0 – 10.9 – 10.1
–7.6 –6.8 2.9 2.4 3.4 –4.0
2.2 – 8.2 – 13.0 – 24.5 134.4 159.5
20.3 20.2 – 13.8 – 24.5 229.3 273.8
– 18.1 – 29.3 7.0 16.2 – 88.7 – 106.5
0.0 0.9 – 6.2 – 16.2 – 6.2 – 7.8
0.0 0.3 0.4 0.0 2.5 10.6
0.0 0.0 0.0 0.0 – 125.6 – 132.4
– 0.6 – 0.8 – 0.7 – 0.3 – 5.9 – 6.5
1.6 –8.7 –13.3 –24.7 5.4 31.2
–6.0 –15.6 –10.5 –22.3 8.8 27.2
0.0 0.0 0.0 0.0 – 1.4 – 3.7
0.0 0.0 12.5 12.9 0.0 0.0
–6.0 –15.6 2.0 –9.4 7.5 23.5

CONSOLIDATED STATEMENT OF FINANCIAL POSITION – CLASSIFIED BY BUSINESS LINE

Property and casualty insurance Health insurance
In € million 30/6/2017 31/12/2016 30/6/2017 31/12/2016
Assets
Property, plant and equipment 164.3 151.1 37.7 30.6
Intangible assets 494.1 451.3 246.2 242.3
Investments
Investment property 261.7 285.9 265.9 275.3
Financial assets accounted for using the equity method 55.9 52.1 178.7 180.8
Other investments 4,706.8 4,510.0 2,836.8 2,825.9
Unit-linked and index-linked life insurance investments 0.0 0.0 0.0 0.0
Reinsurers' share of technical provisions 198.5 188.1 1.2 1.9
Reinsurers' share of technical provisions for unit-linked and index-linked life insurance 0.0 0.0 0.0 0.0
Receivables, including insurance receivables 584.7 651.5 274.4 44.7
Income tax receivables 71.8 64.4 0.4 0.1
Deferred tax assets 1.1 1.1 0.4 0.4
Cash and cash equivalents 452.6 288.6 101.6 78.9
Assets in disposal groups held for sale 0.0 219.3 0.0 33.7
Total assets by business line 6,991.5 6,863.5 3,943.2 3,714.5
Liabilities
Subordinated liabilities 851.2 851.2 0.0 0.0
Technical provisions 3,230.5 2,908.3 2,943.1 2,882.1
Technical provisions for unit-linked and index-linked life insurance 0.0 0.0 0.0 0.0
Financial liabilities 7.4 16.0 31.8 29.2
Other provisions 784.0 749.6 20.6 22.3
Liabilities and other items classified as liabilities 603.2 644.9 255.4 15.4
Income tax liabilities 80.1 75.8 2.7 2.9
Deferred tax liabilities 35.2 37.4 139.6 147.5
Liabilities in disposal groups held for sale 0.0 332.3 0.0 55.0
Total liabilities by business line 5,591.6 5,615.5 3,393.1 3,154.4
Life insurance Consolidation Group
30/6/2017 31/12/2016 30/6/2017 31/12/2016 30/6/2017 31/12/2016
120.0 83.6 0.0 0.0 322.0 265.2
796.7 810.0 – 20.5 – 11.2 1,516.5 1,492.4
742.4 788.8 0.0 0.0 1,270.0 1,350.0
285.0 288.4 0.0 0.0 519.6 521.3
10,974.7 11,467.4 – 623.5 – 649.8 17,894.8 18,153.5
4,896.1 4,879.9 0.0 0.0 4,896.1 4,879.9
147.0 146.5 – 9.9 – 12.0 336.8 324.4
310.4 318.6 0.0 0.0 310.4 318.6
200.0 235.2 – 312.7 – 292.7 746.4 638.7
3.5 1.3 0.0 0.0 75.7 65.9
3.8 4.0 0.0 0.0 5.3 5.6
240.0 182.4 0.0 0.0 794.2 549.9
9.3 4,820.7 0.0 0.0 9.3 5,073.7
18,729.0 24,026.9 –966.6 –965.7 28,697.1 33,639.2
410.8 410.7 – 415.7 – 415.9 846.2 846.0
11,383.2 11,842.7 – 23.5 – 23.9 17,533.2 17,609.2
4,877.2 4,846.6 0.0 0.0 4,877.2 4,846.6
177.5 198.1 – 172.8 – 197.8 43.9 45.5
19.5 37.4 – 16.4 – 10.6 807.6 798.7
690.7 695.0 – 339.0 – 313.1 1,210.3 1,042.2
0.5 0.5 0.0 0.0 83.3 79.1
107.0 111.7 0.0 0.0 281.9 296.7
0.0 4,474.9 0.0 0.0 0.0 4,862.2
17,666.3 22,617.7 –967.4 –961.2 25,683.6 30,426.4
Consolidated equity and non-controlling interests 3,013.5 3,212.8

Total equity and liabilities by business line 28,697.1 33,639.2

The amounts indicated for each business line have been adjusted to eliminate amounts resulting from internal transactions. Therefore, the balance of business line assets and business line equity and liabilities does not allow conclusions to be drawn with regard to the equity allocated to the respective business line.

