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Uniqa Insurance Group AG

Governance Information Apr 14, 2016

764_10-k_2016-04-14_8751904d-8d78-4cfe-8bab-fb1e8481272e.pdf

Governance Information

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Annual Financial Report 2015 according to section 82(4) of the Austrian Stock Exchange Act UNIQA Insurance Group AG

Think FUTURE.

Corporate Governance Report ��������������������������������������������������������������������������������������������������������������������� 4
Report of the Supervisory Board�����������������������������������������������������������������������������������������������������������������15
Group Management Report�������������������������������������������������������������������������������������������������������������������������18
Consolidated Financial Statements ���������������������������������������������������������������������������������������������������������� 36
Notes to the Consolidated Financial Statements�����������������������������������������������������������������������������������42
Audit Opinion����������������������������������������������������������������������������������������������������������������������������������������������� 165

Corporate Governance Report

Since 2004, the UNIQA Group has pledged to comply with the Austrian Code of Corporate Governance and publishes the declaration of conformity both in the Group annual report and on the Group website at www.uniqagroup.com in the Investor Relations section. The Austrian Code of Corporate Governance is also publicly available at www.corporate-governance.at.

Implementation and compliance with the individual rules in the Code are evaluated annually by PwC Wirtschaftsprüfung GmbH – with the exception of Rules 77 to 83. Rules 77 to 83 of the Code are evaluated by the law firm Schönherr Rechtsanwälte GmbH. The evaluation is carried out largely using the questionnaire for the evaluation of compliance with the Code published by the Austrian Working Group for Corporate Governance (as amended January 2015). The reports on the external evaluation in accordance with Rule 62 of the Austrian Code of Corporate Governance can also be found at www.uniqagroup.com.

UNIQA also declares its continued willingness to comply with the Austrian Code of Corporate Governance as currently amended. However, UNIQA deviates from the provisions of the Code as amended with regard to the following C rules (comply or explain rules) and the explanations are set out below.

RULE 49

Due to the growth of UNIQA's shareholder structure and the special nature of the insurance business with regard to the investment of insurance assets, there are a number of contracts with individual members of the Supervisory Boards of related companies, in which these Supervisory Board members discharge duties as members of governing bodies. If such contracts require approval by the Supervisory Board in accordance with Section 95(5)(12) of the Austrian Stock Corporation Act (Rule 48), the details of these contracts cannot be made public for reasons of company policy and competition law. All transactions are in any case entered into and processed on an arm's length basis.

Composition of the Management Board

CHAIRMAN

Andreas Brandstetter,

Chief Executive Officer (CEO)

*1969, appointed 1 January 2002 until 31 December 2016

Responsible for:

  • Investor relations
  • Group Communication
  • Group Marketing
  • Group Human Resources
  • Group Internal Audit
  • Group General Secretary

Supervisory Board appointments or comparable functions in other domestic and foreign companies not included in the consolidated financial statements

  • Member of the Supervisory Board of Raiffeisen Zentralbank Österreich Aktiengesellschaft, Vienna (until 27 June 2015)
  • Member of the Board of Directors of SCOR SE, Paris (until 30 April 2015)

Number of UNIQA shares held as at 31 December 2015: 21,819 shares

MEMBERS

Hannes Bogner,

Chief Investment Officer (CIO)

*1959, appointed 1 January 1998 until 31 December 2016

Responsible for:

  • Group Asset Management
  • Legal & Compliance
  • Group Internal Audit

Supervisory Board appointments or comparable functions in other domestic and foreign companies not included in the consolidated financial statements

  • Member of the Supervisory Board of Casinos Austria Aktiengesellschaft, Vienna
  • Member of the Supervisory Board of CEESEG Aktiengesellschaft, Vienna
  • Member of the Supervisory Board of Niederösterreichische Versicherung AG, St. Pölten
  • Member of the Supervisory Board of Wiener Börse AG, Vienna

Number of UNIQA shares held as at 31 December 2015: 7,341 shares

Wolfgang Kindl

*1966, appointed 1 July 2011 until 31 December 2016

Responsible for:

• UNIQA International

Number of UNIQA shares held as at 31 December 2015: 7,341 shares

Thomas Münkel,

Chief Operating Officer (COO)

*1959, appointed 1 January 2013 until 31 December 2016

Responsible for:

  • Group Operations
  • Group IT
  • Group Project Office

Supervisory Board appointments or comparable functions in other domestic and foreign companies not included in the consolidated financial statements

• Member of the Supervisory Board of Raiffeisen Informatik GmbH, Vienna

Number of UNIQA shares held as at 31 December 2015: 7,341 shares

Kurt Svoboda,

Chief Financial and Risk Officer (CFO/CRO)

*1967, appointed 1 July 2011 until 31 December 2016

Responsible for:

  • Group Finance Accounting
  • Group Finance Controlling
  • Group Actuarial and Risk Management
  • Group Reinsurance
  • Regulatory Affairs

Number of UNIQA shares held as at 31 December 2015: 7,990 shares

The work of the Management Board

The work of the members of the Management Board is regulated by the rules of procedure. The division of the business responsibility as decided by the entire Management Board is approved by the Supervisory Board. The rules of procedure govern the obligations of the members of the Management Board to provide the Supervisory Board and each other with information and approve each other's activities. The rules of procedure specify a list of activities that require consent from the Supervisory Board. The Management Board generally holds weekly meetings in which the members of the Management Board report on the current course of business, determine what steps should be taken and make strategic corporate decisions. In addition, there is a continuous exchange of information between the members of the Management Board regarding relevant activities and events.

The meetings of the Management Board of UNIQA Insurance Group AG are attended by the CEOs of UNIQA Österreich Versicherungen AG and Raiffeisen Versicherung AG – Hartwig Löger and Klaus Pekarek respectively – with an advisory vote. The resulting body is known as the Group Executive Board.

The Management Board informs the Supervisory Board at regular intervals, in a timely and comprehensive manner, about all relevant questions of business development, including the risk situation and the risk management of the Group. In addition, the Chairman of the Supervisory Board is in regular contact with the CEO to discuss the Company's strategy, business performance and risk management.

Members of the Supervisory Board

CHAIRMAN

Walter Rothensteiner

*1953, appointed 3 July 1995 until the 20th AGM (2019)

Supervisory Board appointments in domestic and foreign listed companies

• Chairman of the Supervisory Board of Raiffeisen Bank International AG, Vienna

FIRST VICE CHAIRMAN

Christian Kuhn

*1954, appointed 15 May 2006 until the 20th AGM (2019)

SECOND VICE CHAIRMAN

Erwin Hameseder

*1956, appointed 21 May 2007 until the 20th AGM (2019)

Supervisory Board appointments in domestic and foreign listed companies

  • Chairman of the Supervisory Board of AGRANA Beteiligungs-Aktiengesellschaft, Vienna
  • Vice Chairman of the Supervisory Board of STRABAG SE, Villach
  • First Vice Chairman of the Supervisory Board of Flughafen Wien Aktiengesellschaft, Vienna Airport
  • First Vice Chairman of the Supervisory Board of Raiffeisen Bank International AG, Vienna
  • Second Vice Chairman of the Supervisory Board of Südzucker AG, Mannheim

THIRD VICE CHAIRMAN

Eduard Lechner

*1956, appointed 25 May 2009 until the 20th AGM (2019)

MEMBERS

Markus Andréewitch

*1955, appointed 26 May 2014 until the 20th AGM (2019)

Ernst Burger

*1948, appointed 25 May 2009 until the 20th AGM (2019)

Supervisory Board appointments in domestic and foreign listed companies

• Vice Chairman of the Supervisory Board of Josef Manner & Comp. Aktiengesellschaft, Vienna

Peter Gauper

*1962, appointed 29 May 2012 until the 20th AGM (2019)

Johannes Schuster

*1970, appointed 29 May 2012 until the 20th AGM (2019)

Supervisory Board appointments in domestic and foreign listed companies

• Member of the Supervisory Board of Raiffeisen International AG, Vienna

Kory Sorenson

*1968, appointed 26 May 2014 until the 20th AGM (2019)

Supervisory Board appointments in domestic and foreign listed companies

  • Member of the Board of Directors of SCOR SE, Paris
  • Member of the Board of Directors of Phoenix Group Holdings, Cayman Islands
  • Member of the Board of Directors of Pernod Ricard, Paris

DELEGATED BY THE CENTRAL WORKS COUNCIL

Johann-Anton Auer *1954, since 18 February 2008

Number of UNIQA shares held as at 31 December 2015: 10,106 shares

Peter Gattinger

*1976, from 10 April 2013 until 26 May 2015

Heinrich Kames

*1962, since 10 April 2013

Number of UNIQA shares held as at 31 December 2015: 56 shares

Harald Kindermann

*1969, since 26 May 2015

Number of UNIQA shares held as at 31 December 2015: 750 shares

Franz-Michael Koller

*1956, since 17 September 1999

Number of UNIQA shares held as at 31 December 2015: 912 shares

Friedrich Lehner

*1952, from 31 May 2000 to 1 September 2008 and since 15 April 2009

Number of UNIQA shares held as at 31 December 2015: 912 shares

The Supervisory Board of UNIQA Insurance Group AG held six meetings in 2015.

Committees of the Supervisory Board

COMMITTEE FOR BOARD AFFAIRS

Chairman

• Walter Rothensteiner

Vice Chairman

• Christian Kuhn

Members

  • Erwin Hameseder
  • Eduard Lechner

WORKING COMMITTEE

Chairman

• Walter Rothensteiner

Vice Chairman

• Christian Kuhn

Members

  • Erwin Hameseder
  • Ernst Burger
  • Eduard Lechner
  • Johannes Schuster

Delegated by the Central Works Council

  • Johann-Anton Auer
  • Heinrich Kames
  • Franz-Michael Koller

AUDIT COMMITTEE

Chairman

• Walter Rothensteiner

Vice Chairman

• Christian Kuhn

Members

  • Erwin Hameseder
  • Eduard Lechner
  • Kory Sorenson

Delegated by the Central Works Council

  • Johann-Anton Auer
  • Heinrich Kames
  • Franz-Michael Koller

INVESTMENT COMMITTEE

Chairman

• Erwin Hameseder

Vice Chairman

• Christian Kuhn

Members

  • Eduard Lechner
  • Peter Gauper
  • Kory Sorenson

Delegated by the Central Works Council

  • Johann-Anton Auer
  • Heinrich Kames
  • Franz-Michael Koller

The work of the Supervisory Board and its Committees

The Supervisory Board advises the Management Board in its strategic planning and projects. It decides on the matters assigned to it by law, the Articles of Association and its rules of procedure. The Supervisory Board is responsible for supervising the management of the Company by the Management Board. It is made up of nine shareholder representatives.

A Committee for Board Affairs has been appointed to handle the relationship between the Company and the members of its Management Board relating to employment and salary; this committee also acts as the Nominating and Remuneration Committee. The Committee for Board Affairs dealt with legal employment formalities concerning the members of the Management Board and with questions relating to remuneration policy and succession planning at its two meetings in 2015.

The Working Committee of the Supervisory Board is called upon to make decisions only if the urgency of the matter means that the decision cannot wait until the next meeting of the Supervisory Board. It is the Chairman's responsibility to assess the urgency of the matter. The decisions passed must be reported in the next meeting of the Supervisory Board. Generally, the Working Committee can make decisions on any issue that is the responsibility of the Supervisory Board but this does not include issues of particular importance or matters that must be decided upon by the full Supervisory Board by law. The Working Committee did not convene for any meetings in 2015. It made one decision by way of circular resolution.

The Audit Committee of the Supervisory Board performs the duties assigned to it by law. The Audit Committee convened for three meetings, which were also attended by the auditor of the (consolidated) financial statements. The meetings discussed all the documents relating to the financial statements, the Corporate Governance Report and the appropriation of profit proposed by the Management Board. Furthermore, the audit of the 2015 financial statements of the companies of the consolidated group was planned and the auditor reported on the results of preliminary audits. In particular, the Audit Committee was provided on a quarterly basis with the reports of the Internal Auditing department concerning audit areas and material findings based on the audits conducted.

Finally, the Investment Committee advises the Management Board with regard to its investment policy; it has no decision-making authority. The Investment Committee held four meetings at which the members discussed the capital investment strategy, questions concerning capital structure and the focus of risk and asset liability management.

The various chairmen of the committees informed the members of the Supervisory Board about the meetings and the work of the respective committees. For information concerning the activities of the Supervisory Board and its committees, please also refer to the details in the Report of the Supervisory Board.

Independence of the Supervisory Board

All elected members of the Supervisory Board have declared their independence under Rule 53 of the Austrian Code of Corporate Governance. Kory Sorenson satisfies the criteria in Rule 54 for companies with a free float of more than 20 per cent.

A Supervisory Board member is considered independent if he or she is not in any business or personal relationship with the company or its Management Board, that represents a material conflict of interests and is therefore capable of influencing the behaviour of the member concerned.

UNIQA has established the following points as additional criteria for determining the independence of a Supervisory Board member:

  • The Supervisory Board member should not have been a member of the Management Board or a managing employee of the Company or a subsidiary of the Company in the past five years.
  • The Supervisory Board member should not maintain or have maintained within the last year any business relationship with the Company or a subsidiary of the Company that is material for the Supervisory Board member concerned. This also applies to business relationships with companies in which the Supervisory Board member has a significant economic interest but does not apply to functions performed on decision-making bodies in the Group.
  • The Supervisory Board member should not have been an auditor of the Company or a shareholder or salaried employee of the auditing company within the last three years.

  • The Supervisory Board member should not be a member of the Management Board of another company in which a Management Board member of our Company is a member of the other company's Supervisory Board unless one of the companies is a member of the other company's group or holds an investment in the other company.

  • The Supervisory Board member should not be a member of the Supervisory Board for longer than 15 years. This does not apply to Supervisory Board members who are shareholders with a business investment or who are representing the interests of such a shareholder.
  • The Supervisory Board member should not be a close family relative (direct descendants, spouses, life partners, parents, uncles, aunts, siblings, nieces, nephews) of a Management Board member or of persons who are in one of the positions described in the above points.

Measures to promote women on the Managment Board, the Supervisory Board and in executive positions

UNIQA is convinced that a high degree of diversity in the Group can enhance its success on a sustainable basis. Diversity at management levels has a positive impact on the corporate culture. UNIQA defines diversity as different nationalities, cultures and a collective of men and women. This diversity also reflects the make-up of our customers in Austria and in 18 other European countries, and helps us to understand them better in order to offer suitable products and services. People from more than 32 different countries are employed by UNIQA at the Vienna corporate head office alone.

Over the course of 2015, the proportion of women on Management Boards and in senior executive positions throughout the Group rose to 20 per cent. The equivalent figure at an international level was 29 per cent – this represents a 4 per cent increase compared with the previous year.

The fact that the shareholder representative on our Supervisory Board Kory Sorenson was selected as one of the 100 most influential women in the insurance industry by a British professional magazine is particularly encouraging.

Enabling employees to achieve a work-life balance and providing them with straightforward access to services that make everyday life easier, especially for mothers, are key factors in promoting women. UNIQA has created a comprehensive range of services known as "Freiraum" (Latitude) that addresses these needs. In conjunction with an external partner (KibisCare), this range of services includes a comprehensive childcare service even on "bridging days" (between a public holiday and the weekend), an advisory and agency service for childcare, private tuition, as well as a broad range of health and sports activities. Advice and support with caring for family members has also been offered since 2015 as part of the "Elder Care" scheme.

UNIQA also supports flexible working hours and offers the option of teleworking. In 2015, 23 per cent of the administrative employees in Austria made use of part-time working while 11 per cent opted for teleworking.

In terms of professional development for managers, UNIQA believes that the most promising approach is to undertake joint development activities for both women and men. Cooperation between men and women then becomes a matter of course and also works much better on a day-to-day basis. The "INSPIRE" management development programme, which has been running since 2013, aims to put this joint development approach into practice: it brings together managers from all the markets in the UNIQA Group; a quarter of the participants are women. From a recruitment perspective, however, UNIQA exercises positive discrimination, giving preference to female applicants where they have the same skills and qualifications.

Remuneration Report

REMUNERATION OF THE MANAGEMENT BOARD AND SUPERVISORY BOARD

The members of the Management Board receive their remuneration exclusively from UNIQA Insurance Group AG, the Group holding company.

In € thousand 2015 2014
The expenses attributable to the financial year in question for the
remuneration of the members of the Management Board amounted to:
Fixed remuneration1) 2,469 2,468
Variable remuneration 1,029 2,242
Current remuneration 3,498 4,710
Termination benefit entitlements 0 0
Total 3,498 4,710
of which proportionately recharged to operating subsidiaries: 2,157 2,173
Former members of the Management Board and their surviving dependants received: 2,751 2,706

1) The fixed salary components included remuneration in kind equivalent to € 86,661 (2014: € 85,463).

The breakdown of the total Management Board remuneration among the individual members of the Management Board was as follows:

Name of Mgt. Board member
In € thousand
Fixed
remunera
tion
Variable
remuneration
(STI)1)
Multi-year share-based
remuneration (LTI)2)
Total current
remuneration
Termination
benefit
entitlements
Total for
the year
Andreas Brandstetter 609 250 0 859 0 859
Hannes Bogner 459 195 0 653 0 653
Wolfgang Kindl 459 190 0 649 0 649
Thomas Münkel 485 204 0 689 0 689
Kurt Svoboda 458 190 0 648 0 648
Total 2015 2,469 1,029 0 3,498 0 3,498
Total 2014 2,468 2,242 0 4,710 0 4,710

1) The Short-Term Incentive (STI) includes the variable remuneration for the 2014 financial year, paid out in 2015.

2) The Long-Term Incentive (LTI) corresponds with a share-based remuneration agreement that was introduced in 2013 for the first time, with the beneficiary entitled to receive a cash settlement following a 4-year term. Details can be found in the Notes to the Consolidated Financial Statements.

In 2016, it is expected that the members of the Management Board of the UNIQA Insurance Group AG will be paid a variable remuneration (STI) in the amount of €1.9 million for the 2015 financial year.

In addition to the remuneration listed above, the following pension fund contributions were paid in the financial year for the existing pension commitments to the members of the Management Board. The compensation payments arise if a member of the Management Board steps down before the age of 65 because pension entitlements are generally funded in full until the age of 65.

PENSION FUNDS CONTRIBUTIONS

the year
Andreas Brandstetter
84
0
84
Hannes Bogner
128
0
128
Wolfgang Kindl
119
0
119
Thomas Münkel
245
0
245
Kurt Svoboda
105
0
105
Total 2015
681
0
681
Total 2014
681
0
681

The remuneration paid to the members of the Supervisory Board for their work in the 2014 financial year was €443,750. Provisions of €425,000 have been set aside for the remuneration to be paid for this work in 2015. A total of €49,100 was paid out in 2015 to cover attendance fees and out-of-pocket expenses (2014: €32,700).

In € thousand 2015 2014
Current financial year (provision) 425 444
Attendance fees 49 33
Total 474 476

The breakdown of the total remuneration (including attendance fees) paid to the individual

members of the Supervisory Board was as follows:

Name of Supervisory Board member Remuneration Remuneration
In € thousand 2015 2014
Walter Rothensteiner 74 72
Christian Kuhn 65 61
Georg Winckler 0 24
Erwin Hameseder 65 62
Eduard Lechner 65 53
Günther Reibersdorfer 0 22
Ewald Wetscherek 0 20
Markus Andréewitch 33 20
Ernst Burger 37 35
Peter Gauper 39 35
Johannes Schuster 37 35
Kory Sorenson 43 27
Payments to employee representatives 17 12
Total 474 476

Former members of the Supervisory Board did not receive any remuneration.

The disclosures in accordance with Section 239(1) of the Austrian Commercial Code in conjunction with Section 80b of the Austrian Insurance Supervisory Act, which must be included as mandatory disclosures in the notes to the financial statements for IFRS financial statements to release the Company from the requirement to prepare financial statements in accordance with the Austrian Commercial Code, are defined more broadly for the separate financial statements in accordance with the provisions of the Austrian Commercial Code. The separate financial statements include not only the remuneration for the decision-making functions (Management Board) of UNIQA Insurance Group AG, but also the remuneration paid to the Management Boards of the subsidiaries if such remuneration is based on a contract with UNIQA Insurance Group AG.