Notes to the Condensed Consolidated Half-Year Financial Report

ACCOUNTING REGULATIONS

The consolidated half-year financial report as at 30 June 2017 was prepared in accordance with the requirements of IAS 34 and the International Financial Reporting Standards (IFRSs) of the International Accounting Standards Board (IASB) recognised by the European Union (EU) as well as the interpretations of the IFRS Interpretations Committee. The additional requirements of Section 245a(1) of the Austrian Commercial Code and Section 138(8) of the Austrian Insurance Supervision Act were met.

The accounting, measurement and consolidation principles correspond to those applied in the consolidated financial statements as at 31 December 2016. The functional currency for UNIQA Insurance Group AG is the euro.

On 18 May 2017, the IASB published the IFRS 17 "Insurance contracts". It contains the regulations that up to now were in IFRS 4 "Insurance contracts". The published standard does not show any material changes to the statements made in the 2016 Annual Report.

IFRIC 23 was published by the IASB on 7 June 2017 and deals with the accounting for uncertainty related to income tax treatment. It has no material impact on UNIQA.

On 1 July 2008, securities previously available for sale were reclassified according to IAS 39/50E as other loans. Overall, fixed-income securities with a carrying amount of €2,129.6 million were reclassified. The corresponding revaluation reserve amounted to €–98.2 million as at 30 June 2008. The fair value as at 31 December 2016 was €487.3 million; as at 30 June 2017 it amounted to €426.9 million. The carrying amount of the reclassified securities as at 30 June 2017 was €402.8 million (31 December 2016: €462.5 million).

In accordance with IAS 34.41, estimates and planning have been used to a greater extent in preparing the quarterly financial statements than for annual reporting.

The consolidated half-year financial report was prepared in millions of euros (rounded based on commercial rounding methods). Rounding differences may occur through the use of automated calculation tools when totalling rounded amounts and percentages.

BASIS OF CONSOLIDATION

The basis of consolidation – with UNIQA Insurance Group AG – included 111 subsidiaries (31 December 2016: 116) and 7 associates (31 December 2016: 7) using equity method accounting.

By way of a resolution dated 27 July 2015, UNIQA decided to divest its 29 per cent holding in Medial Beteiligungs-Gesellschaft m.b.H. (Vienna). This is therefore reported under assets in disposal groups held for sale (Group functions segment). Medial Beteiligungs-Gesellschaft m.b.H. has an equity investment of around 38 per cent in Casinos Austria Aktiengesellschaft (Vienna); correspondingly, UNIQA holds an interest of around 11 per cent in Casinos Austria Aktiengesellschaft. Due to a decree by the Vienna regional high court acting as antitrust court, which prohibited the transfer of the investment, the sale to NOVOMATIC AG (Gumpoldskirchen) did not take place. The contract with NOVOMATIC was dissolved at the beginning of 2017. By means of a transfer agreement dated 3 January 2017, UNIQA sold its 29 per cent holding in Medial Beteiligungs-Gesellschaft mbH to CAME Holding GmbH (Vienna). The sale to CAME Holding GmbH is subject to a condition precedent. Conditions precedent are essentially mandatory approvals still required under merger law and public law approvals. Closing is expected in the first half of 2018.

The sale of the 99.7 per cent holding in UNIQA Assicurazioni S.p.A. (Milan, Italy) to Società Reale Mutua di Assicurazioni (Turin, Italy), as decided by the Supervisory Board on 2 December 2016, was closed on 16 May 2017. This also included the company's subsidiaries operating in Italy: UNIQA Previdenza S.p.A. (Milan, Italy) and UNIQA Life S.p.A. (Milan, Italy).

NOTES TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

1. Intangible assets

In € million 30/6/2017 31/12/2016
Deferred acquisition costs 1,147.0 1,134.9
Insurance contract portfolio 15.6 18.3
Goodwill 297.4 295.4
Other intangible assets 56.5 43.8
Total 1,516.5 1,492.4

2. Investments plus valuation hierarchies for fair value measurements

Other investments are broken down into the following classes and categories of financial instruments:

At 30 June 2017 Variable-income
securities
Fixed-income
securities
Loans and
other investments
Derivative
financial
Investments
under investment
Total
In € million instruments contracts
Financial assets recognised at fair value through profit or loss 33.7 254.8 0.0 163.0 58.6 510.1
Available-for-sale financial assets 775.1 15,466.0 0.0 0.0 0.0 16,241.1
Loans and receivables 0.0 402.8 740.8 0.0 0.0 1,143.6
Total 808.8 16,123.6 740.8 163.0 58.6 17,894.8
of which fair value option 33.7 254.8 0.0 0.0 0.0 288.5
At 31 December 2016 Variable-income
securities
Fixed-income
securities
Loans and
other investments
Derivative
financial
Investments
under investment
Total
In € million instruments contracts
Financial assets recognised at fair value through profit or loss 44.3 231.0 0.0 135.1 59.9 470.3
Available-for-sale financial assets 671.7 15,818.9 0.0 0.0 0.0 16,490.6
Loans and receivables 0.0 462.5 730.1 0.0 0.0 1,192.6
Total 716.0 16,512.4 730.1 135.1 59.9 18,153.5
of which fair value option 44.3 231.0 0.0 0.0 0.0 275.3

Fair value hierarchy

A range of Group accounting policies and disclosures require the determination of the fair value of financial and non-financial assets and liabilities. The Group has defined a control framework with regard to the determination of fair value. This includes a measurement team, which bears general responsibility for monitoring all major measurements of fair value, including Level 3 fair values, and reports to the Group Management Board.

The measurement team carries out a regular review of the major unobservable inputs and the measurement adjustments. If information from third parties (e.g. price quotations from brokers or price information services) is used to determine fair values, the measurement team examines the evidence obtained from the third parties for the conclusion that such measurements meet the requirements of IFRSs, including the level in the fair value hierarchy to which these measurements are attributable. Major items in the measurement are reported to the Audit Committee.

As far as possible, the Group uses data that are observable on the market when determining the fair value of an asset or a liability. Based on the inputs used in the valuation techniques, the fair values are assigned to different levels in the fair value hierarchy:

  • Level 1: quoted prices (unadjusted) on active markets for identical assets and liabilities. At UNIQA these primarily involve quoted shares, quoted bonds and quoted investment funds.
  • Level 2: valuation parameters that are not quoted prices included in Level 1 but which can be observed for the asset or liability either directly (i.e. as a price) or indirectly (i.e. derived from prices), or are based on prices on markets that have been classified as inactive. The parameters that can be observed here include, for example, exchange rates, yield curves and volatilities. At UNIQA, these include in particular quoted bonds that do not fulfil the conditions under Level 1, along with structured products.
  • Level 3: valuation parameters for assets or liabilities that are not based or are only partly based on observable market data. The valuations here primarily involve application of the discounted cash flow procedure, comparative procedures with instruments for which there are observable prices, and other procedures. As there are no observable parameters here in many cases, the estimates used can have a significant impact on the result of the valuation. At UNIQA, it is primarily other equity investments, private equity and hedge funds, ABS and structured products that do not fulfil the conditions under Level 2 that come under Level 3.

If the inputs used to determine the fair value of an asset or a liability can be assigned to different levels of the fair value hierarchy, the entire fair value measurement is assigned to the respective level of the fair value hierarchy that corresponds to the lowest input significant for the measurement overall.

The Group recognises reclassifications between different levels of the fair value hierarchy at the end of the reporting period in which the change occurred.

Valuation process and methods

Financial instruments measured at fair value

For the valuation of capital investments, procedures that are best suited for appropriate ascertainment of the value are applied primarily in the Group. The following standard valuation procedures are applied for financial instruments which come under Levels 2 and 3:

Market value-oriented approach

The valuation method in the market value-oriented approach is based on prices or other material information from market transactions which involve identical or comparable assets and liabilities.

Net present value approach

The net present value approach corresponds to the method whereby the future (expected) payment flows or earnings are inferred on a current amount.

Cost-oriented approach

The cost-oriented approach generally corresponds to the value which would have to be applied in order to procure the asset once again.

Non-financial assets and loans

The fair value of investment property within the scope of the impairment test in accordance with IAS 36, as well as for the disclosures according to IFRS 13, is determined based on expert reports.

The loans are accounted for at amortised cost in accordance with the valuation method in the "Loans and receivables" category. Any required impairment is determined with due regard to the collateral and the debtor's creditworthiness.

Financial liabilities

The fair value of financial liabilities and subordinated liabilities is determined using the discounted cash flow method. Yield curves and CDS spreads are used as inputs.