PRINCIPLES OF PROFIT-SHARING FOR THE MANAGEMENT BOARD

A short-term incentive (STI) is offered in which a one-off payment is made based on the relevant earnings situation if the specified individual objectives for the payment of the incentive have been met. A long-term incentive (LTI) is also provided in parallel as a share-based payment arrangement with cash settlement, and this provides for one-off payments after a period of four years in each case based on virtual investments in UNIQA shares each year and the performance of UNIQA shares, the ROE and the total shareholder return over the period. Maximum limits are agreed. This LTI is subject to an obligation on the members of the Management Board to make an annual investment in UNIQA shares with a holding period of four years in each case. The system complies with Rule 27 of the Austrian Code of Corporate Governance.

PRINCIPLES AND REQUIREMENTS FOR THE COMPANY PENSION SCHEME PROVIDED FOR THE MANAGEMENT BOARD

UNIQA has agreed retirement pensions, occupational disability benefits and surviving dependants' pensions for the members of the Management Board. The beneficiaries' actual pension entitlements are a contractual arrangement with Valida Pension AG, which is responsible for managing the pensions. The retirement pension generally becomes due for payment when the beneficiary reaches 65 years of age. The pension entitlement is reduced in the event of an earlier retirement, with the pension eligible for payment once the beneficiary reaches the age of 60 at the earliest. In the case of the occupational disability pension and survivor's benefits, basic amounts are provided as a minimum pension.

The pension plan at Valida Pension AG is funded by UNIQA through ongoing contributions for the individual members of the Management Board. Compensation payments must be made to Valida Pension AG if members of the Management Board step down before the age of 65 (imputed contribution payment duration to prevent overfunding).

PRINCIPLES FOR VESTED RIGHTS AND ENTITLEMENTS OF THE MANAGEMENT BOARD OF THE COMPANY IN THE EVENT OF TERMINATION OF THEIR POSITION

Severance payments have been agreed based on the provisions of the Austrian Salaried Employee Act. These severance payments, which are made if the employment contract of a member of the Management Board is terminated prematurely, comply with the criteria set out in Rule 27a of the Austrian Code of Corporate Governance. The member of the Management Board generally retains his or her pension entitlements if his or her function is terminated, but the entitlements are subject to curtailment rules.

SUPERVISORY BOARD REMUNERATION

The remuneration paid to the Supervisory Board is approved at the Annual General Meeting as a total amount for the work in the previous financial year. The remuneration applicable to the individual Supervisory Board members is based on their position within the Supervisory Board and the number of committee positions held.

D&O INSURANCE, POSI INSURANCE

UNIQA has taken out directors' & officers' (D&O) insurance and, in connection with the implementation of the re-IPO in 2013, public offering of securities insurance (POSI) for the members of the Management Board, Supervisory Board and senior executives. The costs are borne by UNIQA.

Risk Report, Directors ' Dealings

A comprehensive Risk report (Rule 67 of the Austrian Code of Corporate Governance) is included in the notes to the consolidated financial statements. The notifications concerning directors' dealings in the year under review (Rule 73 of the Austrian Code of Corporate Governance) can be found in the Investor Relations section of the Group website at www.uniqagroup.com.

External Evaluation

Implementation of, and compliance with, the individual rules in the Austrian Code of Code of Corporate Governance were evaluated by PwC Wirtschaftsprüfung GmbH for the 2015 financial year – with the exception of Rules 77 to 83. Compliance with Rules 77 to 83 of the Code was evaluated by Schönherr Rechtsanwälte GmbH. The evaluation is carried out largely using the questionnaire for the evaluation of compliance with the Code published by the Austrian Working Group for Corporate Governance (as amended January 2015).

On completion of the evaluation, PwC Wirtschaftsprüfung GmbH and Schönherr Rechtsanwälte GmbH confirmed that UNIQA had complied with the rules of the Austrian Code of Corporate Governance in 2015 – to the extent that these rules were covered by UNIQA's declaration of conformity. Some of the rules were not applicable to UNIQA in the evaluation period.

Vienna, 18 March 2016

Andreas Brandstetter Chairman of the Management Board

Hannes Bogner Member of the Management Board

Wolfgang Kindl Member of the Management Board

Thomas Münkel Member of the Management Board

Kurt Svoboda Member of the Management Board

Report of the Supervisory Board

Dear Shareholders,

The year 2015 was a challenging one for the European insurance industry. Returns on European government bonds with the best credit ratings fell to record lows following the ECB's decision to implement significant bond purchases. This affects all long-term investors in secure fixed-income securities, and therefore the insurance industry as well. Despite this, in 2015 – the fourth full year of the UNIQA 2.0 strategic programme – UNIQA was able to achieve the best results in the history of the Group.

The cornerstones of the strategic programme remain unchanged: the aim is to further increase the number of customers in the two existing core markets by 2020 through UNIQA focusing on its core expertise as a direct insurer. The company is striving for the further gradual improvement in the overall technical results, an increase in economic earnings performance for the life insurance business – particularly in Austria – and careful but profitable growth in Central and Eastern Europe.

The increased digitalisation of our entire societal and economic life represents a challenge as well as an opportunity. UNIQA intends to launch a significant investment programme in 2016 in preparation for this change and in order to set a new direction for information technology in the Group as a whole. This programme is being implemented from a position of strength: as at the end of 2015 the economic capital ratio amounted to 182.2 per cent. In conjunction with the continued low level of interest rates, however, these planned investments will result in the earnings before taxes in 2016 being well below the 2015 level from today's point of view. Nevertheless, they are absolutely necessary for the long-term stable safeguarding of the Group's profits.

ACTIVITIES OF THE SUPERVISORY BOARD

During 2015, the Supervisory Board was regularly informed by the Management Board about the business performance and position of UNIQA Insurance Group AG and the Group as a whole. It also supervised the Management Board's management of the business and fulfilled all the tasks assigned to the Supervisory Board by law and the Articles of Association. At the Supervisory Board meetings, the Management Board presented detailed quarterly reports and provided additional oral as well as written reports. The Supervisory Board was given timely and comprehensive information about those measures requiring its approval.

The members of the Supervisory Board are regularly invited to participate in information events on relevant topics. Two special seminars were held in 2015 on the topic of "The Insurance Supervision Act 2016, the Solvency II regulations and the International Financial Reporting Standards (IFRSs)", and on "Compliance and audit under the new Solvency II regulations".

FOCUS OF THE DELIBERATIONS

The Supervisory Board met on six occasions in 2015. It also adopted two decisions by circulating a written resolution.

Discussions focused on the Group's earnings situation and its further strategic development.

At the meeting held on 5 March, the Supervisory Board mainly discussed the Group's preliminary results for 2014 and the trends in the first few weeks of the 2015 financial year.

The Supervisory Board meeting on 14 April focused on the audit of the annual financial statements and consolidated financial statements for the year ended 31 December 2014 and on the reports from the Management Board with up-to-date information on the performance of the Group in the first quarter of 2015. The Supervisory Board also discussed the agenda for the 16th Annual General Meeting held on 26 May 2015.

The meeting of the Supervisory Board held on 21 May was dedicated to a discussion of the Group's earnings situation in the first quarter of 2015.

The Supervisory Board was reconstituted in the meeting on 26 May based on the new election of all Supervisory Board members.

The Supervisory Board approved a new issue of a hybrid capital bond amounting to €500 million by circular resolution on 31 May.

On 29 July, the Supervisory Board passed the resolution by circular to sell the stake in Casinos Austria Aktiengesellschaft.

At its meeting on 10 September, the Supervisory Board discussed the Group's earnings situation in the first half of the 2015, the latest developments in the third quarter of 2015, and the forecast for the 2015 financial year. It also addressed the equity planning of the Group companies under Solvency II.

In addition to receiving reports on the results of the Group in the first three quarters of 2015 and the latest performance information for the fourth quarter of 2015, the meeting of the Supervisory Board on 26 November held detailed discussions on the forecast for 2015. The Supervisory Board also evaluated is activities in accordance with the Austrian Code of Corporate Governance.

COMMITTEES OF THE SUPERVISORY BOARD

To facilitate the work of the Supervisory Board and to improve its efficiency, other committees have been set up in addition to the mandatory financial Audit Committee.

The Working Committee did not hold any meetings in the past financial year. The Working Committee approved the terms of the hybrid capital bond by way of a circular resolution on 17 July.

The Committee for Board Affairs, which also exercises the functions of the Nominating and Remuneration Committee, dealt with legal employment formalities concerning the members of the Management Board and with questions relating to remuneration strategy and succession planning at two separate meetings.

The Investment Committee held four meetings at which the members discussed the capital investment strategy, questions concerning capital structure and the focus of risk and asset liability management.

The Audit Committee held three meetings in 2015 and these meetings were also attended by the auditors of the (consolidated) financial statements. All of the documents relating to the financial statements and the appropriation of profit proposed by the Management Board were discussed at the meeting on 14 April, with the Compliance Manager's annual activity report for 2014 also submitted and acknowledged in particular. At the meeting held on 21 May, the auditor presented the planning for the audits of the 2015 financial statements prepared by the companies in the UNIQA Group and coordinated this planning and strategy with the committee. At the meeting held on 26 November, the auditor informed the committee about the findings from its preliminary audits to date. The meeting acknowledged a report by the auditor assessing the extent to which the risk management system was fully functioning. In addition, the Audit Committee received quarterly reports from Internal Audit on the areas audited by this department and any material findings that arose from these audits.

The various chairmen of the committees informed the members of the Supervisory Board about the meetings and their committee's work.

SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS

The separate financial statements prepared by the Management Board, the management report of UNIQA Insurance Group AG, the consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRSs) – as adopted by the EU – and the Group management report for the year ended 31 December 2015 were audited by PwC Wirtschaftsprüfung GmbH, which issued an unqualified audit opinion.

The Supervisory Board noted the findings of the audit with approval.

The audit of the compliance of the Corporate Governance Report with Section 243b of the Austrian Commercial Code and the evaluation of UNIQA's compliance with the rules of the Austrian Code of Corporate Governance (with the exception of Rules 77 to 83) in the 2015 financial year was carried out by PwC Wirtschaftsprüfung GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft. The audits found that UNIQA had complied with the rules of the Austrian Code of Corporate Governance in the 2015 financial year to the extent that the rules were included in UNIQA's declaration of conformity.

The Supervisory Board acknowledged the consolidated financial statements for 2015 and approved the 2015 annual financial statements of UNIQA Insurance Group AG. It also endorsed both the management report and the Group management report. The 2015 annual financial statements were thereby adopted in accordance to Section 96(4) of the Austrian Stock Corporation Act.

The Supervisory Board reviewed and approved the proposal for the appropriation of profit submitted by the Management Board. Accordingly, a dividend distribution of 47 cents per share will be proposed to the Annual General Meeting on 30 May 2016.

The Supervisory Board would like to take this opportunity to thank all employees of the UNIQA Group for the immense personal commitment and dedication they have shown over the past year.

Vienna, April 2016

On behalf of the Supervisory Board

Walter Rothensteiner Chairman of the Supervisory Board

Group Management Report

ECONOMIC ENVIRONMENT

The eurozone economy experienced moderate expansion in the past year and proved itself to be resilient to the global headwind. Gross domestic product (GDP) rose by 1.5 per cent in 2015 according to forecasts, thereby showing accelerated growth as compared with the previous year. European consumers have regained their confidence following the euro crisis of 2011/2012, resulting in an expansion of private consumption which is driving domestic demand in the eurozone, with corporate investments still lagging somewhat behind. Some of the major emerging nations which export raw materials, including Russia and Brazil, suffered from the rapid decline in the oil price last year; at the same time it had an overwhelmingly positive price effect on the eurozone. The fall in demand from China also caused uncertainty on the global financial markets. The unemployment rate fell slightly in the entire eurozone. However, this should not hide the fact that the unemployment rate remained very high in 2015 at 10.9 per cent, and the labour markets remain under strain in many countries in Western and in particular Southern Europe. The seasonally adjusted unemployment rate in Austria rose to 5.7 per cent (Eurostat), corresponding to a 9.1 per cent increase according to the Austrian calculation method. Growth in GDP in Austria also remained below the eurozone average for the second year in a row in 2015 at 0.8 per cent. By contrast the Italian economy experienced a mild recovery with growth in GDP expected at 0.7 per cent, following a recession lasting three years.

Inflation remained below expectations in the eurozone contrary to the growth forecasts, caused not least by the heavy fall in prices for raw materials and energy. The European Central Bank (ECB) relaxed its monetary policy further last year in response to this. The main refinancing rate has been virtually zero since 2014. The ECB has also been implementing some unconventional monetary policy measures since last year, principally in the form of a bond acquisition programme with a value of €60 billion per month. In December 2015, the bond acquisition programme was extended to March 2017, and the deposit rate was pushed down even farther into the negative range (–0.3 per cent). These measures continued to suppress general capital market yields.

In Central and Eastern Europe (CEE) the business environment remained generally positive thanks to the macroeconomic structural conditions, although the picture was not entirely consistent. Countries in Central Europe (Poland, Slovakia, Czech Republic and Hungary) were characterised by positive developments in the labour markets, with unemployment rates to some extent coming close to the levels before the financial crisis in 2008. Economic growth in the region remained above 3 per cent on average for the second year in a row. Solid domestic demand is driving economic performance, and stable public finances and debt levels are making Central Europe a safe harbour.

Most of the national economies in CEE are benefiting from the fall in the prices for raw materials and energy. By contrast, Russia's raw-material exporting economy fell into recession in the first half of 2015, and its further development remains heavily dependent on price developments for petroleum on the global markets. The value of the Russian rouble fell heavily against the hard currencies and inflation accelerated over the course of the year, with households forced to accept significant falls in real income. The international economic sanctions against Russia also remained in place. The economic structural conditions in Ukraine were likewise still under strain, although the political and financial situation showed signs of stabilising in the second half of the year. For instance, the Ukrainian government was able to agree on debt relief with its international bond creditors. Real gross domestic product in Ukraine fell by around 10 per cent in 2015 as a result of the slump in the first half of the year. The fall in GDP in Russia is estimated to be around 3.8 per cent.

The negative developments in Russia and Ukraine more or less act as a counterbalance to the solid economic performance in Central Europe and the recovery in Southeastern Europe. Performance in some of the Balkan countries was even better than economic analysts had predicted at the start of last year. GDP in Croatia rose in 2015 for the first time following a six-year recession. Serbia and Bosnia and Herzegovina recovered from the 2014 flood disaster somewhat more quickly than had been originally expected. The South Western Balkan countries (Albania, Macedonia and Montenegro) recorded growth rates which were above the average for the region, supported in part by some major public investment projects.

The economic conditions in most of the core countries in CEE are expected to remain positive with the support of solid macroeconomic structural conditions. The significant fluctuations on the markets for raw materials render the economic conditions in Russia uncertain and make a recovery any time soon more difficult. Economic analysts in Austria expect a boost to the economy for 2016 as a result of the tax reforms that came into force as of 1 January 2016.

Stable performance of the Austrian insurance market

According to initial forecasts, total premium revenues in the Austrian insurance market are expected to increase again by about 0.3 per cent to around €17.5 billion in 2016.

Up 0.2 per cent, life insurance premium revenues rose to a total of €6.8 billion in 2015. Recurring premiums fell by 0.9 per cent. At €1.6 billion, single premiums were up 3.8 per cent. According to initial forecasts, life insurance is expected to record premium revenues of around €6.6 billion in 2016 (–2.7 per cent).

Private health insurance is a complementary partner to the statutory health insurance in Austria. Private health insurance is expected to rise 4.3 per cent for 2015 with total premium revenues of €2.0 billion. Initial forecasts for health insurance show growth of around 3 per cent for 2016.

Premium volumes for property and casualty insurance grew to €8.7 billion in 2015, which represents a 2.4 per cent increase. In 2016, premium revenues in property and casualty insurance are expected to rise by 1.9 per cent to around €8.9 billion.

The German-speaking insurance markets are faced with existing and new challenges, which are still intensifying against the background of the financial and economic crisis. These include long-term developments e.g. in the sociodemographic area, and ongoing developments such as changes in customer behaviour. The "insurance customer 2.0" is more independent, demanding and price sensitive. The change in customers, as illustrated by their new requirements, expectations and values, presents new challenges for insurance undertakings. The "insurance customer 2.0" is more informed and independent when dealing with insurance undertakings. Customer expectations are increasing in relation to greater product flexibility, standardised and reasonably priced products and existing high levels of service. Increased use of new media and greater product transparency are playing a significant role in this. In both the life and the non-life business, the multichannel sales approach is becoming standard in the retail business and electronic channels are becoming an absolute necessity. Greater importance is being attached to technologically-assisted channels in the non-life business in particular.

Restrained growth in the insurance markets in CEE in 2015, outlook optimistic for 2016

Most of the markets in the CEE region experienced above average growth rates in 2015, which were also generally well above the levels in Western Europe. The economic outlook is also positive for the region in 2016. UNIQA therefore expects the convergence process for the countries in Central and Eastern Europe to continue, albeit at a slower speed than previously predicted. A comparable trend is also expected for the insurance market in the CEE region. Although the trends in the some of the individual insurance markets were highly heterogeneous in 2015, the region was able to stabilise to a noticeable extent as compared with the last two years.

The market grew in the non-life sector in Central and Eastern Europe in 2015, although the intense price competition, particularly in the vehicle and property insurance business in a series of markets, also continued to prevent higher premium revenues. Improved legal structural conditions combined with the exit or withdrawal of individual competitors should, however, play a part in easing the competitive situation in these markets in the medium term.

Developments in the life insurance sector in CEE were patchy: on the one hand a series of markets – particularly in Southeastern Europe – were able to record double-digit premium growth, despite the downward trend in interest rates, while on the other the continued decline in single premiums – particularly in the Czech Republic – resulted in a slight fall in premium volumes for the region as a whole. The aggregate figures on market development were also impacted in 2015 by negative exchange rate trends in some of the major markets in Eastern Europe, such as in Ukraine and Russia.

The significant improvements in the economic situation in the countries in Central and Eastern Europe should have a greater impact on consumer spending and investment activity by companies in 2016. The insurance markets in CEE should also benefit from this. The insurance markets which are heavily affected by the detrimental effects of the current political crisis in Ukraine and Russia should also return to positive growth rates.

Despite the patchy development overall in 2015, the CEE region remains a growth region with high potential for UNIQA. Per capita expenditure on insurance products, the ratio of premiums to gross domestic product and the share of life insurance in total premium revenues illustrate that there are still significant opportunities for market development in these countries. The economic growth in CEE, which is notably higher as compared with Western Europe and the EU, with the resulting increased prosperity accompanied by a rise in the need for insurance in the population, offer very good growth opportunities for the insurance industry that clearly surpass those in the already saturated insurance markets of Western Europe.

UNIQA GROUP

With a premium volume written (including savings portions from the unit-linked and indexlinked life insurance) of €6,325.1 million, the UNIQA Group is among the leading insurance groups in Central and Eastern Europe. The savings portion from the unit-linked and indexlinked life insurance in the amount of €485.4 million was set off against the change in insurance provision, pursuant to FAS 97 (US-GAAP). Without taking the savings portion from the unitlinked and index-linked life insurance into consideration, the premium volume written amounted to €5,839.7 million.

UNIQA in Europe

UNIQA offers its products and services via all distribution channels (hired sales force, general agencies, brokers, banks and direct sales) and covers the entire range of insurance lines.

The listed holding company, UNIQA Insurance Group AG, manages the Group and also operates the indirect insurance business. In addition, it carries out numerous service functions for the Austrian and international insurance companies, in order to take best advantage of synergy effects and to consistently implement the Group's long-term corporate strategy.

UNIQA International AG manages the international activities of the Group. This entity is also responsible for the ongoing monitoring and analysis of the international target markets and for acquisitions and post-merger integration.

Successful subordinated capital bond issue (Tier 2) by the UNIQA Group

In July 2015, UNIQA Insurance Group AG successfully placed a subordinated capital bond (Tier 2) to the value of €500 million with institutional investors in Europe. The bond is scheduled for repayment after a period of 31 years and subject to certain conditions, and can only be cancelled by UNIQA after 11 years have elapsed and under certain conditions. The coupon amounts to 6.00 per cent per annum during the first 11 years, after which variable interest applies.