Valuation methods and inputs in the determination of fair values

Assets Price method Input factors Price model
Fixed-income securities
Listed bonds Listed price - -
Not listed bonds Theoretical price CDS spread, yield curves Present value method
Unquoted asset backed securities Theoretical price - Discounted cash flow,
single deal review, peer
Variable-income securities
Listed shares/investment funds Listed price - -
Private equities Theoretical price Certified net asset values Net asset value method
Hedge funds Theoretical price Certified net asset values Net asset value method
Other shares Theoretical value WACC,
(long-term) revenue growth rate,
(long-term) profit margins,
control premium
Expert opinion
Derivative financial instruments
Equity basket certificate Theoretical price CDS spread, yield curves Black-Scholes Monte Carlo N-DIM
CMS floating rate note Theoretical price CDS spread, yield curves,
volatilities (FX, cap/floor, swaption,
constant maturity swap, shares)
Libor market model, Hull-White-Garman
Kohlhagen Monte Carlo
CMS spread certificate Theoretical price CDS spread, yield curves,
volatilities (FX, cap/floor, swaption,
constant maturity swap, shares)
Contract specific model
Fund basket certificate Theoretical price Deduction of fund prices Contract specific model
FX (Binary) option Theoretical price CDS spread, yield curves,
volatilities (FX, cap/floor, swaption,
constant maturity swap, shares)
Black-Scholes-Garman-Kohlhagen Monte
Carlo N-DIM
Option (Inflation, OTC, OTC FX options) Theoretical price CDS spread, yield curves,
volatilities (FX, cap/floor, swaption,
constant maturity swap, shares)
Black-Scholes Monte Carlo N-DIM, contract
specific model, inflation market model NKIS
Structured bonds Theoretical price CDS spread, yield curves,
volatilities (FX, cap/floor, swaption,
constant maturity swap, shares)
Black-Scholes-Garman-Kohlhagen Monte
Carlo N-DIM, LMM
Swap, cross currency swap Theoretical price CDS spread, yield curves,
volatilities (FX, cap/floor, swaption,
constant maturity swap, shares)
Black-Scholes-Garman-Kohlhagen Monte
Carlo N-DIM, Black 76 model, Libor market
model, contract specific model
Swaption, total return swaption Theoretical price CDS spread, yield curves,
volatilities (FX, cap/floor, swaption,
constant maturity swap, shares)
Black - basis point volatility, contract
specific model
Variance, volatility, correlation swap Theoretical price CDS spread, yield curves,
volatilities (FX, cap/floor, swaption,
constant maturity swap, shares)
Contract specific model, Heston - Monte
Carlo optimal strategy
Investments from investment contracts
Listed shares/investment funds Listed price - -
Not listed investment funds Theoretical price CDS spread, yield curves Present value method
Loans and receivables
Loans Theoretical value Collateral, creditworthiness Discounted cash flow
Others
Land and buildings Theoretical value Construction and property value, location,
useable area, usage category, condition,
current contractual rent rates and current
vacancies including rental forecasts
Income value method,
asset value method, income value
and net asset value weighted

Valuation hierarchy

Assets and liabilities measured at fair value

At 30 June 2017
In € million
Level 1 Level 2 Level 3 Total
Available-for-sale financial assets
Variable-income securities 629.8 0.1 145.2 775.1
Fixed-income securities 12,184.4 3,049.7 231.9 15,466.0
Total 12,814.1 3,049.9 377.1 16,241.1
Financial assets recognised at fair value
through profit or loss
Variable-income securities 0.0 20.1 13.7 33.7
Fixed-income securities 110.3 83.8 60.6 254.8
Derivative financial instruments 0.3 89.5 73.2 163.0
Investments from investment contracts 56.9 1.0 0.8 58.6
Total 167.5 194.4 148.2 510.1
At 30 June 2017
In € million
Level 1 Level 2 Level 3 Total
Financial liabilities
Derivative financial instruments 0.5 23.9 5.2 29.6
Total 0.5 23.9 5.2 29.6

Fair values of assets and liabilities measured at amortised cost

Level 1 Level 2 Level 3 Total
0.0 0.0 2,255.7 2,255.7
0.0 0.0 37.2 37.2
61.4 272.5 93.1 426.9
61.4 272.5 130.3 464.1
At 30 June 2017
In € million
Level 1 Level 2 Level 3 Total
Financial liabilities
Liabilities from loans 0.0 0.0 14.3 14.3
Total 0.0 0.0 14.3 14.3
Subordinated liabilities 1,027.7 0.0 0.0 1,027.7

Assets and liabilities measured at fair value

at the previous year's reporting date

At 31 December 2016
In € million
Level 1 Level 2 Level 3 Total
Available-for-sale financial assets
Variable-income securities 394.3 6.8 270.7 671.7
Fixed-income securities 11,501.7 3,890.6 426.6 15,818.9
Total 11,896.0 3,897.3 697.3 16,490.6
Financial assets recognised at fair value
through profit or loss
Variable-income securities 0.0 25.1 19.2 44.3
Fixed-income securities 92.7 77.5 60.8 231.0
Derivative financial instruments 0.0 73.7 61.4 135.1
Investments from investment contracts 58.3 1.6 0.0 59.9
Total 151.0 177.9 141.4 470.3
Assets in disposal groups held for sale 3,764.0 357.6 32.2 4,153.8
At 31 December 2016
In € million
Level 1 Level 2 Level 3 Total
Financial liabilities

Derivative financial instruments 0.0 30.6 0.0 30.6 Total 0.0 30.6 0.0 30.6

Fair values of assets and liabilities measured at amortised cost

at the previous year's reporting date

At 31 December 2016
In € million
Level 1 Level 2 Level 3 Total
Investment property 0.0 0.0 2,248.3 2,248.3
Loans and receivables
Loans and other investments 0.0 0.0 40.0 40.0
Fixed-income securities 51.5 341.0 94.8 487.3
Total 51.5 341.0 134.8 527.3
Assets in disposal groups held for sale 0.0 0.0 5.9 5.9
Liabilities from loans 0.0 0.0 15.0 15.0
Total 0.0 0.0 15.0 15.0
Subordinated liabilities 927.2 0.0 0.0 927.2

Transfers between Levels 1 and 2

Transfers were made in the reporting period from Level 1 to Level 2 amounting to €335.3 million and from Level 2 to Level 1 amounting to €1,057.5 million. These are attributable primarily to changes in trading frequency and trading activity.

Level 3 financial instruments

In accordance with the hierarchy set forth in IFRS 13, Level 3 primarily includes fixed-income securities and other equity investments that come under the category "Available for sale".

The following table shows the changes to the fair values of financial instruments whose valuation procedures are not based on observable inputs.

In € million RZB shares Fixed-income
securities
Other Total
At 1 January 2017 126.1 426.6 286.0 838.6
Transfers from Level 3 to Level 1 – 126.1 0.0 0.0 – 126.1
Transfers into Level 3 0.0 101.2 0.9 102.1
Gains and losses recognised in
the income statement
0.0 – 24.4 – 0.7 – 25.1
Gains and losses recognised in
other comprehensive income
0.0 – 3.1 2.0 – 1.1
Purchases 0.0 3.0 23.7 26.6
Sales/redemptions 0.0 – 271.3 – 23.7 – 295.1
At 30 June 2017 0.0 231.9 288.1 520.1

The transfers between Levels 2 and 3 were made as a result of changes in the observability of the relevant inputs. Due to the merger of Raiffeisen Zentralbank Österreich Aktiengesellschaft, Vienna (RZB) with Raiffeisen Bank International AG, Vienna, (RBI) UNIQA now only holds shares in RBI. Following the market listing of RBI these now have Level 1 input parameters, resulting in a transfer of the former RZB shares to Level 1.

Sensitivities

For the most important fixed-income securities, an increase in the discount rate of 100 basis points results in a –2.0 per cent reduction in the value. A reduction in the discount rate by 100 basis points results in a 2.6 per cent increase in value.

3. Assets and liabilities in disposal groups held for sale

Due to the contract of assignment dated 28 July 2015, the 29 per cent holding in Medial Beteiligungs-Gesellschaft m.b.H. (Vienna) (Medial) is recorded under this item.

On 16 May 2017, the sale of the 99.7 per cent holding in the Group company UNIQA Assicurazioni S.p.A. (Italian Group) was closed. Assets and liabilities that were recorded under the item "Assets and liabilities in disposal groups held for sale" up until the closing were derecognised accordingly.

Assets and liabilities in disposal groups held for sale are as follows:

In € million Medial Italian Group 30/6/2017 31/12/2016
Assets
Property, plant and equipment 0.0 0.0 0.0 21.7
Intangible assets 0.0 0.0 0.0 112.0
Investments
Investment property 0.0 0.0 0.0 1.4
Financial assets accounted for using the equity method 9.3 0.0 9.3 9.3
Other investments 0.0 0.0 0.0 4,156.7
Unit-linked and index-linked life insurance investments 0.0 0.0 0.0 354.2
Reinsurers' share of technical provisions 0.0 0.0 0.0 206.9
Receivables, including insurance receivables 0.0 0.0 0.0 163.1
Income tax receivables 0.0 0.0 0.0 16.7
Deferred tax assets 0.0 0.0 0.0 19.0
Cash and cash equivalents 0.0 0.0 0.0 12.7
Assets in disposal groups held for sale 9.3 0.0 9.3 5,073.7
In € million Medial Italian Group 30/6/2017 31/12/2016
Liabilities
Technical provisions 0.0 0.0 0.0 4,213.5
Technical provisions for unit-linked and index-linked life
insurance 0.0 0.0 0.0 354.2
Other provisions 0.0 0.0 0.0 11.0
Liabilities and other items classified as liabilities 0.0 0.0 0.0 231.1
Income tax liabilities 0.0 0.0 0.0 7.6
Deferred tax liabilities 0.0 0.0 0.0 44.8
Liabilities in disposal groups held for sale 0.0 0.0 0.0 4,862.2

In the course of the sale of the Italian Group, UNIQA provided a contractual guarantee to Società Reale Mutua di Assicurazioni in the amount of maximum €40 million from the sales partnership with Veneto Banca S.p.A. (Montebelluna, Italy) which remains in place until 2019.