Rating

In 2015, the rating agency Standard & Poor's confirmed the rating of UNIQA Insurance Group AG as "A–". The ratings of UNIQA Österreich Versicherungen AG and the Group's reinsurer, UNIQA Re AG in Switzerland, also remained "A". UNIQA Versicherung AG in Liechtenstein received an "A–". Standard & Poor's rates the outlook for all the companies as stable. The rating of the UNIQA subordinated capital bond continues to be "BBB".

Companies included in the IFRS consolidated financial statements

In addition to UNIQA Insurance Group AG, UNIQA's 2015 consolidated financial statements also include 56 Austrian and 67 international companies. A total of 23 affiliated companies whose influence on an accurate presentation of the actual financial status of the assets, financial position and profitability was insignificant were not included in the consolidated financial statements. In addition, eight Austrian companies and one foreign company were valued according to the equity method as associates. Five associates were of minor importance.

Details on the consolidated companies and associates are contained in the corresponding overview in the consolidated financial statements. The accounting policies are also described in the consolidated financial statements.

Risk reporting

UNIQA's comprehensive risk report is included in the notes to the consolidated financial statements 2015.

Corporate Governance Report

Since 2004, UNIQA has pledged to comply with the Austrian Code of Corporate Governance and publishes the Corporate Governance Report at www.uniqagroup.com in the Investor Relations section.

GROUP BUSINESS DEVELOPMENT

UNIQA provides life and health insurance and is active in almost all lines of property and casualty insurance. It serves about 10.0 million customers, over 19.3 million insurance contracts with a premium volume written (including savings portions from the unit-linked and index-linked life insurance) of about €6.3 billion (2014: €6.1 billion) and investments of €29.4 billion (2014: €29.0 billion). UNIQA is the second-largest insurer in Austria, has a strong network in Central and Eastern Europe with a presence in 15 countries and is additionally active in Italy, Liechtenstein and Switzerland.

Premium development

UNIQA's total premium volume increased in 2015, taking into account the savings portions of the unit-linked and index-linked life insurance in the amount of €485.4 million (2014: €544.7 million), by 4.3 per cent to €6,325.1 million (2014: €6,064.4 million). The total consolidated premium volume written rose by 5.8 per cent to €5,839.7 million (2014: €5,519.7 million).

In the area of insurance policies with recurring premium payments, there was a rise of 0.6 per cent to €5,131.2 million (2014: €5,102.7 million). In the single premium business the premium volume increased by 24.2 per cent to €1,194.0 million (2014: €961.6 million) due to very strong growth in the Raiffeisen Insurance Austria segment and in Italy.

The Group premiums earned, including savings portions from the unit-linked and indexlinked life insurance (after reinsurance) in the amount of €469.3 million (2014: €526.1 million), rose by 4.5 per cent to €6,102.8 million (2014: €5,839.0 million). The volume of premiums earned (net, according to IFRS) increased by 6.0 per cent to €5,633.5 million (2014: €5,312.9 million).

In the 2015 financial year, 41.8 per cent (2014: 43.2 per cent) of the premium volume written (including savings portions from the unit-linked and index-linked life insurance) arose in property and casualty insurance, 15.8 per cent (2014: 15.8 per cent) in health insurance and 42.5 per cent (2014: 40.9 per cent) in life insurance.

Development of insurance benefits

The insurance benefits before reinsurance (see Note 33 in the consolidated financial statements) rose in the 2015 financial year by 5.1 per cent to €4,749.9 million (2014: €4,517.7 million). Consolidated net insurance benefits also increased in the past year by 5.1 per cent to €4,607.6 million (2014: €4,383.7 million), principally on account of the sharp increase in single premium business and the negative impact of hailstorms in the third quarter of 2015 amounting to €30 million. The combined ratio in property and casualty insurance improved after reinsurance at Group level to 97.8 per cent (2014: 99.6 per cent).

Operating expenses

Total consolidated operating expenses (see Note 34 in the consolidated financial statements) less reinsurance commission and share of profit from reinsurance ceded (see Note 34 in the consolidated financial statements) remained at the same level in the 2015 financial year as the previous year at €1,298.7 million (2014: €1,299.1 million). Expenses for the acquisition of insurance less reinsurance commission and share of profit from reinsurance ceded in the amount of €24.8 million (2014: €26.0 million) increased by 1.4 per cent to €925.6 million (2014: €912.5 million). Other operating expenses fell by 3.5 per cent to €373.1 million (2014: €386.6 million). This was mainly attributable to adjustments in the works agreements for pension fund provision which had a positive effect amounting to €50.6 million.

UNIQA's cost ratio after reinsurance, i.e. the relation of total operating expenses less the amounts received from reinsurance commission and share of profit from reinsurance ceded to the Group premiums earned including savings portions from the unit-linked and index-linked life insurance, dropped to 21.3 per cent during the past year (2014: 22.2 per cent) as a result of the developments mentioned above. The cost ratio before reinsurance was 21.0 per cent (2014: 21.8 per cent).

Investment income

Total investments including investment property, shares in associates and investments of the unit-linked and index-linked life insurance and current cash held at banks and cash-in-hand rose in the 2015 financial year by €391.1 million to €29,416.1 million (31 December 2014: €29,024.9 million).

Net investment income fell by 6.4 per cent to €831.1 million (2014: €888.2 million) as a result of the low interest rates. Among other things, the gains from the disposal of property had a positive effect on net investment income in the 2015 financial year. Additional drivers of performance included the restructuring of strategic asset allocation for economic optimisation of capital and positive currency effects from investments in US dollars. Due to the balancing of the 13.8 per cent holding in STRABAG SE according to the equity method, there was a positive contribution in the amount of €23.7 million in 2015. A detailed description of the investment income can be found in the consolidated financial statements (see Note 35).

Other income and other expenses

Other income fell in 2015 by 31.9 per cent to €42.5 million (2014: €62.4 million) mainly due to differences in the exchange rate of the Ukrainian hryvnia. Other expenses also fell in the reporting period due to exchange rate differences of the Russian rouble and Ukrainian hryvnia and amounted to €61.0 million (2014: €70.3 million).

Earnings before taxes

The technical result of the UNIQA Group rose significantly in 2015 by 56.5 per cent to €199.9 million (2014: €127.7 million). Operating profit increased to €494.1 million (2014: €447.6 million). UNIQA's earnings before taxes were very satisfactory, above all due to the welcome trend in the operative segments UNIQA Austria and UNIQA International, rising by 11.9 per cent to €422.8 million (2014: €377.9 million). Profit/(loss) for the year rose by 14.2 per cent to €334.6 million (2014: €292.9 million). The consolidated profit/(loss), i.e. the proportion of the net profit for the year attributable to the shareholders of UNIQA Insurance Group AG, amounted to €331.1 million (2014: €289.9 million). The earnings per share rose as a result to €1.07 (2014: €0.94). The return on equity after tax and non-controlling interests in the reporting period was 10.6 per cent (2014: 9.9 per cent).

On this basis therefore the Management Board will propose a dividend of 47 cents per share to the Supervisory Board and the Annual General Meeting (2014: 42 cents per share).

Own funds and total assets

The UNIQA Group's equity rose in the past financial year by 2.3 per cent or €70.5 million to €3,152.7 million due to the net consolidated profit (31 December 2014: €3,082.2 million). The minority interests came to €22.1 million (31 December 2014: €20.2 million). The solvency ratio (Solvency I) increased accordingly to 301.7 per cent (31 December 2014: 295.4 per cent). The total assets of the Group remained almost unchanged in the reporting period, and amounted to €33,078.4 million as at 31 December 2015 (31 December 2014: €33,038.2 million).

Cash flow

UNIQA's cash flows from operating activities amounted to €49.5 million in 2015 (2014: €1,558.5 million). The cash flow from investing activities amounted to –€499.9 million (2014: –€1,088.2 million). As a consequence of the issue of the subordinated capital bond (Tier 2), net cash from financing activities rose to €365.1 million (2014: –€111.2 million).

In total, liquid funds changed by –€85.3 million (2014: €359.1 million). Financial resources available as at the end of 2015 amounted to €890.1 million (2014: €975.8 million).

Employees

In 2015, the average number of employees at UNIQA fell to 14,113 (2014: 14,336). These included 5,427 (2014: 5,821) field sales employees. The number of employees in administration amounted to 8,686 (2014: 8,515).

In the 2015 financial year, the Group had 2,591 employees in the Central Europe region (CE) – Poland, Slovakia, Czech Republic and Hungary (2014: 2,806 employees), 2,561 employees (2014: 2,412) in the Southeastern Europe region (SEE) – Albania, Bosnia and Herzegovina, Bulgaria, Kosovo, Croatia, Macedonia, Montenegro and Serbia – and 2,068 employees (2014: 2,328) in the Eastern Europe region (EE) of Romania and Ukraine. There were 96 employees (2014: 103) in Russia. The average number of employees in the Western European markets rose slightly to 369 (2014: 360). A total of 6,428 people were employed in Austria (2014: 6,327). Including the employees of the general agencies working exclusively for UNIQA, the total number of people working for the Group amounts to 21,227.

In 2015, 51 per cent of the staff working in administrative positions at UNIQA Insurance Group AG in Austria were women (2014: 51 per cent). In sales, the ratio was 82 per cent men to 18 per cent women. Twenty-one per cent (2014: 21 per cent) of the employees in administration were working part time. The average age in the past year was 44 years (2014: 43 years). In 2015, a total of 14.8 per cent (2014: 15.3 per cent) of the employees participated in UNIQA's bonus system – a variable remuneration system that is tied both to the success of the Company and to personal performance. In addition, UNIQA offers young people in training the opportunity to get to know foreign cultures and make international contacts. Currently, 29 apprentices are being trained. Thirteen new apprentices were accepted in 2015.

OPERATING SEGMENTS

UNIQA Austria

Premiums At UNIQA Austria, the premiums written including savings portions from the unit-linked and index-linked life insurance increased in 2015 by 1.2 per cent to €2,807.7 million (2014: €2,773.5 million). Recurring premiums rose by 1.2 per cent to €2,775.5 million (2014: €2,741.7 million), and single premiums increased by 1.2 per cent to €32.2 million (2014: €31.9 million).

Including savings portions from the unit-linked and index-linked life insurance, the volume of premiums earned at UNIQA Austria amounted to €2,229.9 million (2014: €2,137.0 million). The volume of premiums earned (net, according to IFRS) rose in 2015 by 5.5 per cent to €2,102.8 million (2014: €1,993.9 million) as a result of changes to the reinsurance structure.

While premiums written in property and casualty insurance rose by 1.3 per cent to €1,380.6 million (2014: €1,362.6 million), in health insurance they increased by 3.9 per cent to €921.6 million (2014: €887.3 million). In life insurance (including savings portions from the unit-linked and index-linked life insurance) they fell 3.5 per cent to €505.5 million (2014: €523.7 million).

Net premiums earned (according to IFRS) rose in property and casualty insurance by 9.8 per cent to €826.9 million (2014: €753.0 million); in health insurance, they increased by 3.9 per cent to €921.9 million (2014: €886.9 million). They remained stable in life insurance at €354.0 million (2014: €353.9 million). Including savings portions from the unit-linked and index-linked life insurance, the volume of premiums earned in life insurance amounted to €481.1 million (2014: €497.0 million).

Benefits Net insurance benefits at UNIQA Austria increased by 5.6 per cent in 2015 to €1,729.4 million (2014: €1,637.2 million). In property and casualty insurance they rose by 11.8 per cent to €577.6 million (2014: €516.5 million) as a result of the changes in the solution for reinsurance; in health insurance they increased by 2.5 per cent to €762.9 million (2014: €744.3 million). In life insurance they grew 3.3 per cent to reach €388.9 million (2014: €376.4 million). Overall, in 2015 the loss ratio in property and casualty insurance amounted to 69.8 per cent (2014: 68.6 per cent). The combined ratio in the UNIQA Austria segment therefore increased after reinsurance to 93.9 per cent (2014: 91.8 per cent).

Operating expenses Operating expenses, less reinsurance commission and share of profit from reinsurance ceded, which amounted to €160.3 million (2014: €175.8 million), decreased in the 2015 financial year by 4.0 per cent to €390.7 million (2014: €407.1 million), also on account of the revaluation of the pension provisions in accordance with IAS 19. They rose 13.9 per cent in property and casualty insurance to €199.1 million (2014: €174.8 million) on account of the changes in the reinsurance structure. They decreased 8.9 per cent in health insurance to €121.8 million (2014: €133.7 million). They fell sharply by 29.2 per cent in life insurance to €69.8 million (2014: €98.6 million) on account of the IAS 19 effect described above and a change to the cost allocation.

The cost ratio of UNIQA Austria after reinsurance, i.e. the relation of total operating expenses, less reinsurance commission and share of profit from reinsurance ceded, to the premiums earned, including savings portions from the unit-linked and index-linked life insurance, amounted to 17.5 per cent during the past year (2014: 19.0 per cent).

Investment income Net investment income in the UNIQA Austria segment dropped in 2015 by 8.8 per cent to €343.2 million (2014: 376.1 million), despite currency gains from the investments in US dollars on account of the low interest rates that still prevail.

Earnings before taxes Earnings before taxes from ordinary activities of UNIQA Austria rose in the reporting period by 5.3 per cent to €288.5 million (2014: €273.9 million) driven by the solid profits in health insurance. They fell by 19.6 per cent in property and casualty insurance to €81.0 million (2014: €100.7 million). In health insurance they rose by 44.0 per cent to €187.5 million (2014: €130.2 million). In life insurance earnings before taxes fell by 53.5 per cent to €20.0 million (2014: €43.0 million); the principal reason for this was the fall in investment income by 21.8 per cent to €147.4 million (2014: €188.6 million).

Raiffeisen Insurance Austria

Premiums The Raiffeisen Insurance Austria segment recorded significant growth in 2015 and increased the premiums written, including savings portions from the unit-linked and index-linked life insurance, by 18.8 per cent to €1,075.8 million (2014: €905.3 million), despite a decline recorded in premiums in unit-linked life insurance. However, the very strong performance in the Austrian core business with Raiffeisen as a partner bank was more than capable of compensating for that deterioration. Recurring premiums were just above the previous year's level at €756.1 million (2014: €754.0 million), while single premiums rose 111.3 per cent to €319.7 million (2014: €151.3 million).

Including savings portions from the unit-linked and index-linked life insurance, the volume of premiums earned at Raiffeisen Insurance Austria amounted to €965.1 million (2014: €794.0 million). The volume of premiums earned (net, according to IFRS) rose in 2015 by 28.8 per cent to €838.0 million (2014: €650.8 million).

While premiums written rose in property and casualty insurance by 4.6 per cent to €160.1 million (2014: €153.2 million), in life insurance they increased by 21.7 per cent to €915.7 million (2014: €752.1 million). Health insurance is not offered in the Raiffeisen Insurance Austria segment.

Net premiums earned (according to IFRS) rose in property and casualty insurance by 4.4 per cent to €83.3 million (2014: €79.8 million); in life insurance, they increased by 32.2 per cent to €754.7 million (2014: €571.1 million). Including savings portions from the unitlinked and index-linked life insurance, the volume of premiums earned in life insurance amounted to €881.8 million (2014: €714.2 million).

Benefits Net insurance benefits in the Raiffeisen Insurance Austria segment increased in 2015 by 21.1 per cent to €829.8 million (2014: €685.2 million). They fell by 2.2 per cent in property and casualty insurance to €55.9 million (2014: €57.1 million). In life insurance they grew 23.2 per cent to reach €773.9 million (2014: €628.1 million) on account of the sharp increase in premium volumes. Overall, in 2015 the loss ratio in property and casualty insurance amounted to 67.1 per cent (2014: 71.6 per cent). The combined ratio in the Raiffeisen Insurance Austria segment therefore improved after reinsurance to 82.7 per cent (2014: 88.1 per cent).

Operating expenses Operating expenses minus reinsurance commission and share of profit from reinsurance ceded, which amounted to €32.9 million (2014: €30.5 million), increased by 20.9 per cent to €135.5 million in 2015 (2014: €112.1 million) on account of the increase in business revenue. They fell slightly in property and casualty insurance by 0.9 per cent to €13.0 million (2014: €13.1 million); in life insurance, they increased by 23.8 per cent to €122.5 million (2014: €99.0 million).

The cost ratio in the Raiffeisen Insurance Austria segment after reinsurance, i.e. the ratio of total operating expenses, less reinsurance commission and share of profit from reinsurance ceded, to the premiums earned, including savings portions from the unit-linked and indexlinked life insurance, fell to 14.0 per cent in 2015 (2014: 14.1 per cent).

Investment income Net investment income in the Raiffeisen Insurance Austria segment also fell in 2015 by 8.3 per cent to €254.7 million (2014: 277.7 million) on account of the low interest rates that still prevail.

Earnings before taxes Earnings before taxes in the Raiffeisen Insurance Austria segment fell by 2.9 per cent to €105.4 million in the reporting year (2014: €108.6 million). They rose by 34.6 per cent in property and casualty insurance to €18.9 million (2014: €14.1 million). In life insurance on the other hand they fell by 8.5 per cent to €86.5 million (2014: €94.6 million).

UNIQA International

Premiums

UNIQA International increased the premiums written, including savings portions from the unit-linked and index-linked life insurance, in 2015 by 2.7 per cent to €2,416.8 million (2014: €2,353.1 million). The premiums written even increased by 4.6 per cent when adjusted for foreign currency effects. Recurring premiums remained stable at €1,574.9 million (2014: €1,574.6 million). Single premiums rose due to the very strong business performance in Italy by 8.2 per cent to reach €842.0 million (2014: €778.5 million). That means that in 2015 the international companies contributed a total of 38.2 per cent (2014: 38.8 per cent) to total Group premiums.

Including savings portions from the unit-linked and index-linked life insurance, UNIQA International's volume of premiums earned amounted to €1,892.3 million (2014: €1,822.2 million). The volume of premiums earned (net, according to IFRS) rose in 2015 by 6.0 per cent to €1,677.1 million (2014: €1,582.3 million).

While premiums written in property and casualty insurance only increased slightly due to negative currency effects and the continued restraint in the highly competitive motor vehicle segment in CEE by 0.1 per cent to €1,085.8 million (2014: €1,084.9 million), these grew by 4.6 per cent in health insurance to €76.9 million (2014: €73.5 million). In life insurance (including savings portions from the unit-linked and index-linked life insurance) they rose, driven by the positive business performance in Italy, by 5.0 per cent to €1,254.1 million (2014: €1,194.6 million).

Net premiums earned (according to IFRS) rose in property and casualty insurance by 1.3 per cent to €595.8 million (2014: €588.2 million), in health insurance they rose by 5.4 per cent to €75.6 million (2014: €71.7 million) and in life insurance by 9.0 per cent to €1,005.8 million (2014: €922.5 million). Including savings portions from the unit-linked and index-linked life insurance, the volume of premiums earned in life insurance amounted to €1,221.0 million (2014: €1,162.4 million).

In the Central Europe region (CE) – Poland, Slovakia, the Czech Republic and Hungary – premiums earned, including savings portions from the unit-linked and index-linked life insurance, increased slightly in the 2015 financial year by 0.6 per cent to €527.7 million (2014: €524.7 million). In Eastern Europe (EE) – comprising Romania and Ukraine – premiums earned, including savings portions from the unit-linked and index-linked life insurance, fell above all due to the loss in value of the Ukrainian hryvnia and the restraint in the highly competitive Romanian motor vehicles business by 21.6 per cent to €92.1 million (2014: €117.4 million). In the Southeastern Europe region (SEE) – Albania, Bosnia and Herzegovina, Bulgaria, Kosovo, Croatia, Macedonia, Montenegro and Serbia – in 2015 premiums grew by 12.9 per cent to €232.1 million (2014: €205.7 million). In Russia (RU) the premiums earned, including savings portions from the unit-linked and index-linked life insurance, fell by 26.1 per cent to €48.5 million (2014: €65.6 million) on account of the decrease in value of the Russian rouble. In Western Europe (WE) – Italy, Liechtenstein and Switzerland – the premiums earned, including savings portions from the unit-linked and index-linked life insurance, rose in particular due to the increase in single premiums in Italy by 9.1 per cent to €991.9 million (2014: €908.9 million).