According to the current status of the insolvency proceedings regarding Veneto Banca S.p.A. that began in June 2017, Banca Intesa Sanpaolo (Turin, Italy) will be taking over part of Veneto Banca's business. However, the sales partnership with the UNIQA Italian Group will probably not be taken over as part of this process. As a result, UNIQA is likely to be liable for payment of the full amount as a result of the contractual guarantee. A corresponding provision of €40 million has been formed for this purpose.

As at the disposal date the net assets sold and the profit/(loss) from the de-consolidation were as follows:

In € million Italian Group Intragroup
balances
Total
Property, plant and equipment 22.6 0.0 22.6
Intangible assets 112.1 0.0 112.1
Investments
Investment property 1.4 0.0 1.4
Other investments 4,327.3 0.0 4,327.3
Unit-linked and index-linked life insurance investments 361.2 0.0 361.2
Reinsurers' share of technical provisions 201.5 153.3 354.8
Receivables, including insurance receivables 135.8 7.1 143.0
Income tax receivables 16.6 0.0 16.6
Deferred tax assets 22.1 0.0 22.1
Cash and cash equivalents 12.1 0.0 12.1
Assets in disposal groups held for sale 5,212.8 160.4 5,373.2
Technical provisions 4,378.8 0.0 4,378.8
Technical provisions for unit-linked and index-linked life insurance 361.2 0.0 361.2
Financial liabilities 0.0 37.7 37.7
Other provisions 11.5 0.0 11.5
Liabilities and other items classified as liabilities 234.2 20.0 254.2
Income tax liabilities 8.1 0.0 8.1
Deferred tax liabilities 40.2 0.0 40.2
Liabilities in disposal groups held for sale 5,034.0 57.7 5,091.7
Net assets sold 281.5
In € million
Consideration received in cash 294.1
Adjustments to the sale price
Obligation connected with the Veneto Banca sales partnership – 40.0
Other purchase price adjustments – 18.0
Less net assets sold (including non-controlling interests) – 281.5
Less the portion of net assets held by non-controlling interests 10.2
Profit/(loss) from the de-consolidation as at 30 June 2017 –35.3

NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

4. Premiums

Premiums earned
In € million
1 –6/2017 1 –6/2016
Property and casualty insurance 1,253.9 1,165.6
Gross 1,322.3 1,227.4
Reinsurers' share – 68.5 – 61.8
Health insurance 511.6 495.0
Gross 512.1 495.3
Reinsurers' share – 0.5 – 0.3
Life insurance 549.4 569.1
Gross 567.8 587.6
Reinsurers' share – 18.3 – 18.6
Total 2,314.9 2,229.6
Property and casualty insurance premiums written
In € million
1 –6/2017 1 –6/2016
Direct insurance
Fire and business interruption insurance 148.9 133.4
Household insurance 93.8 89.3
Other property insurance 139.7 132.3
Motor TPL insurance 307.2 299.9
Other motor insurance 262.0 244.2
Casualty insurance 182.4 176.1
Liability insurance 144.2 139.9
Legal expense insurance 45.5 43.8
Marine, aviation and transport insurance 29.6 30.2
Other forms of insurance 36.2 33.9
Total 1,389.5 1,322.9
Indirect insurance
Marine, aviation and transport insurance 0.9 1.9
Other forms of insurance 51.2 29.7
Total 52.1 31.6
Total direct and indirect insurance (amount consolidated) 1,441.6 1,354.5
Premiums earned
In € million
1 –6/2017 1 –6/2016
Property and casualty insurance 1,253.9 1,165.6
Gross 1,322.3 1,227.4
Reinsurers' share – 68.5 – 61.8
Health insurance 511.6 495.0
Gross 512.1 495.3
Reinsurers' share – 0.5 – 0.3
Life insurance 549.4 569.1
Gross 567.8 587.6
Reinsurers' share – 18.3 – 18.6
Total 2,314.9 2,229.6

5. Operating expenses

In € million 1 –6/2017 1 –6/2016
Property and casualty insurance
Acquisition costs
Payments 299.9 288.3
Change in deferred acquisition costs – 5.5 – 18.7
Other operating expenses 109.1 112.9
Reinsurance commission and share of profit from reinsurance ceded – 6.8 – 6.1
396.7 376.3
Health insurance
Acquisition costs
Payments 50.5 56.8
Change in deferred acquisition costs – 4.4 – 4.8
Other operating expenses 36.4 34.2
Reinsurance commission and share of profit from reinsurance ceded – 0.2 – 0.2
82.3 85.9
Life insurance
Acquisition costs
Payments 100.5 109.6
Change in deferred acquisition costs 13.0 15.2
Other operating expenses 57.2 48.3
Reinsurance commission and share of profit from reinsurance ceded – 4.0 – 4.5
166.7 168.6
Total 645.7 630.8

6. Insurance benefits

Gross
Reinsurers' share
Net
In € million 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
Property and casualty insurance
Claims expenses
Claims paid 752.2 714.0 – 15.9 – 26.0 736.3 687.9
Change in provision for unsettled claims 57.7 44.3 5.0 6.9 62.7 51.2
Total 809.8 758.2 –10.8 –19.1 799.0 739.1
Change in insurance provision – 0.1 – 0.2 0.0 0.0 – 0.1 – 0.2
Change in other technical provisions – 0.6 – 0.1 0.0 0.0 – 0.6 – 0.1
Non-profit related and profit-related premium refund
expenses 18.2 16.2 0.0 0.0 18.2 16.2
Total benefits 827.3 774.2 –10.8 –19.1 816.5 755.1
Health insurance
Claims expenses
Claims paid 365.1 347.1 – 1.4 0.0 363.7 347.1
Change in provision for unsettled claims – 3.4 4.5 0.5 0.0 – 2.9 4.5
Total 361.7 351.7 –0.9 0.0 360.8 351.6
Change in insurance provision 69.4 63.0 – 0.1 0.0 69.4 63.0
Change in other technical provisions 0.0 – 0.6 0.0 0.0 0.0 – 0.6
Non-profit related and profit-related premium refund
expenses 5.4 10.7 0.0 0.0 5.4 10.7
Total benefits 436.5 424.7 –0.9 0.0 435.5 424.7
Life insurance
Claims expenses
Claims paid 834.1 1,016.7 – 10.4 – 12.8 823.7 1,003.9
Change in provision for unsettled claims – 2.3 – 20.7 – 1.0 0.5 – 3.3 – 20.1
Total 831.8 996.0 –11.4 –12.3 820.4 983.8
Change in insurance provision – 331.9 – 471.1 – 5.8 – 5.5 – 337.7 – 476.5
Change in other technical provisions 0.0 5.1 – 0.2 0.0 – 0.2 5.1
Non-profit related and profit-related premium refund expenses
and/or (deferred) benefit participation expenses 14.5 16.3 0.0 0.0 14.5 16.3
Total benefits 514.4 546.3 –17.3 –17.7 497.0 528.6
Total 1,778.2 1,745.2 –29.1 –36.8 1,749.0 1,708.4

7. Investment income

Classified by business line Property and
casualty insurance
Health insurance Life insurance Group
In € million 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
Investment property –1.3 3.7 2.6 2.2 15.4 30.0 16.7 35.9
Financial assets accounted for using the equity method 5.4 4.1 –3.9 –5.3 –6.2 –7.8 –4.8 –9.1
Variable-income securities 13.0 2.4 12.1 0.0 6.8 –9.9 32.0 –7.5
Available for sale 13.0 2.0 11.7 – 1.6 13.4 – 8.7 38.1 – 8.3
At fair value through profit or loss 0.0 0.4 0.4 1.6 – 6.6 – 1.3 – 6.2 0.7
Fixed-income securities 33.7 45.4 26.5 44.9 103.5 137.6 163.7 227.9
Available for sale 33.8 45.8 26.8 44.7 100.8 130.9 161.4 221.4
At fair value through profit or loss – 0.1 – 0.4 – 0.4 0.2 2.7 6.7 2.2 6.6
Loans and other investments 1.7 2.5 0.7 2.5 18.7 23.5 21.2 28.4
Loans 1.4 0.8 1.7 1.8 3.9 5.7 7.1 8.3
Other investments 0.3 1.7 – 1.0 0.7 14.8 17.8 14.1 20.1
Derivative financial instruments 6.4 0.6 10.9 0.1 2.7 –7.1 19.9 –6.3
Investment administration expenses, interest paid and other
investment expenses –4.1 –6.0 –4.5 –4.2 –6.6 –6.6 –15.2 –16.8
Total 54.8 52.7 44.3 40.2 134.4 159.5 233.5 252.4
Classified by type of income Current income Gains/losses from
disposals and
changes in value
Total of which impairment
In € million 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016 1 –6/2017 1 –6/2016
Financial assets recognised at fair value through profit or loss 4.3 0.0 11.7 1.0 16.0 1.0 0.0 0.0
Variable-income securities (within the framework of fair value option) 1.0 2.0 – 7.1 – 1.3 – 6.2 0.7 0.0 0.0
Fixed-income securities (within the framework of fair value option) 2.5 2.2 – 0.3 4.4 2.2 6.6 0.0 0.0
Derivative financial instruments 0.8 – 4.2 19.1 – 2.1 19.9 – 6.3 0.0 0.0
Investments under investment contracts1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Available-for-sale financial assets 188.2 213.3 11.4 –0.2 199.6 213.1 –35.3 –41.8
Variable-income securities 11.3 25.7 26.8 – 34.0 38.1 – 8.3 – 0.8 – 35.8
Fixed-income securities 176.8 187.6 – 15.4 33.7 161.4 221.4 – 34.5 – 6.0
Loans and receivables 22.3 24.9 –1.1 3.5 21.2 28.4 0.0 –0.3
Fixed-income securities 4.2 6.9 0.8 0.0 5.0 6.9 0.0 0.0
Loans and other investments 18.1 18.0 – 1.9 3.5 16.2 21.5 0.0 – 0.3
Investment property 40.8 40.9 –24.1 –5.1 16.7 35.9 0.0 0.0
Financial assets accounted for using the equity method –4.8 –9.2 0.0 0.1 –4.8 –9.1 0.0 0.0
Investment administration expenses, interest paid and
other investment expenses –15.2 –16.8 0.0 0.0 –15.2 –16.8 0.0 0.0
Total 235.5 253.1 –2.0 –0.7 233.5 252.4 –35.3 –42.0