Benefits Net insurance benefits of UNIQA International increased in 2015 by 6.0 per cent to €1,329.3 million (2014: €1,253.6 million). They fell by 2.7 per cent in property and casualty insurance to €362.7 million (2014: €372.7 million). In health insurance they grew 6.8 per cent to reach €48.8 million (2014: €45.7 million). They also increased 9.9 per cent in life insurance to €917.8 million (2014: €835.2 million) due to the strong rise in premium revenue. In 2015 the loss ratio in property and casualty insurance fell to 60.9 per cent (2014: 63.4 per cent) on account of the restructuring of the motor vehicle business which is already at an advanced stage. The combined ratio in the UNIQA International segment after reinsurance amounted to 99.1 per cent (2014: 102.3 per cent).

In the CE region, benefits fell by 3.4 per cent in 2015 to €237.3 million (2014: €245.8 million); in the EE region they fell by 40.4 per cent to €41.5 million (2014: €69.6 million). They grew 16.2 per cent in SEE to reach €149.8 million (2014: €128.9 million). In Russia, benefits amounted to €36.3 million (2014: €44.2 million), and in Western Europe, the volume of benefits also rose due to the strong growth in premiums in life insurance by 13.0 per cent to €864.5 million (2014: €765.2 million).

Operating expenses Operating expenses, not including reinsurance commission and share of profit from reinsurance ceded, which amounted to €134.4 million (2014: €147.9 million), decreased in the 2015 financial year by 1.7 per cent to €427.5 million (2014: €434.8 million) on account of consistent cost management and improvements in process efficiency through the implementation of a target operating model. They fell by 0.5 per cent in property and casualty insurance to €227.7 million (2014: €228.9 million). In health insurance on the other hand they rose by 0.9 per cent to €31.0 million (2014: €30.7 million). In life insurance they fell 3.7 per cent to €168.8 million (2014: €175.3 million).

The cost ratio of UNIQA International after reinsurance, i.e. the ratio of total operating expenses, less reinsurance commission and share of profit from reinsurance ceded, to premiums earned, including savings portions from the unit-linked and index-linked life insurance, decreased during the past year for the reasons mentioned above to 22.6 per cent (2014: 23.9 per cent).

In CE, operating expenses, not including reinsurance commission and share of profit from reinsurance ceded, rose in the reporting year by 7.9 per cent to €172.3 million (2014: €159.7 million). They fell by 20.5 per cent in EE to €51.6 million (2014: €64.9 million). In SEE they increased slightly by 1.6 per cent to €91.2 million (2014: €89.7 million). In Russia, costs fell by 44.0 per cent to €9.4 million (2014: €16.8 million), while they increased in Western Europe by 5.4 per cent to €82.5 million (2014: €78.3 million). In administration (UNIQA International AG), costs decreased by 19.3 per cent to €20.5 million (2014: €25.4 million).

Investment income Net investment income rose during 2015 by 12.0 per cent to €195.3 million (2014: 174.3 million).

Earnings before taxes

Earnings before taxes in the UNIQA International segment rose in the reporting year to €54.5 million (2014: –€1.2 million) despite an extraordinary impairment of goodwill in Ukraine amounting to €13.0 million. Earnings before taxes in property and casualty insurance increased despite the impairment of goodwill mentioned above to €17.6 million (2014: –€21.4 million). In health insurance, it came to –€22,862(2014: –€1.3 million). Lastly, in life insurance earnings before taxes improved by 71.8 per cent to €36.9 million (2014: €21.5 million).

Reinsurance

In the reinsurance segment, the premium volume written fell in 2015 by 6.5 per cent to €1,112.1 million (2014: €1,189.3 million). The volume of premiums earned (net, according to IFRS) also fell by 6.1 per cent to €1,014.4 million (2014: €1,080.9 million).

Net insurance benefits fell in 2015 by 10.1 per cent to €720.1 million (2014: €800.8 million).

Operating expenses less reinsurance commission and share of profit from reinsurance ceded in the amount of €8.2 million (2014: €8.2 million) fell by 5.8 per cent to €315.7 million (2014: €335.1 million).

Net investment income fell in 2015 to €27.7 million (2014: €31.3 million).

Earnings before taxes in the reinsurance segment increased to –€2.1 million (2014: –€30.5 million).

Group functions and consolidation

In the Group Functions and Consolidation segment, earnings before taxes fell to –€23.5 million (2014: €27.0 million).

Net investment income fell in 2015 to €10.3 million (2014: €28.7 million).

SIGNIFICANT EVENTS SUBSEQUENT TO THE REPORTING DATE (SUBSEQUENT REPORT)

In January 2016 the Management Board of UNIQA Insurance Group AG decided in agreement with the Supervisory Board to launch a comprehensive programme of investments as of 2016 with the aim of aligning processes and products with the changes to requirements and customer expectations as a result of the digital transformation. This innovation and investment programme, which is the biggest in the Company's history, is split over several years and has a total value of around €500 million.

Following the decision to implement this programme, UNIQA is also aligning the Group structure to meet the strategic objectives and challenges of the future. The Management and Supervisory Boards at UNIQA Insurance Group AG decided on a new streamlined Group structure in early March 2016 with a functional organisation and Group-wide responsibilities.

The listed holding UNIQA Insurance Group AG will have three members of the Management Board in future. As of 1 June 2016, the Management Board will consist of Andreas Brandstetter (CEO), Kurt Svoboda (CFO/CRO) and Erik Leyers (COO). Their terms of office will run until 30 June 2020.

The four direct insurance companies operating on the Austrian market up to now, UNIQA Österreich Versicherungen AG, Raiffeisen Versicherung AG, FinanceLife Lebensversicherung AG and Salzburger Landes-Versicherung AG will – subject to the requisite approvals from the authorities – be merged by the first quarter of 2017 at the latest. UNIQA Österreich Versicherungen AG will be the acquiring company.

OUTLOOK

Economic outlook

The moderate economic recovery in the eurozone is expected to continue. Economic analysts in Austria expect a boost to the economy for 2016 as a result of the tax reforms that came into force as of 1 January 2016, as well as an increase in government expenditures for transfer payments. The headwind in the global economy has in recent times increasingly come from the emerging nations in Asia and Latin America and from the national economies dependent on raw materials. By contrast, the economic conditions in most of the core countries in Central and Eastern Europe are expected to be supported by solid macroeconomic structural conditions. The four countries in Central Europe (Poland, Slovakia, Czech Republic and Hungary) can once again expect real economic growth of more than 3 per cent, and the recovery is also generally strengthening in Southeastern Europe. If the recovery in the oil price on the global markets fails to materialise in the medium term, this will increase the uncertainty regarding the performance of the Russian economy following the recession in 2015. Continued financial and macroeconomic stabilisation in Ukraine would also be accompanied by a slow normalisation in the business environment.

Price developments remain muted in the eurozone and in many countries in Central and Eastern Europe, and deflation can also be expected to some extent. Against this background the European Central Bank's highly expansionary monetary policy can continue to be expected, with a similar policy implemented by some of the central banks in CEE as a result. UNIQA is therefore adjusting to a very low general interest rate environment which will last even longer.

Consolidated profit

UNIQA is launching the biggest innovation programme in its corporate history in 2016, and will be investing around €500 million over the next few years in "re-designing" its business model, establishing the staff expertise required for this and in the IT systems required. These significant investments in the future will to a large extent take effect in 2016 and will be reflected in changes to the expected results. Combined with the ongoing difficulties with the structural conditions, such as an economic outlook which remains moderate, sustained low interest rates, falls in investment income and political uncertainties in certain markets, UNIQA expects earnings before taxes to fall by up to 50 per cent for the 2016 financial year, compared with the very good results for 2015.

Despite the investments and challenging economic environment, UNIQA intends to continue increasing its annual distribution per share over the next few years as part of a progressive dividend policy.

INFORMATION ACCORDING TO SECTION 243A(1) OF THE AUSTRIAN COMMERCIAL CODE

    1. The share capital of UNIQA Insurance Group AG is €309,000,000 and is comprised of 309,000,000 individual no-par value shares in the name of the bearer. €285,356,365 of the share capital was fully paid in cash and €23,643,635 was paid in non-cash contributions. All shares confer the same rights and obligations.
    1. Due to their voting commitments, the shares of UNIQA Versicherungsverein Privatstiftung, Austria Versicherungsverein Beteiligungs-Verwaltungs GmbH, BL Syndikat Beteiligungs Gesellschaft m.b.H., Collegialität Versicherungsverein Privatstiftung and RZB Versicherungsbeteiligung GmbH are counted together. Reciprocal purchase option rights have been agreed upon between the first four shareholders listed.
    1. Raiffeisen Zentralbank Österreich Aktiengesellschaft holds indirectly, via BL Syndikat Beteiligungs Gesellschaft m.b.H. and RZB Versicherungsbeteiligung GmbH, a total of 31.40 per cent (allocated in accordance with the Austrian Stock Exchange Act) of the company's share capital; UNIQA Versicherungsverein Privatstiftung holds directly and indirectly through Austria Versicherungsverein Beteiligungs-Verwaltungs GmbH a total of 30.58 per cent (allocated in accordance with the Austrian Stock Exchange Act) of the company's share capital.
    1. No shares with special control rights have been issued.
    1. The employees that have share capital exercise their voting rights directly.
    1. No provisions of the Articles of Association or other provisions exist that go beyond the statutory provisions for appointing Management Board and Supervisory Board members or for modifying the Articles of Association with the exception of the rule that when a Supervisory Board member turns 70 years of age, they retire from the Supervisory Board at the end of the next Annual General Meeting.
    1. The Management Board is authorised to increase the company's equity capital up to and including 30 June 2019 with the approval of the Supervisory Board by a total of no more than €81,000,000 by issuing up to 81,000,000 no-par voting shares in the name of the holder or registered for payment in cash or in kind, one time or several times. The Management Board is further authorised until 27 May 2018 to buy back up to 30,900,000 treasury shares (together with other treasury shares that the company has already acquired and still possesses) through the company and/or through subsidiaries of the company (section 66 Stock Corporation Act). As at 31 December 2015, the Company held 819,650 treasury shares.
    1. With regard to the holding company STRABAG SE, corresponding agreements with other shareholders of this holding company exist.
    1. No reimbursement agreements exist for the event of a public takeover offer.

INFORMATION ACCORDING TO SECTION 243A(2) OF THE AUSTRIAN COMMERCIAL CODE

The most important features of the internal controlling and risk management system with regard to the financial reporting process are described in the consolidated financial statements (Risk Report).

PROPOSED APPROPRIATION OF PROFIT

The separate financial statements of UNIQA Insurance Group AG, prepared in accordance with the Austrian Commercial Code, report an annual net profit for the 2015 financial year in the amount of €145,318,925.52 (2014: €130,571,950.61). The Management Board will propose to the Annual General Meeting on 30 May 2016 that this net profit be used for a dividend of 47 cents for each of the 309,000,000 dividend-entitled no-par value shares issued as at the reporting date and the remaining amount carried forward to a new account.

Vienna, 18 March 2016

Andreas Brandstetter Chairman of the Management Board

Wolfgang Kindl Member of the Management Board

Hannes Bogner

Member of the Management Board

Thomas Münkel Member of the Management Board

Kurt Svoboda

Member of the Management Board

Consolidated Statement of Financial Position as at 31 December 2015

Assets
In € thousand
Notes 31/12/2015 31/12/2014
Adjusted
01/01/2014
Adjusted
Property, plant and equipment 8 307,741 283,506 286,589
Investment property 9 1,392,590 1,504,483 1,652,485
Intangible assets 10 1,472,476 1,517,058 1,529,131
Financial assets accounted for using the equity method 11 514,165 528,681 545,053
Investments 13 21,392,476 20,629,354 19,038,091
Unit-linked and index-linked life insurance investments 13 5,226,748 5,386,650 5,332,611
Reinsurers' share of technical provisions 21 548,966 563,540 553,252
Reinsurers' share of technical provisions for unit-linked and index-linked life insurance 27 315,646 332,974 389,206
Receivables, including insurance receivables 14 911,477 1,094,544 979,746
Income tax receivables 15 87,270 53,917 69,881
Deferred tax assets 16 9,427 6,630 8,695
Cash and cash equivalents 17 890,083 975,764 616,976
Assets in disposal groups held for sale 12 9,289 161,053 0
Total assets 33,078,355 33,038,153 31,001,715
Equity and liabilities
In € thousand
Notes 31/12/2015 31/12/2014
Adjusted
01/01/2014
Adjusted
Total equity 18
Portion attributable to shareholders of UNIQA Insurance Group AG
Subscribed capital and capital reserves 1,789,920 1,789,920 1,789,920
Holding of own shares – 10,857 – 10,857 – 10,857
Accumulated results 4 1,373,651 1,303,179 984,065
3,152,713 3,082,242 2,763,127
Non-controlling interests 19 22,127 20,193 22,012
3,174,840 3,102,434 2,785,139
Liabilities
Subordinated liabilities 20 1,095,745 600,000 600,000
Technical provisions 22, 23, 24, 26 21,100,072 21,220,068 19,900,215
Technical provisions for unit-linked and index-linked life insurance 27 5,175,437 5,306,000 5,251,035
Financial liabilities 28 33,580 49,181 26,836
Other provisions 4, 29 796,442 801,837 793,190
Liabilities and other items classified as equity and liabilities 4, 30 1,271,572 1,400,828 1,405,608
Income tax liabilities 31 95,970 43,272 40,712
Deferred tax liabilities 16 334,696 355,424 198,980
Liabilities in disposal groups held for sale 12 0 159,107 0
29,903,515 29,935,719 28,216,576
Total equity and liabilities 33,078,355 33,038,153 31,001,715

To make the presentation clearer, the items in the consolidated statement of financial position have been summarised for the reporting period (and that of the previous year) and then listed and explained in the notes to the consolidated financial statements according to their importance.

Consolidated Income Statement from 1 January until 31 December 2015

In € thousand Notes 2015 2014
adjusted
Premiums earned (net) 32
a) Gross 5,829,514 5,523,218
b) Reinsurers' share – 196,007 – 210,322
5,633,507 5,312,896
Technical interest income 518,439 560,384
Other insurance income
a) Gross 29,806 32,595
b) Reinsurers' share 863 1,897
30,669 34,492
Insurance benefits 33
a) Gross – 4,749,877 – 4,517,700
b) Reinsurers' share 142,310 134,038
–4,607,567 –4,383,662
Operating expenses 4, 34
a) Expenses for the acquisition of insurance – 950,390 – 938,593
b) Other operating expenses – 373,144 – 386,558
c) Reinsurance commission and share of profit from reinsurance
ceded 24,839 26,044
–1,298,695 –1,299,106
Other technical expenses 38
a) Gross – 50,207 – 71,304
b) Reinsurers' share – 26,282 – 25,994
–76,489 –97,298
Technical result 199,864 127,706
Net investment income 4, 35 831,145 888,151
of which profit from financial assets accounted for using the equity
method 23,205 23,583
Other income 36 42,525 62,428
Reclassification of technical interest income –518,439 –560,384
Other operating expenses 37 –60,993 –70,334
Non-technical result 294,238 319,860
Operating profit/(loss) 494,102 447,566
Amortisation of goodwill and impairment losses –21,018 –32,292
Finance costs –50,243 –37,343
Earnings before taxes 422,840 377,932
Income taxes 38 –88,254 –85,055
Profit/(loss) for the year 334,586 292,877
of which attributable to shareholders of UNIQA Insurance Group AG 331,087 289,863
of which attributable to non-controlling interests 3,499 3,014
Earnings per share (in €)1) 18 1.07 0.94
Average number of shares in circulation 308,180,350 308,180,350

1) Diluted earnings per share is equal to undiluted earnings per share. Calculated on the basis of the consolidated profit/(loss).

Consolidated Statement of Comprehensive Income from 1 January until 31 December 2015

In € thousand 2015 2014
adjusted
Profit/(loss) for the year 334,586 292,877
Items not to be reclassified to profit or loss in subsequent periods
Actuarial gains and losses on defined benefit obligations
Gains (losses) recognised in equity – 57,554 – 46,042
Gains (losses) recognised in equity – deferred taxes 12,727 8,841
Gains (losses) recognised in equity – deferred profit participation 7,062 9,779
–37,765 –27,422
Items to be reclassified to profit or loss in the subsequent periods
Currency translation
Gains (losses) recognised in equity – 16,429 – 62,125
Recognised in the consolidated income statement – 1,155 0
Valuation of financial instruments available for sale
Gains (losses) recognised in equity – 64,569 1,318,234
Gains (losses) recognised in equity – deferred taxes 5,737 – 127,346
Gains (losses) recognised in equity – deferred profit participation 22,057 – 893,479
Recognised in the consolidated income statement – 87,860 – 174,736
Recognised in the consolidated income statement – deferred tax 11,076 11,112
Recognised in the consolidated income statement – deferred profit participation 64,934 98,135
Other income from financial assets accounted for using the equity method
Gains (losses) recognised in equity – 19,067 – 7,445
–85,276 162,350
Other comprehensive income –123,041 134,928
Total comprehensive income 211,545 427,805
of which attributable to shareholders of UNIQA Insurance Group AG 205,982 426,516
of which attributable to non-controlling interests 5,563 1,289

Consolidated Statement of Cash Flows from 1 January until 31 December 2015

In € thousand Notes 2015 2014 Adjusted
Profit/(loss) for the year 334,586 292,877
Amortisation of goodwill and other intangible assets, impairment losses
and other depreciation of property, plant and equipment
55,952 87,763
Impairment losses/reversal of impairment losses on other investments – 2,849 – 13,490
Gain/loss on the disposal of investments 4 – 100,009 – 41,208
Change in deferred acquisition costs 18,745 – 4,451
Change in securities at fair value through profit or loss 12,364 83,232
Change in direct insurance receivables 70,596 26,756
Change in other receivables 83,930 – 123,711
Change in direct insurance liabilities – 129,565 – 7,230
Change in other liabilities 57,699 1,423
Change in technical provisions – 218,656 1,140,249
Change in defined benefit obligations – 48,336 – 2,509
Change in deferred tax assets and deferred tax liabilities – 23,526 156,461
Change in other statement of financial position items – 44,639 22,548
Other non-cash income and expenses as well as adjustments to profit
for the year – 16,796 – 60,185
Cash flows from operating activities 49,497 1,558,523
Proceeds from disposal of intangible assets and property, plant and
equipment 14,500 13,503
Payments for acquisition of intangible assets ad property, plant and
equipment
– 31,716 – 74,725
Proceeds from disposal of consolidated companies 2,136 34,303
Payments for acquisition of consolidated companies – 18,058 – 72,247
Proceeds from disposal and maturity of other investments 4 4,666,786 8,301,173
Payments for acquisition of other investments – 5,293,419 – 9,236,185
Change in unit-linked and index-linked life insurance investments 159,902 – 54,039
Net cash flow from investing activities –499,868 –1,088,217
Change in treasury shares held – 129,621 – 109,342
Dividend payments 495,745 0
Proceeds from other financing activities – 1,034 – 1,843
Net cash flows from financing activities 365,091 –111,185
Change in cash and cash equivalents –85,280 359,121
Change in cash and cash equivalents due to movements in exchange
rates
– 401 – 334
Cash and cash equivalents at beginning of the year 975,764 616,976
Cash and cash equivalents at end of period 890,083 975,764
Income taxes paid – 63,518 – 18,997
Interest paid – 64,842 – 65,797
Interest received 569,996 607,524
Dividends received 62,185 63,764

Consolidated Statement of Changes in Equity

Accumulated
In € thousand Notes Subscribed capital and Holding of own shares Valuation of financial Actuarial gains and
capital reserves instruments available for
sale
losses on defined benefit
obligations
As at 31 December 2013 1,789,920 –10,857 177,133 –116,081
Restatement IAS 8 4 32,971
As at 1 January 2014 1,789,920 –10,857 210,105 –116,081
Change in basis of consolidation
Dividends to shareholders
Total comprehensive income 233,645 –27,422
Profit/(loss) for the year
Other comprehensive income 233,645 – 27,422
As at 31 December 2014 1,789,920 –10,857 443,750 –143,503
As at 1 January 2015 1,789,920 –10,857 443,750 –143,503
Change in basis of consolidation
Dividends to shareholders
Total comprehensive income –51,997 –37,060
Profit/(loss) for the year
Other comprehensive income – 51,997 – 37,060
As at 31 December 2015 1,789,920 –10,857 391,753 –180,563

Results

Differences from
currency translation
other accumulated
results
Portion attributable to
shareholders of UNIQA
Insurance Group AG
Non-controlling
interests
Total
equity
–91,140 1,014,152 2,763,127 22,012 2,785,139
– 32,971 0 0
–91,140 981,181 2,763,127 22,012 2,785,139
462 462 – 1,629 – 1,167
– 107,863 – 107,863 – 1,479 – 109,342
–64,364 284,657 426,516 1,289 427,805
289,863 289,863 3,014 292,877
– 64,364 – 5,206 136,653 – 1,725 134,928
–155,504 1,158,437 3,082,242 20,193 3,102,434
–155,504 1,158,437 3,082,242 20,193 3,102,434
– 6,075 – 6,075 – 3,313 – 9,388
– 129,436 – 129,436 – 315 – 129,751
–16,980 312,020 205,982 5,563 211,545
331,087 331,087 3,499 334,586
– 16,980 – 19,067 – 125,104 2,063 – 123,041
–172,485 1,334,945 3,152,713 22,127 3,174,840

Notes to the Consolidated Financial Statements

1. General information

UNIQA Insurance Group AG (UNIQA) is a company domiciled in Austria. The address of the company's registered office is Untere Donaustraße 21, 1029 Vienna. The Group primarily conducts business with property, casualty, health and life insurance.