1) Income from investments under investment contracts is not stated due to its transitory character.

Net profit/(loss) by measurement category

In € million 1 –6/2017 1 –6/2016
Financial assets recognised at fair value through profit or loss
Recognised in profit/(loss) for the period 16.0 1.0
Available-for-sale financial assets
Recognised in profit/(loss) for the period 199.6 213.1
of which reclassified from equity to consolidated income statement – 85.5 – 32.6
Recognised in other comprehensive income – 276.0 607.5
Net income –76.5 820.6
Loans and receivables
Recognised in profit/(loss) for the period 21.2 28.4
Financial liabilities measured at amortised cost
Recognised in profit/(loss) for the period – 27.0 – 33.6

The net investment income of €233.5 million (1–6/2016: €252.4 million) includes realised and unrealised profits and losses of €–2.0 million (1–6/2016: €–0.7 million), which includes currency losses of €41.6 million (1–6/2016: currency losses in the amount of €12.6 million). These amounts are essentially the result of investments in US dollars.

In addition, currency effects amounting to €–16.6 million (1–6/2016: €2.1 million) were recognised directly in equity.

8. Discontinued operations

1 –6/20171) 1 –6/2016
349.4 611.8
23.4 42.1
0.4 0.2
– 337.6 – 583.2
– 28.7 – 53.8
– 2.0 – 5.0
4.9 12.0
20.3 49.0
2.2 3.7
– 23.4 – 42.1
– 0.7 – 2.2
–1.6 8.4
3.3 20.5
– 0.2 – 0.9
3.1 19.6
– 0.4 – 3.4
2.7 16.2
– 35.3 7.5
– 0.8 0.0
–33.4 23.7
– 33.3 23.1
– 0.1 0.6

1) Due to contractual arrangements with the seller, UNIQA only has a right to the profit of the first quarter of 2017.

OTHER DISCLOSURES

9. Dividends paid

A dividend of €0.49 per share was paid on 12 June 2017 (previous year: €0.47). This corresponds to a distribution amounting to €151.0 million (previous year: €144.8 million).

10. Employees

Average number of employees 1 –6/2017 1 –6/2016
Total 12,806 13,442
of which sales 4,404 5,141
of which administration 8,402 8,301

EVENTS AFTER THE REPORTING DATE

With regard to storms in July and August 2017, a severe hailstorm occurred on 10 July 2017 constituting a significant weather event for UNIQA. The hailstorm, that spread over Vienna, the eastern part of Lower Austria and Burgenland, caused damages of around €12 million. The damages primarily affected comprehensive motor insurance as well as household and homeowner insurance.

Declaration of the Legal Representatives

The Management Board of UNIQA Insurance Group AG hereby confirms that, to the best of its knowledge, the condensed half-year financial report gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group as required by the applicable accounting standards and that the Group's half-year management report gives a true and fair view of important events that have occurred during the first six months of the financial year and their impact on the condensed half-year financial report, of the principal risks and uncertainties for the remaining six months of the financial year and of the major related party transactions to be disclosed.

This half-year financial report was neither audited nor reviewed by an auditor.

Vienna, August 2017

Andreas Brandstetter Chairman of the Management Board

Erik Leyers

Member of the Management Board

Kurt Svoboda Member of the Management Board

IMPRINT

Owner and publisher UNIQA Insurance Group AG Commercial registry no.: 92933t Data processing register: 0055506

Typesetting

Produced in-house using firesys

CONTACT

UNIQA Insurance Group AG Untere Donaustraße 21, 1029 Vienna, Austria Phone:(+43) 01 21175-3773 E-mail: [email protected]

www.uniqagroup.com

Clause regarding predictions about the future

This report contains statements which refer to the future development of the UNIQA Group. These statements present estimations which were reached upon the basis of all of the information available to the Group at the present time. If the assumptions on which they are based do not occur, the actual events may vary from the results currently expected. As a result, no guarantee can be provided for the information given.

This is a translation of the German Interim Report of UNIQA Group. In case of any divergences, the German original is legally binding.

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