UNIQA Insurance Group AG is registered in the company registry of the Commercial Court of Vienna under FN 92933t. The shares of UNIQA Insurance Group AG are listed on the Vienna Stock Exchange.

Unless otherwise stated, these consolidated financial statements are prepared in thousand euros; rounding differences may occur through the use of automated calculation tools when totalling rounded amounts and percentages. The functional currency at UNIQA is the euro.

UNIQA's reporting date is 31 December.

2. Accounting principles

2.1 Principles

The consolidated financial statements were prepared in line with the International Financial Reporting Standards (IFRSs) as well as the provisions of the International Financial Reporting Interpretations Committee (IFRIC) as adopted by the European Union (EU) as at the reporting date. The additional requirements of section 245a(1) of the Austrian Commercial Code (UGB) were also met.

The following table provides an overview of the valuation principles for the individual balance sheet items in the assets and liabilities:

Balance sheet item Standard of valuation
Assets
Property, plant and equipment at lower of amortised cost or recoverable amount
Investment property at lower of amortised cost or recoverable amount
Intangible assets
-with determinable useful life at lower of amortised cost or recoverable amount
-with indeterminable useful life at lower of acquisition cost or recoverable amount
Financial assets accounted for using the equity method at lower of amortised pro-rata value of the equity or recoverable
amount
Investments
-Financial assets held for sale fair value or acquisition cost
-Loans and receivables armortised cost
-Derivative financial instruments fair value
Investments of unit-linked and index-linked life insurance fair value
Reinsurers' share of technical provisions as per the valuation of technical provisions
Reinsurers' share of technical provisions of unit-linked and
index-linked life insurance
as per the valuation of technical provisions
Receivables, including insurance receivables armortised cost
Income tax receivables at the amount of any obligations to the tax authorities, based on
the tax rates applicable on the reporting date or in the near future
Deferred tax assets undiscounted valuation applying the tax rates that are expected
for the period in which an asset is realised or a liability met
Cash and cash equivalents armortised cost
Assets in disposal groups held for sale lower of carrying amount and fair value less cost to sale
Balance sheet item Standard of valuation
Liabilities
Subordinated liabilities amortised cost
Technical provisions property insurance: provisions for losses and unsettled claims
(undiscounted value of expected future payment obligations)
life and health insurance: insurance provision in accordance with
actuarial calculation principles (discounted value of expected
future benefits less premiums)
Technical provisions for unit-linked and index-linked life insurance insurance provision based on the change in value of the contributions assessed
Financial liabilities
-Liabilities from loans amortised cost
-Derivative financial instruments fair value
Other provisions
-from defined benefit obligations actuarial valuation applying the projected benefit obligation
method
-other present value of future settlement value
Liabilities and other items classified as equity and liabilities amortised cost
Income tax liabilities at the amount of any obligations towards the tax authorities, based
on the tax rates applicable on the reporting date or in the near
future
Deferred tax liabilities undiscounted valuation applying the tax rates that are expected
for the period in which an asset is realised or a liability met

2.2 Principles for technical items

UNIQA has applied IFRS 4 (published in 2004) for insurance contracts since 1 January 2005. This standard demands that the accounting policies be largely unaltered with regard to the actuarial items.

The IFRSs contain no specific regulations that comprehensively govern the recognition and measurement of insurance and reinsurance policies and investment contracts with a discretionary participation feature. Therefore, in accordance with IAS 8, the provisions of US Generally Accepted Accounting Principles (US GAAP) in the version applicable on 1 January 2005 were applied to all cases for which IFRS 4 contains no specific regulations. For balancing the accounts and evaluation of the insurance-specific entries of life insurance with profit sharing, FAS 120 was observed; FAS 60 was applied for specific items in health, property and casualty insurance and FAS 113 for reinsurance. Unit-linked life insurance, where the policyholder bears the entire investment risk, was accounted for in accordance with FAS 97.

Based on the regulations, technical items must be covered by suitable assets (cover funds). As is standard in the insurance industry, amounts dedicated to the cover funds are subject to a limitation as regards availability in the group.

2.3 Consolidation principles

Business combinations

If the Group has obtained control, it accounts for business combinations in line with the acquisition method. The consideration transferred for the acquisition and the identifiable net assets acquired are measured at fair value. Any generated goodwill is tested annually for impairment. Any profit from an acquisition at a price below the fair value of the net assets is recognised directly in profit/(loss) for the year. Transaction costs are recognised as expenses immediately.

The consideration transferred does not include any amounts associated with the fulfilment of pre-existing relationships. Such amounts are generally recognised in profit/(loss) for the year.

Any contingent obligation to pay consideration is measured at fair value as of the acquisition date. If the contingent consideration is classified as equity, it is not revalued, and a settlement is accounted for within equity. Otherwise, later changes in the fair value of the contingent consideration are recognised in profit/(loss) for the year.

Non-controlling interests

Non-controlling interests are measured as at the acquisition date with their proportionate share in the identifiable net assets of the acquired entity.

Changes in the Group's share in a subsidiary that do not result in a loss of control are recognised directly as equity transactions with non-controlling interests.

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls a company if

  • the Group is able to exercise power over the relevant entity,
  • it is exposed to fluctuating returns from its participation and
  • it is able to influence the amount of the returns as a result of the power it exercises.

The financial statements of subsidiaries are included in the consolidated financial statements from the date control begins until the date control ends.

Loss of control

If the Group loses control of a subsidiary, it derecognises the subsidiary's assets and liabilities and all associated non-controlling interests and other equity components. Any resulting profit or loss is recognised in profit/(loss) for the year. Any retained interest in the former subsidiary is measured at fair value as of the date of the loss of control.

Investments in associates

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

Investments in associates are equity-accounted. They are initially recognised at acquisition cost, which also includes transaction costs. After the first-time recognition, the consolidated financial statements include the Group's share in profit/(loss) for the year and in changes in other comprehensive income until the date the significant influence ends.

At each reporting date, the Group reviews whether there are any indications that the investments in associates are impaired. If this is the case, then the impairment loss is recorded as the difference between the participation carrying amount of the associate and the corresponding recoverable amount and recognised separately in profit/(loss) for the year.

Transactions eliminated on consolidation

Intragroup balances and transactions and all unrealised income and expenses from intragroup transactions are eliminated when consolidated financial statements are prepared.

Discontinued operations

A discontinued operation is a part of the Group that has either been sold or has been categorised as held for sale, and which

  • represents a major line of business or geographical area of operations;
  • is part of a single coordinated plan to dispose of a separate, major line of business or geographical area of operations, or
  • is a subsidiary acquired exclusively with a view to resale.

The entity is classified as a discontinued operation when the aforementioned criteria are fulfilled.

If an operation is classified as a discontinued operation, the consolidated statement of comprehensive income for the comparative year is adjusted so that it were as if the operation had been discontinued from the start of the comparative year.

Assets held for sale

Non-current assets or disposal groups that include assets and liabilities are classified as held for sale if it is highly probable that they will be realised through sale rather than continued use.

In general, these assets or disposal groups are recognised at the lower of their carrying amounts or fair values less costs to sell. Any impairment loss of a disposal group is firstly attributed to goodwill and then to the remaining assets and liabilities on a proportional basis – with the exception that no loss is attributed to financial assets, deferred tax assets, assets in connection with employee benefits or investment property that continues to be measured based on the Group's other accounting policies. Impairment losses on the first-time classification as held for sale and any subsequent impairment losses are recognised in profit or loss.

Intangible assets held for sale, and property, plant and equipment are no longer amortised or depreciated and any investments recognised using the equity method are no longer equityaccounted.

2.4 Scope of consolidated financial statements

In addition to the annual financial statements of UNIQA Insurance Group AG, the consolidated financial statements include the financial statements of all subsidiaries in Austria and abroad. The basis of consolidation comprised– including UNIQA Insurance Group AG –56 Austrian (2014: 52) and 67 (2014: 70) foreign subsidiaries. The associates are eight domestic (2014: 8) and one foreign company (2014: 1) that were included in the consolidated financial statements using the equity method accounting.

On page 161 there is a list of the fully consolidated subsidiaries and associates.

Shares in subsidiaries that are not consolidated (for lack of materiality), associates or joint ventures not accounted for using the equity method are classified as financial assets available for sale in accordance with IAS 39 and recognised at fair value in other comprehensive income. Those equity investments for which the fair value cannot be reliably ascertained are recognised at cost less any impairments.

In application of IFRS 10, fully-controlled investment funds are included in the consolidation, insofar as their fund volumes were not of minor importance when viewed separately and as a whole.

There were no business combinations in accordance with IFRS 3 in the reporting year. Any acquisitions of shares in other companies represented an acquisition of a group of assets because the prerequisites for a business operation were not met. The companies acquired were mainly financial and strategic shareholdings.

The following companies were included in the consolidated financial statements for the first time in the reporting year:

Date of initial
inclusion
Share in equity as at
31.12.2015
Figures in per cent
Diakonissen & Wehrle Privatklinik GmbH 31.3.2015 60.0
PremiQaMed Beteiligungs GmbH 31.3.2015 100.0
UNIQA Immobilien-Projekterrichtungs GmbH 30.6.2015 100.0
sTech d.o.o 31.12.2015 100.0
UNIQA Leasing GmbH 31.12.2015 25.0

The sale of UNIQA Lebensversicherung AG in Vaduz, as decided in the fourth quarter of 2014, was completed in the first quarter of 2015. The following four companies also exited the scope of consolidation as part of the portfolio optimisation: UNIQA Real Estate Ukraine (Kiev), Suoreva Ltd. (Limassol), Poliklinika Medico (Rijeka) and UNIQA Internationale Anteilsverwaltung GmbH (Vienna). As part of the UNIQA 2.0 strategic programme focussing on the core insurance business in the key markets of Austria and Central and Eastern Europe, UNIQA also sold its 29 per cent stake in Medial Beteiligungs-Gesellschaft m.b.H. (Vienna) to NOVOMATIC AG (Gumpoldskirchen) in a transfer agreement dated 28 July 2015. Medial Beteiligungs-Gesellschaft m.b.H. itself has a stake of around 38 per cent in Casinos Austria Aktiengesellschaft (Vienna), which corresponds to a stake for UNIQA in Casinos Austria Aktiengesellschaft of around 11 per cent. The sale to NOVOMATIC AG is subject to a condition precedent. The conditions precedent are essentially mandatory approvals still required under merger law and public law approvals. The closing is expected to occur in 2016.

2.5 Currency translation

Functional currency and reporting currency

The items included in the financial statement for each operating subsidiary are valued based on the currency that corresponds with the currency of the primary economic environment in which the subsidiary operates (functional currency). The consolidated financial statements are prepared in euros which is UNIQA's reporting currency.

Transactions in foreign currencies

Transactions in foreign currencies are translated into the functional currency of the Group entity at the exchange rate on the date of the transaction or, in the case of revaluations, at the time of the valuation.

Monetary assets and liabilities denominated in a foreign currency on the reporting date are translated into the functional currency at the closing rate. Non-monetary assets and liabilities measured at fair value in a foreign currency are translated at the rate valid on the date the fair value is calculated. Currency translation differences are generally recognised in profit/(loss) for the year. Non-monetary items recognised at historical acquisition cost or the cost of selfconstruction in a foreign currency are not translated.

In deviation from this policy, there is one case where currency translation differences are recognised in other comprehensive income:

• available-for-sale equity instruments (except in the case of impairment, for which currency translation differences are reclassified from other comprehensive income to profit/(loss) for the year).

Foreign operations

Assets and liabilities from foreign operations, including the goodwill and fair value adjustments that result from the acquisition, are translated into euros at the closing rate on the reporting date. Income and expenses from foreign operations are translated at the monthly closing rates.

Currency translation differences are reported in other comprehensive income and recognised in equity as a part of the accumulated results in the item "Differences from currency translation" if the foreign exchange difference is not attributable to non-controlling interests.

When the disposal of a foreign operation results in loss of control, joint control or significant influence, the corresponding amount recognised in the item "Differences from currency translation" under the accumulated results up to this date is reclassified to profit/(loss) for the year as part of the gain or loss on disposal. In the case of only partial disposal without loss of control over a subsidiary that includes a foreign operation, the corresponding portion of the cumulative exchange difference is attributed to the non-controlling interests. If the Group partially disposes of an associate or jointly controlled company that includes a foreign operation, but retains significant influence or joint control, the corresponding portion of the cumulative currency translation difference is reclassified to profit/(loss) for the year.

If the settlement of monetary items in the form of receivables or liabilities from or to a foreign operation is neither planned nor probable in the foreseeable future, the resulting foreign currency gains and losses are considered part of the net investment in the foreign operation. The foreign currency gains and losses are then reported in other comprehensive income and recognised in the "Differences from currency translation" in equity.

Major exchange rates:

EUR closing rates
31.12.2015
EUR closing rates
31.12.2014
EUR average rates
2015
EUR average rates
2014
Swiss franc CHF 1.0835 1.2024 1.0752 1.2139
Czech koruna CZK 27.0230 27.7350 27.3053 27.5418
Hungarian forint HUF 315.9800 315.5400 310.0446 308.9869
Croatian kuna HRK 7.6380 7.6580 7.6211 7.6342
Polish złoty PLN 4.2639 4.2732 4.1909 4.1909
Bosnia and Herzegovina convertible mark BAM 1.9558 1.9558 1.9558 1.9558
Romanian leu RON 4.5240 4.4828 4.4440 4.4410
Bulgarian lev BGN 1.9558 1.9558 1.9558 1.9558
Ukrainian hryvnia UAH 26.1223 19.1492 24.6297 15.7763
Serbian dinar RSD 121.5835 121.3495 120.7530 116.9427
Russian rouble RUB 80.6736 72.3370 69.0427 51.3856
Albanian lek ALL 136.9100 139.8700 139.5977 139.9069
Macedonian denar MKD 61.3868 61.4218 61.5080 61.5244
U.S. dollars (USD) 1.0887 1.2141 1.1130 1.3232

2.6 Insurance items

Premiums written

The (gross) premiums written include those amounts that have been called due by the insurer either once or on an ongoing basis in the financial year for the purposes of providing the insurance coverage. The premiums written are increased by the charges added during the year (in the event of payment in instalments) and the ancillary charges in line with the tariffs. In the case of unit-linked and index-linked life insurance, only the premiums decreased by the savings portion are stated in the item "Premiums written".

Insurance and investment contracts

Insurance contracts, i.e. contracts through which significant insurance risk is assumed, and investment contracts with a discretionary participation feature are treated in accordance with IFRS 4, i.e. under application of US GAAP. Investment contracts, i.e. contracts that do not transfer a significant insurance risk and that do not include a discretionary participation feature, fall under the scope of IAS 39 (Financial Instruments).

Reinsurance contracts

Assumed reinsurance (indirect business) is recognised as an insurance contract in accordance with IFRS 4.

Ceded reinsurance is also subject to the application of IFRS 4 and is presented in a separate item under assets in accordance with IFRS 4. The profit and loss items (premiums and payments) are deducted openly from the corresponding items in the gross account, while commission income is reported separately as its own item.

Deferred acquisition costs

Based on US GAAP, deferred acquisition costs are accounted for in accordance with IFRS 4. In the case of property and casualty insurance contracts, costs directly attributable to the acquisition are deferred and distributed over the expected contract term or according to the unearned premiums. In life insurance, the deferred acquisition costs are amortised in line with the pattern of expected gross profits or margins.

Unearned premiums

For short-term insurance contracts, such as most property and casualty insurance policies, the premiums relating to future years are reported as unearned premiums in line with the applicable regulations of US GAAP. The amount of these unearned premiums corresponds to the insurance cover granted proportionally in future periods.

Premiums levied upon entering into certain long-term contracts (e.g. upfront fees) are recognised as unearned premiums. In line with the applicable regulations of US GAAP, these fees are recorded in the same manner as the amortisation of deferred acquisition costs.

These unearned premiums are in principle calculated for each individual policy and exactly to the day. If they are attributable to life insurance, they are included in the insurance provision.

Insurance provision

Insurance provisions are established in the life and health insurance lines. Their carrying amount is determined based on actuarial principles on the basis of the present value of future benefits to be paid by the insurer less the present value of future net premiums the insurer expects to receive. Similarly, insurance provisions are established in the casualty lines that also cover life-long obligations (accident pensions). The insurance provision of the life insurer is calculated by taking into account prudent and contractually agreed calculation principles.

For policies that are mainly of investment character (e.g. unit-linked life insurance), the provisions of FAS 97 are used to measure the insurance provision. The insurance provision is arrived at by combining the invested amounts, the change in value of the underlying investments and the withdrawals under the policy. For unit-linked insurance policies in which the policyholder carries the sole risk of the value of the investment rising or falling, the insurance provision is listed as a separate liability entry under "Technical provisions for unit-linked and index-linked life insurance".

The insurance provisions for health insurance are determined based on calculation principles that correspond to the "best estimate", taking into account safety margins. Once calculation principles have been determined, they have to be applied to the corresponding partial portfolio for the whole duration (locked-in principle).

Provisions for losses and unsettled claims

The provision for outstanding claims in the property and casualty insurance lines contains the actual and the expected amounts of future financial obligations, including the direct claims settlement expenses appertaining thereto, based on accepted statistical methods. This applies for claims already reported as well as for claims incurred but not yet reported (IBNR). In insurance lines in which past experience does not allow the application of statistical methods, individual loss provisions are set aside.

Life insurance is calculated on an individual loss basis with the exception of the provision for unreported claims.

As for health insurance, the provisions for outstanding claims are estimated on the basis of past experience, taking the known arrears in claim payments into consideration.

The provision for the assumed reinsurance business generally complies with the figures of the cedents.

Provision for premium refunds and profit sharing

The provision for premium refunds includes the amounts for profit-related and non-profit related profit sharing to which the policyholders are entitled on the basis of statutory or contractual provisions.

In life insurance policies with a discretionary participation feature, differences between local measurement and measurement according to IFRS are presented with deferred profit participation taken into account, whereby this is also reported in profit/(loss) for the year or in other comprehensive income depending on the recognition of the change in the underlying measurement differences. The amount of the provision for deferred profit participation generally comes to 85 per cent of the valuation differentials before tax.

Other technical provisions

This item basically contains the provision for contingent losses for acquired reinsurance portfolios as well as a provision for expected cancellations and premium defaults.

Liability Adequacy Test

The Liability Adequacy Test evaluates whether the established IFRS reserves are sufficient. For the life insurance portfolio, a so-called best estimate reserve is compared with the IFRS reserve less the deferred acquisition costs. This calculation is done separately each quarter for mixed insurance policies, pension policies, risk insurance policies, and unit-linked and index-linked policies.

Because UNIQA uses the best estimate approach for calculating the loss reserves in non-life, only the unearned premiums are tested. Only segments that show a surplus of less than 10 per cent at the time of the annual calculation are tested every quarter. In non-life insurance, the segments tested are the general motor vehicle liability lines and other.

Technical provisions for unit- and index-linked life insurance

This item relates to the insurance provisions and the remaining technical provisions for obligations from life insurance policies where the value or income is determined by investments for which the policyholder bears the risk or for which the benefit is index-linked. As a general rule, the valuation corresponds with the unit-linked and index-linked life insurance investments written at current market values.

2.7 Employee benefits

Short-term employee benefits

Obligations from short-term employee benefits are recognised as expenses through profit or loss as soon as the associated work is performed. A liability must be recognised for the expected amount to be paid if the Group currently has a legal or de facto obligation to pay this amount on the basis of work performed by the employee and the obligation can be reliably estimated.

Defined contribution plans

Obligations for contributions to defined contribution plans are recognised as expenses through profit or loss as soon as the associated work is performed. Prepaid contributions are recognised as assets if an entitlement to refund or reduction of future payments arises. The defined contribution plan is financed completely by UNIQA.

Defined benefit plans

There are individual contractual pension obligations, individual contractual bridge payments, and pension allowances in accordance with association recommendations. Individuals who have an individual contractual obligation can generally claim a pension when they reach the age of 65, but not before the age of 62, and in the event of an inability to work. The amount of the pension generally depends on the number of their years of service and their last salary before leaving their active employment. In the event of death, the spouse of the individual entitled to the claim receives a pension at 60 per cent, 50 per cent or 40 per cent depending on the policy. The pensions are suspended for any period in which a termination benefit is paid and their value is generally guaranteed.

Final pension funds contribution

Board members, special policyholders and active employees in Austria who meet the criteria for inclusion according to the association recommendations are subject to a basic defined contribution pension fund scheme. The beneficiaries are also entitled to a final pension fund contribution which guarantees them a fixed cash value for retirement when they begin their retirement. According to the provisions of IAS 19, this obligation in the contribution phase is to be classified as a defined benefit. The works council agreement states the extent to which a final pension fund contribution is provided to the beneficiary's individual assurance cover account in the event of a transfer to the old-age pension or of an incapacity to work or the death as a participant. UNIQA has no obligations during the benefit phase.

Termination benefit entitlements

In the case of employees of Austrian companies whose employment began prior to 31 December 2002 and lasted three years without interruption, the employee is entitled to termination benefits when the employment is terminated, unless the employee quits, leaves without an important reason or is guilty of an act resulting in early dismissal. The amount is double the salary owed to the employee in the last month of the employee relationship and increases after five years of employment to three times, after ten years of employment to four times, after fifteen years of employment to six times, after twenty years of employment to nine times and after twenty-five years of employment to twelve times the monthly salary. Employees subject to the collective agreement for insurance undertakings – back office and whose employment began before 1 January 1997 also receive after five years of employment three times, after ten years of employment six times the monthly salary.

If the employment ends due to the death of the employee, the termination benefit only amounts to half of the above-mentioned amounts and is only owed to legal beneficiaries who were legal dependents of the deceased.

For employees of Austrian companies who joined the Group after 31 December 2002, the statutory provisions apply. These people are not included in the calculation of the termination benefits.

The Group's net liability with regard to defined benefit plans is calculated separately for each plan by estimating the future benefits that the rightful claimants have already earned in the current and in earlier periods. This amount is discounted and the fair value of any plan assets is deducted.

The calculation of defined benefit obligations is carried out annually by a qualified actuary using the projected unit credit method. If the calculation results in a potential asset for the Group, the asset recognised is limited to the present value of any economic benefit available in the form of future refunds from the plan or reductions in future contributions to the plan. Any valid minimum funding requirements are included in the calculation of the present value of the economic benefit.

Revaluations of the net liability from defined benefit plans are recognised directly in other comprehensive income. The revaluation includes the actuarial gains and losses, the income from plan assets (not including projected interest income) and the effect of any asset ceiling. The Group calculates net interest expenses (income) on the net liabilities (assets) from defined benefit plans for the reporting period by applying the discount rate used to measure the defined benefit obligation at the start of the annual reporting period. This discount rate is applied to net liabilities (assets) from defined benefit plans on this date. Any changes in the net liabilities (assets) from defined benefit plans resulting from contribution and benefit payments over the course of the reporting period are taken into account. Net interest expenses and other expenses for defined benefit plans are recognised through profit or loss in the profit/(loss) for the year.

If a plan's defined benefits are changed or a plan is curtailed, the resulting change in the benefit relating to past service or the gain or loss on the curtailment is recognised directly in profit/(loss) for the year. The Group recognises gains and losses from the settlement of a defined benefit plan at the date of the settlement. The pensions are financed through provisions that are based on individual policies or on the association recommendations. The final pension contribution is set aside during the contribution phase and transferred to the pension fund at the time of retirement. The financing is specified in the business plan, in the works council agreement and in the pension fund contract.

Other long-term employee benefits

The Group's net obligation with regard to long-term employee benefits comprises the future benefits that the employees have earned in return for work performed in the current and in earlier periods. These obligations include provisions for length of service awards that are paid to employees after reaching a certain length of service. These benefits are discounted to determine their present value. Revaluations are recognised in profit/(loss) for the year in which they arise.

Payments based on termination of employment contracts

Post-employment benefits are recognised as expenses on the earlier of the following dates: when the Group can no longer withdraw the offer of such benefits or when the Group recognises costs for restructuring. If benefits are not expected to be settled within twelve months of the end of the reporting period, they are discounted.

Share-based payments with cash settlement (share appreciation rights)

The fair value on the date share-based payment awards are granted to employees is recognised as expense over the period in which the employees become unconditionally entitled to the awards. The amount recognised as expense is adjusted in order to reflect the number of awards expected to fulfil the corresponding service conditions and non-market performance conditions, so that the expense recognised is ultimately based on the number of awards that fulfil the corresponding service conditions and non-market performance conditions at the end of the vesting period. Changes in valuation assumptions likewise result in an adjustment of the recognised provision amounts affecting income.

2.8 Income taxes

Tax expense includes actual and deferred tax. Actual tax and deferred tax is recognised in profit/(loss) for the year, with the exception of any amount associated with a business combination or with an item recognised directly in equity or other comprehensive income.

Actual tax

Actual tax is the expected tax liability or tax receivable on taxable income for the financial year or the tax loss on the basis of interest rates that apply on the reporting date or will soon apply, plus all adjustments of the tax liability relating to previous years. Actual tax liabilities include all tax liabilities resulting from the determination of dividends.

Group taxation

UNIQA exercises the option of forming a Group of companies for tax purposes provided by lawmakers with the Tax Reform Act 2005; there are three taxable groups of companies with the parent groups UNIQA Insurance Group AG, PremiQaMed Holding GmbH and R-FMZ Immobilienholding GmbH.

The group members are charged the corporation tax amounts attributable to them by the parent group by distributing their tax burden in the tax group. Losses from foreign group members are also included within the scope of taxable profits. The tax realisation for these losses is accompanied by a future tax obligation to pay income taxes at an unspecified point in time. The corresponding liability from ongoing tax liabilities is presented in undiscounted form.

Deferred taxes

Deferred taxes are recognised with regard to temporary differences between the carrying amounts of assets and liabilities in the IFRS consolidated financial statements and the amounts used for tax purposes. Deferred taxes are not recognised for:

• Temporary differences on the first-time recognition of assets or liabilities in the event of a transaction that is not a business combination and that affects neither net earnings before taxes nor taxable income,

  • Temporary differences in connection with shares in subsidiaries, associates and jointly controlled entities, provided the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future,
  • Taxable temporary differences on the first-time recognition of goodwill.

A deferred tax asset is recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profit will be available for which they can be used. Deferred tax assets are tested for impairment on every reporting date and reduced to the extent that it is no longer probable that the associated tax advantage will be realised.

Deferred taxes are measured on the basis of the tax rates expected to be applied to temporary differences as soon as they reverse, and using tax rates that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred taxes reflects the tax consequences arising from the Group's expectation of the manner in which it will recover the carrying amounts of its assets or settle its liabilities on the reporting date. For investment property measured at fair value, the presumption that the carrying amount will be recovered through sale was not rebutted.

Deferred tax assets and debts are netted out if the conditions for a legal claim to offsetting are met and the deferred tax claims and liabilities relate to income tax that is levied by the same tax authority, either for the same taxable item or different taxable items, aimed at achieving a settlement on a net basis.

2.9 Property, plant and equipment

Recognition and measurement

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

If parts of an item of property, plant and equipment have different useful lives, they are recognised as separate items (main components) of property, plant and equipment.

Any gain or loss from the disposal of an item of property, plant and equipment is recognised in profit/(loss) for the year.

Reclassification as investment property

If the use of a property changes and an owner-occupied property becomes an investment property, the property is reclassified as investment land and buildings with the carrying amount as of the date of the change.

Subsequent costs

Subsequent costs are only capitalised when it is probable that the future economic benefit associated with the expense will flow to the Group. Ongoing repairs and maintenance are recognised as expenses immediately.

Depreciation

The depreciation is calculated in order to write down the costs of property, plant and equipment less their estimated residual values on a straight-line basis over the period of their estimated useful lives. The depreciation is recognised in the profit/(loss) for the year. Land is not depreciated.

The estimated useful lives of significant property, plant and equipment for the current year and comparative years are as follows:

  • Buildings: 10–65 years
  • Plant and equipment: 4–10 years
  • Fixtures and fittings: 4–10 years

Depreciation methods, useful lives and residual values are reviewed on every reporting date and adjusted if necessary. The depreciation charges for property, plant and equipment are recognised in profit/(loss) for the year on the basis of allocated operating expenses under the items insurance benefits, operating expenses and net investment income.

2.10 Intangible assets

Deferred acquisition costs

Deferred acquisition costs for insurance activities that are directly related to new business and/or to extensions of existing policies and that vary in line with that business are capitalised and amortised over the term of the insurance contracts they relate to. If they are attributable to property and casualty insurance, they are amortised over the probable contractual term, with a maximum of seven years. In life insurance, the acquisition costs are amortised over the duration of the contract in the same proportion as the actuarial profit margin of each individual year is realised in comparison to the total margin to be expected from the contracts. For long-term health insurance contracts, the amortisation of acquisition costs is measured in line with the proportionate share of earned premiums in the present value of expected future premium income. The changes in deferred acquisition costs are shown as operating expenses.

Goodwill

The goodwill arising in the context of business combinations is measured at cost less accumulated impairment losses. Goodwill arises upon acquisition of subsidiaries and represents the surplus of the consideration transferred for acquisition of the company above the fair value of the Group's share in the identifiable assets acquired, the liabilities assumed, contingent liabilities and all non-controlling shares in the acquired company at the time of the acquisition.

Value of insurance contracts

Values of life, property and casualty insurance policies relate to expected future margins from purchased operations and are recognised at the fair value at the acquisition date.

With regard to life insurance business acquired, the amortisation of the current value follows the progression of the estimated gross margins.

Other intangible assets

Other intangible assets include both purchased and internally-developed software, which is depreciated on a straight-line basis over its useful economic life of 2 to 5 years.

In accordance with the provisions of IAS 38, costs that are incurred at the research stage for inhouse software are recognised through profit or loss in profit/(loss) for the year in which they were incurred. Costs that are incurred at the development stage are deferred provided that it is foreseeable that the software will be completed, there is the intention and ability for future internal use and a future economic benefit arises from this.

The useful lives of both the in-house software and acquired intangible assets amount to between 2 and 5 years. The amortisation and impairment losses of the other intangible assets were recognised in profit/(loss) for the year on the basis of allocated operating expenses under the items insurance benefits, operating expenses and net investment income.

2.11 Investment property

Land and buildings, including buildings on third-party land, held as long-term investments to generate rental income and/or for the purpose of capital appreciation are measured at cost when they are acquired. Subsequent measurement follows the cost model. The useful lives of the investment property are between 10 and 80 years.

2.12 Financial instruments

Classification

The Group classifies non-derivative financial assets to the following categories: Financial assets measured at fair value through profit or loss, loans and receivables, and financial assets available for sale.

The Group categorises non-derivative financial liabilities as other financial liabilities.

Investments

With the exception of mortgages and other loans, investments are listed at the current fair value, which is established by determining a market value or stock market price. In the case of investments that are not listed on an active market, the fair value is determined through internal valuation models or on the basis of estimates of what amounts could be achieved under current market conditions in the event of proper realisation.

Investments – derivatives ( held for trading)

Derivatives are used within the limits permitted under the Austrian Insurance Supervisory Act for hedging investments and for increasing earnings. All fluctuations in value are recognised in profit/(loss) for the year. Financial assets from derivative financial instruments are recognised under investments. Financial liabilities from derivative financial instruments are recognised under financial liabilities.

Investments – measured at fair value through profit or loss

Financial assets are measured at fair value through profit or loss if the asset is either held for trading or is designated at fair value and recognised in profit and loss (fair value option).

The fair value option is applied to structured products which are not split between the underlying transaction and the derivative, but are accounted for as a unit. All the structured products can therefore be found in the item "financial instruments at fair value through profit or loss" on the statement of financial position. Unrealised gains and losses are recognised in profit/(loss) for the year. In accordance with IAS 39 (11A), ABS bonds, structured bonds, hedge funds and a special annuity fund with a high share of derivatives are also recognised under the items for securities at fair value through profit or loss.

Financial assets "at fair value through profit or loss" are carried at fair value. Each profit or loss resulting from the measurement is recognised through profit or loss.

Capital investments held for unit-linked and index-linked life insurance policyholders

These investments concern life insurance contracts whose value or profit is determined by investments for which the policyholder carries the risk, i.e. the unit-linked or index-linked life insurance contracts. The investments in question are collected in asset pools, recognised at their fair value and kept separately from the remaining investments of the companies. The policyholders are entitled to all income from these investments. The amount of the recognised investments strictly corresponds to the insurance provisions (before reinsurance business ceded) for life insurance, to the extent that the investment risk is borne by the policyholders. The unrealised gains and losses from fluctuations in the fair values of the investment pools are thus offset by the appropriate changes in these provisions.

Non-derivative financial assets and liabilities – recognition and derecognition

The Group recognises loans, receivables and issued debt securities from the date on which they arise. All other financial assets and liabilities are recognised for the first time on the settlement date. The Group derecognises a financial asset when the contractual rights to cash flows from an asset expire or it transfers the rights to receive the cash flows in a transaction in which all major risks and opportunities connected with the ownership of the financial asset are transferred. Derecognition also occurs when the Group neither transfers nor retains all major risks and opportunities connected with ownership and does not retain control over the transferred asset. Every share in such transferred financial assets that arise or remain in the Group is recognised as a separate asset or separate liability.

Financial liabilities are derecognised when the contractual obligation is fulfilled, extinguished or expired.

Financial assets and liabilities are set off and recognised in net amounts in the statement of financial position if the Group has a legal right to set off the reported amounts against each other and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Loans and receivables

When first recognised, such assets are measured at their fair value plus directly attributable transaction costs. Subsequently, they are measured at amortised cost using the effective interest method.

Cash and cash equivalents

In the consolidated cash flow statement, cash and cash equivalents includes bank balances available upon demand, which are a central component of the management of the Group's payment transactions.

Available-for-sale financial assets

Available-for-sale financial assets are initially measured at fair value plus directly attributable transaction costs. Subsequently, available-for-sale financial assets are measured at fair value and corresponding value changes are, with the exception of impairment and foreign exchange differences in the case of available-for-sale debt securities, recognised in the accumulated results in equity. When an asset is derecognised, the accumulated other comprehensive income is reclassified to profit/(loss) for the year.

Non-derivative financial liabilities – measurement

When first recognised, non-derivative financial liabilities are measured at fair value less directly attributable transaction costs. Subsequently, these financial liabilities are measured at amortised cost using the effective interest method.

2.13 Impairments

Non-derivative financial assets

Financial assets not designated as at fair value through profit or loss, including interests in entities accounted for using the equity method, are tested on every reporting date to determine whether there is any objective indication of impairment.

Objective indications that financial assets are impaired are:

  • The default or delay of a debtor,
  • The restructuring of an amount owed to the Group at conditions that the Group would otherwise not consider,
  • Indications that a debtor or issuer will become insolvent,
  • Adverse changes in the payment status of borrowers or issuers,
  • The disappearance of an active market for a security,
  • Observable data that indicate a significant decrease in the expected payments from a group of financial assets.

In the case of an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is also objective evidence of impairment. The Group considers a decline of 20 per cent as significant and a period of nine months as prolonged.

Financial assets measured at amortised cost

The Group considers indications of impairment for these financial assets both at the level of the individual assets and collectively. All assets significant in themselves are tested for specific impairment. Those that prove not to be specifically impaired are then collectively tested for impairment that has occurred but not yet been identified. Assets not significant in themselves are collectively tested for impairment by pooling assets with similar risk characteristics in one group.

When testing for collective impairment, the Group uses historical information on the timing of payments and the value of the incurred losses, adjusted by a judgement on the part of the Management Board on whether the current economic conditions and credit conditions are such that the actual losses are probably higher or lower than the losses to be expected on the basis of historical trends.

Impairment is calculated as the difference between the carrying amount and the present value of the estimated future cash flows, discounted at the original effective interest rate of the asset. Losses are recognised in profit/(loss) for the year. If the Group has no realistic hope of recovering the asset, the amounts are written off. If an event occurring after the recognition of impairment reduces the level of impairment, the reduction is recognised in profit/(loss) for the year.

Available-for-sale financial assets

Impairment of available-for-sale financial assets is recognised in profit/(loss) for the year by reclassifying the losses accumulated in equity. The accumulated loss that is reclassified from equity to profit/(loss) for the year is the difference between the acquisition cost, net of any redemptions, and current fair value, less any impairment loss previously recognised in profit or loss. If the fair value of an impaired, available-for-sale debt instrument increases in a subsequent period and the increase can be objectively related to an event occurring after the impairment was recognised, the impairment is reversed, with the amount of the reversal recognised in profit or loss. In other cases, impairment reversal is recognised in other comprehensive income.

Associates accounted for using the equity method

An impairment loss relating to an associate accounted for using the equity method is measured by comparing the recoverable amount of the shares with their carrying amount. The impairment loss is recognised in profit/(loss) for the year. An impairment loss is reversed in the event of an advantageous change in the estimates used to determine the recoverable amount.

Non-financial assets

The carrying amounts of the Group's non-financial assets – excluding deferred tax assets – are tested on every reporting date to determine whether there is an indication of impairment. If this is the case, the recoverable amount of the asset is estimated. The goodwill and intangible assets with indefinite useful lives are tested for impairment annually.

In order to test for impairment, assets are grouped into the smallest groups of assets whose continued use generates cash flows that are to the greatest possible extent independent of cash flows from other assets or cash-generating units (CGUs). Goodwill acquired in a business combination is allocated to the CGUs or groups of CGUs expected to benefit from the synergies of the combination.

The recoverable amount of an asset or a CGU is the higher of its value in use or its fair value less costs to sell. When calculating value in use, the estimated future cash flows are discounted to their present value, whereby a pre-tax discount rate is used that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognised when the carrying amount of an asset or a CGU exceeds its recoverable amount.

Impairment losses are recognised in profit/(loss) for the year. Impairment recognised for CGUs is first allocated to any goodwill allocated to the CGU and then allocated to the carrying amount of the other assets of the CGU (group of CGUs) on a proportional basis.

An impairment loss on goodwill is not reversed. In the case of other assets, an impairment loss is reversed only to the extent that it does not increase the carrying amount of the asset above the carrying amount that would have been determined net of depreciation or amortisation had no impairment loss been recognised.

2.14 Other provisions

Provisions are formed if the Group has a current obligation (be it legal or practical in nature) from a past event, it is likely that fulfilment of the obligation will be associated with an outflow of resources, and a reliable estimate of the amount for the provision is possible.

The provision amount assessed is the best estimate for the additional benefit as at the reporting date for the purposes of settling the current obligation.

The level of the provisions is calculated by discounting the expected future cash flows at a pre-tax interest rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a finance cost.

2.15 Own shares

The acquisition costs of treasury shares are recognised as a deduction from the equity.

2.16 Determination of fair value

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 directly to the Group Management Board.

The measurement team carries out a regular review of the major unobservable input factors 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 IFRS, 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. On the basis of the input factors 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.
  • Level 2: Measurement 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).
  • Level 3: Measurement parameters for assets or liabilities that are not based on observable market data.

If the input factors 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 level of the fair value hierarchy that corresponds to the lowest input factor 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.

Further information on the assumptions used to determine the fair values is given in the following Notes:

  • Note 9 on investment property
  • Note 13 on financial instruments

2.17 Operating segments

The accounting and valuation methods of the segments that are subject to mandatory reporting correspond to the consolidated accounting and valuation methods disclosed in Note 2. The earnings before taxes for the segments were determined taking the following components into consideration: summation of the IFRS earnings in the individual companies, taking the elimination of investment income in the various segments and amortisation of goodwill into consideration. All other consolidation effects (profit/(loss) at associates, elimination of interim results, and other overall effects) are included in the segment Group functions and consolidation. The segment profit/(loss) obtained in this manner is reported to the Management Board of the UNIQA Insurance Group AG to manage the Group in the following five operating segments:

  • UNIQA Austria this segment includes UNIQA Österreich Versicherungen AG, Salzburger Landesversicherung AG and 50 per cent of FinanceLife Lebensversicherung AG.
  • Raiffeisen Versicherung this includes the remaining 50 per cent of FinanceLife Lebensversicherung AG together with Raiffeisen Versicherung AG.
  • UNIQA International includes the Austrian holding companies UNIQA International AG and UNIQA Internationale Beteiligungs-Verwaltungs GmbH in addition to all foreign insurance companies (with the exception of UNIQA Re AG). This segment is divided into the following main areas on a regional basis:
  • Western Europe (WE Switzerland, Italy and Liechtenstein)
  • Central Europe (CE Czech Republic, Hungary, Poland and Slovakia)
  • Eastern Europe (EE Romania and Ukraine)
  • Southeastern Europe (SEE Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Montenegro, Macedonia, Serbia and Kosovo)
  • Russia (RU)
  • Administration (the Austrian holding companies)
  • Reinsurance includes UNIQA Re AG (Switzerland) and the reinsurance business of UNIQA Insurance Group AG
  • Group functions and consolidation this segment includes the remaining items for UNIQA Insurance Group AG (investment result and administrative costs) as well as all other remaining Austrian and foreign service companies.

3. Changes in major accounting policies

With the exception of the following changes, the Group applied the accounting policies outlined consistently to all periods presented in these consolidated financial statements.

The Group applied the following new standards, interpretations and amendments to standards, with these first being applied as of 1 January 2015. None of the new regulations arising from this have any essential impact on UNIQA.

Miscellaneous Annual Improvements Project 2010 –2012
IFRIC 21 Charges

4. IAS 8.42 restatements

Statement of management fees

For the purposes of more transparent presentation of the consolidated income statement as of 2015, income from management fees, which in previous years was deducted from operating expenses, is reported under investment income. Prior-year amounts have been adjusted accordingly.

Deferred tax

An adjustment was made to a deferred tax liability in the reporting year amounting to €33 million, which was recognised in 2011 in connection with a proportion allocated to the IAS 39 category "Available for sale" within the scope of a benefit in kind. Prior-year amounts have been adjusted accordingly. The adjustments are shown in the consolidated statement of changes in equity.

Presentation of deferred liabilities

In order to achieve a transparent presentation of the balance sheet, starting in the 2015 financial year debt that was reported in the previous year under other provisions is now reported under liabilities and other items classified as equity and liabilities. This essentially includes liabilities to employees. Prior-year amounts have been adjusted accordingly.

Consolidated statement of cash flows

With the objective of enabling a clearer presentation of cash flows, reclassifications have been made compared to the presentation in the previous years. The figures for the previous year have been adjusted accordingly.The impact of the adjustments described above on the consolidated statement of financial position and the consolidated income statement is presented below:

Consolidated statement of financial sosition
Equity and liabilities
in € thousand
31/12/2014
Adjusted
31/12/2014
Published
31/12/2014
Adjustment
Liabilities
Other provisions 801,837 833,914 – 32,077
Liabilities and other items classified as equity and liabilities 1,400,828 1,368,751 32,077
Total equity and liabilities 33,038,153 33,038,153 0
Consolidated income statement
in € thousand
2014 Adjusted 2014 Published Adjustment 2014
Operating expenses
b) Other operating expenses – 386,558 – 362,782 – 23,776
Technical result 127,706 151,482 –23,776
0
Net investment income 888,151 864,375 23,776
Non-technical result 319,860 296,084 23,776
Profit/(loss) for the year 292,877 292,877 0
Earnings per share (in €) 0.94 0.94 0.00

5. New standards and interpretations which have not yet been applied

A series of new standards, amendments to standards and interpretations were due to be applied for the first time in the first reporting period of a financial year starting after 1 January 2015 and were not applied in preparing these consolidated financial statements. Those which could be relevant for the Group are outlined below. The Group does not intend to early apply these standards.

New standards and interpretations Effective date Endorsement
IFRS 9
9
Financial instruments 1 January 2018 No
IFRS 14 Regulatory deferral accounts 1 January 2016 No1
IFRS 15 Revenue from contracts with customers 1 January 2018 No
IFRS 16 Leases 1 January 2019 No
Amended standards and interpretations Effective date
IAS 1 Presentation of financial statements (disclosure initiative) 1 January 2016 Yes
IAS 19 Employee benefits – defined benefit plans: employee contributions 1 February 2015 Yes
Miscellan
eous
Annual Improvements Project 2011 –2013 1 February 2015 Yes
IAS 16, IAS 38 Property, plant and equipment and intangible assets – clarification of the
admissible methods of depreciation and amortisation
1 January 2016 Yes
IAS 27 Separate financial statements – equity method in separate financial
statements
1 January 2016 Yes
IFRS 10,
IAS 28
Consolidated financial statements and investments in associates and joint
ventures – sale or contribution of assets between an investor and its
associate or joint venture
The endorsement was postponed
indefinitely
IFRS 10, 1 January 2016 No
IFRS 12,
IAS 28
Consolidated financial statements and investments in associates and joint
ventures – investment entities: applying the consolidation exception
IFRS 11 Joint arrangements – acquisition of interests in joint operations 1 January 2016 Yes
Miscellan
eous
Annual Improvements Project 2012 –2014 1 January 2016 Yes
IAS 16, IAS 41 Property, plant and equipment and agriculture – bearer plants 1 January 2016 Yes

IFRS 9 "Financial Instruments" deals with the classification, recognition and measurement of financial assets and financial liabilities. The full version of IFRS 9 was published in July 2014. This standard replaces the regulations of those sections of the existing IAS 39 that address the

1 The European Commission decided not to adopt this interim standard and to wait for publication of the final standard. classification and measurement of financial instruments. IFRS 9 adheres to a mixed measurement model, but it simplifies this and sets out three principal measurement categories for financial assets: measurement of amortised cost, measurement at fair value with value fluctuations recorded in profit/(loss) for the year (fair value through profit and loss) and measurement at fair value with value fluctuations recorded in other comprehensive income (fair value through OCI). The classification depends directly on the company's business model as well as on the features of the contractually agreed payment flows for the financial assets. Shares of equity instruments must be measured at fair value, with fluctuations in fair value recognised through profit or loss, or with fluctuations in fair value measured through other comprehensive income if the company irrevocably opts to do so upon first-time recognition of the equity instruments (with no subsequent reclassification in net profit for the year). There is also a new measurement model for impairments based on expected losses (expected credit losses model) which replaces the existing measurement model of actual losses incurred that was used in IAS 39 (incurred loss model). Regarding financial liabilities, there are no changes to classification or measurement, with the exception of mandatory reporting of own creditworthiness risk in other comprehensive income for financial liabilities designated at fair value and recognised in profit/(loss) for the year. IFRS 9 eases the requirements in relation to hedging effectiveness by removing the previous narrow limits of hedging effectiveness. There is now a requirement for an economic relationship between the underlying transaction and the hedging instrument, and also that the hedged part (hedged ratio) corresponds with the assumptions and conditions with which the Company manages the items as part of its risk management activities. Furthermore, hedging documentation must be prepared as currently prescribed, whereby it will differ from the documentation required under IAS 39. The standard applies to reporting periods beginning on or after 1 January 2018. Earlier application is permitted. This is expected to have an impact on UNIQA's consolidated financial statements in relation to the classification and measurement of financial assets, although no statement can be made at present concerning the effects it will have on the company's financial position. In this context, the IASB published a draft of proposed amendments to IFRS 4 insurance contracts on 9 December 2015, aimed at addressing the concerns surrounding the different implementation dates of IFRS 9 financial instruments and the expected new standard for accounting for insurance contracts.

The amendments are intended to provide two options to companies that issue insurance contracts within the scope of IFRS 4:

  • Companies may reclassify some of the expenses and income from the income statement that emerge from qualified assets as other total comprehensive income. This is known as the overlay approach. A company would apply the overlay approach to qualifying assets retrospectively, when it applies IFRS 9 for the first time.
  • Companies whose primary business activity involves the awarding of insurance contracts within the scope of IFRS 4 have the option of temporarily deferring their IFRS 9 application. This is known as the deferral approach. According to the amendments that make up the deferral approach, a company would be allowed to apply IAS 39 instead of IFRS 9 for reporting periods that begin prior to 1 January 2021.

This draft could therefore result in the initial application for IFRS 9 being deferred until January 2021, if it is implemented.

IFRS 15 "Revenue from Contracts with Customers" governs revenue recognition and sets out the basic principles for reporting of meaningful information on the type, amount, recognition date and uncertainties regarding revenues and payment flows from contracts with customers. Sales revenues are recorded if a customer has control over a delivered item or a service provided and has the ability to enjoy these goods and services and derive benefits from these. The standard replaces IAS 18 "Revenue" and IAS 11 "Construction Contracts" and the associated interpretations. The standard applies to reporting periods beginning on or after 1 January 2017. The Group is currently ascertaining the impact of IFRS 15.

IFRS 16 "Leases" covers the reporting of leases. UNIQA acts both as a lessee and a lessor, with no changes being made to accounting on the lessor side as a result of the introduction of IFRS 16. The leases from a lessee perspective pertain primarily to land and buildings. The standard applies to reporting periods beginning on or after 1 January 2019. The Group is currently ascertaining the impact of IFRS 16.

The provisions stated have been implemented in these consolidated financial statements if applicable. However, this has not resulted in any significant impact on the presentation of the financial position.

6. Use of discretionary decisions and estimates

The consolidated financial statements require the Group Management Board to make discretionary decisions, estimates and assumptions that relate to the application of accounting policies and the amounts stated for the assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and their underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recorded prospectively.

The most significant instances where discretion has been exercised and forecasts for the future have been used for these IFRS-consolidated financial statements are described below:

6.1 Impairment test

Ascertainment and allocation of goodwill

Goodwill arises from company mergers and acquisitions. It represents the difference between the acquisition costs and the proportional and current corresponding net fair value of identifiable assets, debts and specific contingent liabilities. In accordance with IAS 36, goodwill is not subject to amortisation, but reported at the acquisition cost less any accrued impairments.

For the purpose of the impairment test, UNIQA has allocated the goodwill to "cashgenerating units" (CGUs). These CGUs are the smallest identifiable groups of assets that generate cash flows that are to the greatest possible extent independent from the cash generating units of other assets or other groups of assets. The impairment test implies a comparison between the amount that can be generated by selling or using each CGU, the present value of future cash flows, and the value to be covered, consisting of goodwill, the proportional net assets and any capital increases and internal loans. If the resulting value exceeds the realisable value of the unit based on the discounted cash flow method, an impairment loss is recognised. The impairment test was carried out in the fourth quarter of 2015. UNIQA has allocated goodwill to the CGUs listed below, which coincide with the countries in which UNIQA operates. As an exception to this, the Austrian companies were considered individually, and SalzburgerLandesversicherung AG and UNIQA Österreich Versicherungen AG were considered as a group, as was the Sigal Group, in which the three countries of Albania, Kosovo and Macedonia were combined as one CGU, due to their similar development and organisational connection:

  • Albania/Kosovo/Macedonia as "Sigal Group" sub-group (SEE)
  • Bosnia and Herzegovina (SEE)
  • Bulgaria (SEE)
  • Italy (WE)
  • Croatia (SEE)
  • Liechtenstein (WE)
  • UNIQA Austria (AT)
  • Raiffeisen Insurance Austria (AT)
  • FinanceLife (AT)
  • Poland (CE)
  • Romania (EE)
  • Russia (RU)
  • Switzerland (WE)
  • Serbia (SEE)
  • Montenegro (SEE)
  • Slovakia (CE)
  • Czech Republic (CE)
  • Ukraine (EE)
  • Hungary (CE)
  • UNIQA Re

Determination of the capitalisation interest rate

The assumptions with regard to risk-free interest rate, market risk premium and segment betas made for determination of the capitalisation rate are consistent with the parameters used in the UNIQA planning and controlling process and are based on the capital asset pricing model.

In order to depict the economic situation of income values as accurately as possible, considering the volatility on the markets, the capitalisation rate was calculated as follows: a uniform, risk-free interest rate according to the Svensson method (German treasury bonds with 30 year maturities) was used as a base interest rate.

The beta factor was determined on the basis of the monthly betas over the last five years for a defined peer group. The betas for the non-life, life and health segments were determined using the revenues in the relevant segments of the individual peer group companies. The health insurance segment, which is strongly focused on the Austrian market, is operated in a manner similar to life insurance. A uniform beta factor for personal injury insurance is therefore used in relation to the life and health insurance lines.

The market risk premium was determined on the basis of the current standards issued by the Austrian Chamber of Public Accountants and Tax Advisors (Kammer der Wirtschaftstreuhänder). The calculations published by Damodaran were used to determine the country risk premium. The country risk premium in accordance with the Damodaran method is calculated as follows: Starting from the rating of the country concerned (from Moody's), UNIQA obtains the yield spread from credit default swap spreads with the same rating as risk-free US government bonds, and adjusts this spread for the volatility difference between equity and bond markets. UNIQA also assumes that country risk will decline over the next few years on the basis of subsequent trends.

The calculation also factored in the inflation differential for countries outside the eurozone. In general, the inflation differential represents inflation trends in different countries and is used as a key indicator in assessing competitiveness. In order to calculate the inflation differential, the deviation of the inflation forecast for the country of the CGU in question in relation to the inflation forecast for a risk-free environment (Germany, in this case) was used. This is adjusted annually in the detailed planning by the expected inflation, and is subsequently applied for perpetuity with the value of the last year of the detailed planning phase.

Impairment test for goodwill – ascertainment of the recoverable amount

UNIQA calculates the recoverable amount of the CGUs with goodwill allocated on the basis of value in use by applying generally accepted valuation principles by means of the discounted cash flow method (DCF). The budget projections (detailed planning phase) of the CGUs, the estimate of the long-term net profits achievable by the CGUs and long-term growth rates (perpetuity) are used as the starting point for determination of the capitalised value.

The earning power is determined by discounting the future profits with a suitable capitalisation interest rate after assumed retention to strengthen the capital base. In the process, the earning power values are separated by balance sheet segments, which are then totalled to yield the value for the entire company.

Taxes on operating income were set at the average effective tax rate of the past three years.

Cash flow forecast (multi-phase model)

Phase 1: Five-year company planning

The detailed company planning generally encompasses a period of five years. The company plans used for the calculation are the result of a structured and standardised management dialogue at UNIQA with the participation of UNIQA International, in combination with the reporting and documentation processes that are integrated into this dialogue. The plans are formally approved by the Group Management Board and also include material assumptions regarding the combined ratio, investment income, market shares and the like.

Phase 2: Perpetuity growth rate

The last year of the detailed planning phase is used as the basis for determining the cash flows in phase 2. The growth in the start-up phase leading up to phase two was determined using a projection of the growth in insurance markets. It was assumed that the insurance markets would come into line with the Austrian level in terms of density and penetration in 40 to 60 years.

The capitalisation rate for all CGUs is listed below:

Cash-Generating Unit Discount factor Discount factor
perpetuity
Growth rate
(perpetuity)
Figures in per cent Property/
casualty
Life & health Property/
casualty
Life & health Property/
casualty
Life & health
Bosnia-Herzegovina 17.3 17.9 13.3 14.0 7.1
Bulgaria 10.7 11.3 9.8 10.5 6.5
Italy 10.7 11.3 10.7 11.3 1.0
Croatia 11.3 11.9 10.5 11.2 5.6
Liechtenstein 6.5 7.1 6.9 7.6 1.0
Montenegro 14.6 15.3 10.6 11.3 6.5
Austria 7.8 8.5 7.8 8.5 1.0
Poland 8.2 8.8 9.5 10.1 4.7
Romania 10.3 11.0 10.8 11.5 6.2
Russia 24.3 24.9 12.3 13.0 5.5
Switzerland 6.5 7.1 6.9 7.6 1.0
Serbia 15.9 16.5 13.7 14.3 7.2
Albania, Kosovo, Macedonia as "Sigal
Group" sub-group (SEE) 12.9 – 16.1 13.6 – 16.7 11 – 12.7 11.7 – 13.3 6.8 – 8.1
Slovakia 9.1 9.7 8.9 9.5 4.8
Czech Republic 9.1 9.7 8.8 9.5 4.5
Ukraine 73.5 74.2 22.2 22.8 7.6
Hungary 11.6 12.2 11.3 12.0 5.5
Regions
Austria 7.8 8.5 7.8 8.5 1.0
Western Europe (WE) 6.5 – 10.7 7.1 – 11.3 6.9 – 10.7 7.6 – 11.3 1.0
Central Europe (CE) 8.2 – 11.6 8.8 – 12.2 8.8 – 11.3 9.5 – 12.0 4.5 – 5.5
Eastern Europe (EE) incl. Russian
Federation 10.3 – 73.5 11.0 – 74.2 10.8 – 22.2 11.5 – 22.8 6.2 – 7.6
Southeastern Europe (SEE) 10.7 – 17.3 11.3 – 17.9 9.8 – 13.7 10.5 – 14.3 6.5 – 8.1

The discount rate ranges listed for the Sigal Group and the regions relate to the spread over the respective countries grouped under these headings. Source: Damodaran and derived factors

The following discount rates were applied in 2014:

Cash Generating Unit Discount factor Discount factor
perpetuity
Growth rate
(perpetuity)
Figures in per cent Property/
casualty
Life & health Property/
casualty
Life & health Property/
casualty
Life & health
Bosnia-Herzegovina 17.8 18.6 14.1 14.9 7.1
Bulgaria 8.4 9.2 10.6 11.4 6.5
Italy 11.2 11.9 10.1 10.9 1.0
Croatia 10.7 11.5 11.5 12.3 5.6
Liechtenstein 7.1 7.8 7.6 8.4 1.0
Montenegro 15.3 16.0 11.3 12.1 6.5
Austria 8.3 9.1 8.3 9.1 1.0
Poland 8.5 9.2 10.2 10.9 4.7
Romania 11.9 12.6 11.7 12.5 6.2
Russia 16.7 17.4 12.9 13.7 5.5
Switzerland 7.1 7.8 7.6 8.4 1.0
Serbia 16.5 17.3 14.4 15.1 7.2
Albania, Kosovo, Macedonia as "Sigal
Group" sub-group (SEE) 14.2 – 15.5 14.9 – 16.3 11.5 – 13.4 12.2 – 14.1 6.8 – 8.1
Slovakia 9.6 10.4 9.4 10.1 4.8
Czech Republic 8.5 9.3 9.5 10.3 4.5
Ukraine 27.0 27.7 17.4 18.1 7.6
Hungary 10.9 11.7 12.0 12.8 5.5
Regions
Austria 8.3 9.1 8.3 9.1 1.0
Western Europe (WE) 7.1 – 11.2 7.8 – 11.9 7.6 – 10.1 8.4 – 10.9 1.0
Central Europe (CE) 8.5 – 10.9 9.2 – 11.7 9.4 – 12.0 10.1 – 12.8 4.5 – 5.5
Eastern Europe (EE) incl. Russian
Federation
11.9 – 27.0 12.6 – 27.7 11.7 – 17.4 12.5 – 18.1 6.2 – 7.6
Southeastern Europe (SEE) 8.4 – 17.8 9.2 – 18.6 10.6 – 14.4 11.4 – 15.1 6.5 – 8.1

The discount rate ranges listed for the Sigal Group and the regions relate to the spread over the respective countries grouped under these headings. Source: Damodaran and derived factors

Uncertainty and sensitivity

Various studies and statistical analyses were used as sources to provide a basis for determining the growth rates in order to consistently and realistically reflect the market situation and macroeconomic development.

The reference sources included the following studies and materials:

  • Internal research
  • Damodaran country risks, growth rate estimations, multiples

Sensitivity analyses of financial instruments

In order to substantiate the results of the calculation and estimation of the value in use, random sensitivity analyses with regard to the capitalisation rate and the main value drivers are performed.

These analyses show that sustained surpluses on the part of the individual CGUs are highly dependent on the actual development of these assumptions within the individual national or regional economies (GDP, insurance density, purchasing power parities), particularly in the CEE markets, as well as the associated implementation of the individual profit goals. These forecasts and the related assessment of how the situation in the markets will develop in the future, under the influence of the continuing financial crisis in individual markets, are the largest uncertainties in connection with measurement results.

In the event that the recovery from the economic crisis turns out to be much weaker and slower than assumed in the business plans and fundamental forecasts, and the insurance markets therefore develop completely differently from the assumptions made in those business plans and forecasts, the individual CGUs may be subject to unscheduled impairment losses. Despite slower economic growth, income expectations have not changed significantly compared to previous years.

A sensitivity analysis shows that if there is a rise in interest rates of 50 basis points in the countries of Romania and Hungary, there could be a convergence between the value in use and the carrying amount or a value in use that is lower than the carrying amount. If there were a stronger rise in interest rates of 100 basis points or more, Bosnia-Herzegovina, Italy, Serbia and Slovakia would also be affected. If the underlying cash flows change by –5.0 per cent, there will also be a risk of a convergence or a value in use that is lower than the carrying amount in Hungary. This list expands to include Bosnia-Herzegovina, Italy, Romania and Slovakia when there is a deviation of more than –10.0 per cent in the cash flows.

In 2015, due to exchange rate effects and necessary adjustments of the discount rate as a result of the changes in the economic environment, impairment losses were recognised in the amount of €13.1 million for Ukraine.

The following table shows the recoverable amounts at the time of the impairment test for all CGUs with the necessary goodwill.

Recoverable
Cash-Generating Unit Recoverable amount exceeds Impairment
In € thousand amount carrying amount for the period
Bulgaria 99,916 27,800 0
Italy 361,076 20,029 0
Romania 183,564 17,601 0

Backtesting

Backtesting is regularly carried out on the planning for the individual countries. The objective is to obtain information for internal purposes on the extent to which the operating units plan their results accurately and on the extent to which details useful with regard to subsequent development are highlighted. Backtesting is intended to help draw conclusions that can be applied to the latest round of planning, in order to enhance the planning accuracy of forthcoming financial plans.

6.2 Investment property

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 by using a report prepared by independent experts. These expert reports are prepared based on earned value and asset value methods. This is typically done using the DCF method by discounting expected future payments from the relevant land and buildings. It requires making assumptions, principally concerning the discount rate, the exit yield, the expected utilisation (vacancy rate), the development of future rental charges, and the condition of the land and buildings. For this reason, all measurements of the fair value for the land and buildings come under level 3 of the hierarchy according to IFRS 13. The nature of the measurement procedures stated above is that they respond sensitively to the underlying assumptions and parameters. For instance, any reduction in the discount rate applied would result in an increase in the values ascertained for the land and buildings if the other assumptions and parameters remained unchanged. Conversely, any reduction in the expected utilisation or the expected rental charges would, for instance, result in a decrease in the values ascertained for the land and buildings if the other assumptions and parameters remained unchanged. The measurement-related assumptions and parameters are ascertained carefully at each key date based on the best estimate by management and/or the experts in view of the current prevailing market conditions. These estimates are updated at each key measurement date.

6.3 Deferred tax assets

As at 31 December 2015 UNIQA had deferred tax assets amounting to €9.4 million (netted out), of which €11.7 million were attributable to tax loss carryforwards. The deferred tax assets result from tax loss carryforwards, impairment in accordance with section 12 of the Corporation Tax Act (KStG), and from deductible temporary differences between the carrying amounts of the assets and liabilities in the consolidated statement of financial position and their tax values. Deferred tax assets are accounted for, provided that it is likely that there will be adequate taxable profit for them to be realised. An assessment of the ability to realise deferred tax assets requires an estimate of the amount of future taxable profits. The amount and type of these taxable earnings, the periods in which they are incurred, and the available tax planning measures are all taken into account. The corresponding analyses and forecasts, and ultimately the determination of the deferred tax assets, are carried out by the local tax and finance experts in the relevant countries. Because the effects of the underlying estimates may be significant, there are internal group procedures that guarantee the consistency and reliability of the evaluation process. The resulting forecasts are based on business plans that are reviewed and approved through proper procedures. Especially convincing evidence regarding accounting for deferred tax assets is required under internal group policies if the relevant group company has suffered a loss in the current or a prior period.

6.4 Provisions for defined benefit obligations

For this purpose, reference is made to the statements and sensitivity analyses in the Notes to this balance sheet item under Note 28.

6.5. Technical provisions

Reference is made here to the statements and sensitivity analyses under Note 7.5.

6.6 Investments

Reference is made here to the statements and sensitivity analyses under Notes 7.5 and 13.

6.7 Other discretionary judgements and assumptions regarding the future

The investment in STRABAG SE, the portfolio of asset-backed securities (ABS), and the assets related to Hypo Group Alpe Adria (HGAA) and HETA Asset Resolution AG (HETA) continue to be carefully monitored.

As at 31 December 2015, UNIQA held a 13.8 per cent stake in STRABAG SE (31 December 2014: 13.8 per cent). UNIQA is continuing to treat STRABAG SE as an associate due to contractual arrangements. The carrying amount of the investment in STRABAG SE at 31 December 2015 amounted to €463.0 million (31 December 2014: €456.5 million).

UNIQA held 0.7 per cent (2014: 1.8 per cent) of its investments in ABS. There were several developments in 2015 that resulted from the continued improvement in the liquidity situation of ABS, which influenced UNIQA's decision to depart from its forecast of expected losses based on internal valuations developed during crisis periods. The switch to a market data-based measurement of the ABS portfolio resulted in a reclassification of the ABS portfolio from category two to category three. This resulted in an increase in market value of €5.3 million.

The Act to restructure the state-owned Hypo Alpe Adria International AG (HaaSanG), which took effect on 1 August 2014, and which resulted in the cancellation of the subordinate liabilities of Hypo Alpe Adria International AG (HAA) without consideration of existing guarantees of the federal state of Carinthia, resulted in a complete impairment for the bonds held by UNIQA in 2014, with a nominal value of €36 million and a loss of €34.1 million. The legal steps taken by UNIQA and other creditors against these statutory measures culminated in a decision by the Austrian Constitutional Court on 3 July 2015, G239/2014 inter alia, whereby HaaSanG, along with the order by the Austrian Financial Market Authority (FMA) regarding the implementation of restructuring measures in accordance with section 7(2) HaaSanG in conjunction with sections 3 and 4(1) HaaSanG (HaaSanV), were lifted in their entirety. As a consequence, the subordinate bonds with a nominal value of €36 million that had been derecognised in 2014 were included on the balance sheet once again as at 30 September 2015. The value of these bonds on the balance sheet as at the reporting date of 31 December 2015 was €6.8 million.

On 1 March 2015 the FMA passed a decision on a debt moratorium for Heta Asset Resolution AG (HETA) with immediate effect until 31 May 2016, whereby no interest payments or repayments may be made inter alia on bond liabilities, subordinated capital or bonded loans. Aside from the subordinated liabilities, senior bonds guaranteed by the federal state of Carinthia and held by UNIQA with a nominal value of €25.0 million are affected by this measure. The value of these bonds as at the reporting date amounts to €17.1 million.

A subordinated liability of HETA collateralised by the Republic of Austria with a balance sheet value of €10.6 million (nominal value: €10.0 million) is the only one not affected by the statutory and supervisory measures.

RISK REPORT

7.1 Risk strategy

Principles

We have set ourselves ambitious goals in connection with our corporate strategy UNIQA 2.0. In summary, we are working towards sustainable and profitable growth. We are taking the initiative, optimising processes and building on innovations. We are doing this in order to keep the promises we made to our customers, our shareholders and our employees. In addition, we make sure we have a business strategy that knows the right answer to all of our Company's risks. The Management Board has therefore adopted a risk strategy borne by four principles:

  • We know our responsibility
  • We know our risk
  • We know our capacity to take on risk
  • We know our opportunities

By following these four principles, we approach the future with confidence so that we can maintain a financial strength that allows us to achieve our corporate goals, keep our promises and fulfil our obligations even in turbulent times.

Organisation

Our core business is to relieve our customers of risk, pool the risk to reduce it and thereby generate profit for our Company. Here, the focal point lies in understanding risks and their particular features.

In order to ensure that we keep our focus on risk, we have created a separate risk function in the Group's Management Board by establishing the position of a Group Chief Risk Officer and made the function of Chief Risk Officer a part of the Management Board in our regional companies. This ensures that decision-making is risk-based in all relevant bodies. We have established processes that allow us to identify, analyse and manage risks. Our business involves a large range of different risk types, which is why we employ experts to identify and manage them.

We regularly validate our risk profile at all levels of the hierarchy and hold discussions in specially instituted committees with the members of the Management Board. To obtain a complete picture of our risk position, we draw on internal and external sources while also regularly checking for new threats both in the Group and in our subsidiaries.

Risk-bearing capacity and risk appetite

We take risks and do so in full knowledge of our risk-bearing capacity. We define this as our ability to absorb potential losses from extreme events so that our medium and long-term objectives are not put in danger.

Our risk decisions centre on our economic capital model (ECM), which we use to quantify risk and determine economic capital. The ECM is based on the standard model according to Solvency II and also reflects our own risk assessment. This is expressed in the quantification of the risks from the non-life sectors, in which we focus on a stochastic cash flow model, additional capital requirements of government bonds and a mark-to-market valuation of asset-backed securities. Based on this model, we are aiming for risk capital cover (capital ratio) of 170 per cent. As long as the capital ratio remains within the range of 155 to 190 per cent no action will be

taken, since a certain level of fluctuation is absolutely normal within the framework of the Solvency II regulations. However, immediate steps will be taken to improve the capital position if the marginal value falls below 135 per cent.

We also seek external confirmation of the path we have chosen. Standard & Poor´s has given us a credit rating of A–. One of our key objectives is to maintain the rating at this level or to improve upon it and to achieve sustainable increases in accordance with corporate strategy.

Non-quantifiable risks, in particular operational risk, litigation risk and strategic risk are identified as part of the risk assessment process and then assessed using scenario-based techniques. This assessment is then used as the basis for implementing any necessary risk mitigation measures.

Our risk strategy specifies the risks we intend to assume and those we plan to avoid. As part of our strategy process, we define our risk appetite on the basis of our risk-bearing capacity. This risk appetite is then used to determine tolerances and limits, which provide us with an early warning system sufficient for us to initiate prompt corrective action should we deviate from our targets. We also consider risks outside our defined appetite. We counter risks that fall into this category, such as reputational risk, with proactive measures, transparency and careful assessment.

We focus on risks that we understand and can actively manage. We divest ourselves of any investments in which the business principles are inconsistent with our core business. We consciously take on risk associated with life, health and non-life underwriting in order to consistently generate our income from our core business. We aim for a balanced mix of risk to achieve the greatest possible effect from diversification.

We analyse our income and the underlying risk, optimising our portfolio using value-based principles. We therefore strive for a balance between risk and return.

Opportunities

Risk also means opportunity. We regularly analyse trends, risks and phenomena that influence our society and thus our customers and ourselves. We involve our employees in the whole of the business to identify and analyse trends at an early stage, produce suitable action plans and develop innovative approaches.

7.2 Risk management system

The focus of risk management with management structures and defined processes is the attainment of UNIQA's and its subsidiaries' strategic goals.

UNIQA's Risk Management Guidelines form the basis for a uniform standard at various company levels. The guidelines are approved by the Group CRO and the full Management Board and describe the minimum requirements in terms of organisational structure and process structure. They also provide a framework for all risk management processes for the most important risk categories.

In addition to the Group Risk Management Guidelines, similar guidelines have also been prepared and approved for the Company's subsidiaries. The Risk Management Guidelines at subsidiary level were approved by the Management Board of the UNIQA subsidiaries and are consistent with UNIQA's Risk Management Guidelines.

They aim to ensure that risks relevant to UNIQA are identified in advance and evaluated. If necessary, proactive measures are introduced to transfer or minimise the risk.

Intensive training on the content and utilisation of these guidelines is required in order to ensure that risk management is incorporated in everyday business activities. Extensive informative and training measures have therefore been taken since 2012; they will be continued in the future and extended to additional target groups.

7.2.1 Organisational structure (governance)

The detailed set-up of the process and organisational structure of risk management is set out in UNIQA's Risk Management Guidelines. They reflect the principles embodied in the concept of "three lines of defence" and the clear differences between the individual lines of defence.

First line of defence: risk management within the business activity

Those responsible for business activities must develop and put into practice an appropriate risk control environment to identify and monitor the risks that arise in connection with the business and processes.

Second line of defence: supervisory functions including risk management functions

The risk management function and the supervisory functions, such as controlling, must monitor business activities without encroaching on operational activities.

Third line of defence: internal and external auditing

This enables an independent review of the formation and effectiveness of the entire internal control system, which comprises risk management and compliance (e.g. internal auditing).

UNIQA Holding Management Board UNIQA Holding Management Board
• Active risk management and controlling through value-orientated principles
• Approves the UNIQA risk management strategy
• Approves the risk limit for operating companies
• Highest authority for decisions regarding risk transfer and mitigation
UNIQA Holding CRO1) UNIQA Holding CRO
• Functional management of the UNIQA risk management unit
• Chair of the UNIQA Risk Management Committee
• Responsible for shaping the risk management strategy
• Monitors the overall risk situation
• Appropriate structures for risk management and reporting
Group Risk Committee Group Risk Committee
• Defi nes the risk management strategy
• Prepares and monitors risk-bearing capacity and risk limits and the
"value-creating units" in the Group
• Defi nes capital allocation and sets coherent limits
• Approves the model change (capital model, partial models)
Group Risk Management Functions Group Actuarial & Risk Management
• Defi nes the UNIQA risk management process
• Conducts the uniform risk management process
• Coordinates the calculation of solvency capital requirements and
minimum capital requirements
• Defi nes minimum standards for all risk management processes
• Ensures the eff ective and timely reporting of risk management
information
• Prepares and monitors risk limits for the company
Operating Companies (CRO, RM) Local Risk Committees
• Conducts the uniform UNIQA BU risk management process in
accordance with Group standards
• Prepares and maintains minimum standards for the specifi c Operating Company (CRO, RM)
risk management processes for all risk categories
• Prepares and monitors risk limits
• Monitors overall risk management performance and ensures
eff ective and timely reporting

1) Beginning 1 January 2015 in an interlocking directorate together with the CFO

Management Board and Group functions

The UNIQA Insurance Group AG Management Board is responsible for establishing the business policy objectives and determining the associated risk strategy. The core components of the risk management system and the associated governance are enshrined within the UNIQA Group Risk Management Policy adopted by the Management Board.

The function of Chief Risk Officer (CRO)1 is a separate area of responsibility at the Group Management Board level. This ensures that risk management is represented on the Management Board. The CRO is supported in the implementation and fulfilment of risk management duties by the Group Actuarial and Risk Management unit. A central component of the risk management organisation is UNIQA's risk management committee, which carries out monitoring and initiates appropriate action in relation to the current development and the short and longterm management of the risk profile. The risk management committee establishes the risk strategy, monitors and controls compliance with risk-bearing capacity and limits, and therefore plays a central role in the management process implemented under UNIQA's risk management system.

Operative insurance companies

In the operative insurance companies, the CRO function has also been established at Management Board level, with the functions of the risk manager at the next level down. A consistent, uniform risk management system has therefore been set up throughout the Group.

As at Group level, each of the operative insurance companies has its own risk management committee, which forms a central element of the risk management organisation. This committee is responsible for the management of the risk profile and the associated specification and monitoring of risk-bearing capacity and limits.

The Supervisory Board at UNIQA Insurance Group AG receives comprehensive risk reports at Supervisory Board meetings.

7.2.2 Risk management process

UNIQA's risk management process delivers periodic information about the risk profile and enables the top management to make the decisions for the long-term achievement of objectives.

The process concentrates on risks relevant to the Company and is defined for the following risk categories:

  • Actuarial risk (property and casualty insurance, health and life insurance)
  • Market risk/Asset-Liability Management risk (ALM risk)
  • Credit risk/default risk
  • Liquidity risk
  • Concentration risk
  • Strategic risk
  • Reputational risk
  • Operational risk
  • Contagion risk

1 Activities carried out concurrently by the CFO A Group-wide, standardised risk management process regularly identifies, evaluates and reports on risks to UNIQA and its subsidiaries within these risk categories.

UNIQA's risk management process

Risk identification:

Risk identification is the starting point for the risk management process, systematically recording all major risks and describing them in as much detail as possible. In order to conduct as complete a risk identification as possible, different approaches are used in parallel, and all risk categories, subsidiaries, processes and systems are included.

Evaluation/measurement:

The risk categories of market risk, technical risk, counterparty default risk and concentration risk are evaluated at UNIQA by means of a quantitative method based on the standard approach of Solvency II and the ECM approach. Furthermore, risk drivers are identified for the results from the standard approach and analysed to assess whether the risk situation is adequately represented (in accordance with the Company's Own Risk and Solvency Assessment (ORSA)). All other risk categories are evaluated quantitatively or qualitatively with their own risk scenarios.

The scenario analysis (of UNIQA's economic, internal and external risk situation) is generally a crucial element in the risk management process.

A scenario is a possible internal or external event that has a short-term or medium-term effect on consolidated profit or loss, the solvency position or sustainability of future results. The scenario is formulated with respect to its inherent characteristic (e.g. the start of Greece's insolvency) and evaluated in terms of its financial effect on UNIQA. The likelihood that the scenario will actually occur is also considered.

Limits/early warning indicators:

The limit and early warning system determines risk-bearing capacity (available equity according to IFRS, financial equity) and capital requirements on the basis of the risk situation at ongoing intervals, thereby deriving the level of coverage. If critical coverage thresholds are reached, then a precisely defined process is set in motion, the aim of which is to bring the level of solvency coverage back to a non-critical level.

Reporting:

A quarterly report on the solvency situation along with a monthly risk report on the biggest risks identified are prepared for each operational company and for the UNIQA Group on the basis of detailed risk analysis and monitoring. The reports for each individual UNIQA subsidiary and the UNIQA Group itself have the same structure, providing an overview of major risk indicators such as risk-bearing capacity, solvency requirements and risk profile. In addition, quantitative and qualitative reporting (in the form of the quantitative reporting templates and the narrative report respectively) is implemented for the UNIQA Group and for all subsidiaries for which Solvency II reporting is mandatory.

7.2.3 Activities and objectives in 2015

Based on external and internal developments, activities in 2015 focused on the following:

  • Preparation work for the implementation of Solvency II
  • Reduction in the risks caused by the period of low interest rates

Preparation work for the implementation of Solvency II

Solvency II is an EU-wide project, the objective of which is to achieve a fundamental reform of solvency regulations (capital requirements) for insurance companies. The existing static system for determining capital requirements is to be superseded by a risk-based system. One of the main changes in the new system is that it is to take greater account of qualitative elements such as internal risk management.

Following publication of the preparation guidelines by the European Insurance and Occupational Pensions Authority (EIOPA) in October 2013 and the implementation of these guidelines in the Austrian Insurance Supervision Act (VAG) of June 2014, it is now clear what preparation work is needed before Solvency II comes into force on 1 January 2016.

As in previous years, in 2015 specific preparatory steps were again taken based on this information, both in the UNIQA Group and in the operating units. This included in particular

  • Development of quantitative reports (QRTs)
  • Development of narrative reports
  • Preparatory work for future reporting in general (SFCR, RSR, AFR)
  • Further development of the Company's Own Risk and Solvency Assessment (ORSA)
  • Further development of the partial internal model for the property/casualty insurance business.
  • Further development of comprehensive limits
  • Increase in the frequency of solvency calculations

In addition, a comprehensive training programme for senior managers, other managers, and employees in key functions is a core component of a fully functioning Group-wide risk management framework. Understanding of the objectives and the impact of the risk management approach in the context of value-based management should be achieved. A great deal of importance is also attached to training the Supervisory Board of the UNIQA Insurance Group AG so that the members of the Supervisory Board are well informed about the ongoing developments in the management approach (economic management) and can take these developments into account with respect to their supervisory activities.

In both cases, the discussion about the use of the information from the risk capital models, in particular from the partial internal model relating to property/casualty insurance, is a relevant point, allowing users to make the connection between this information and the ongoing business.

Reduction in the risks caused by the period of low interest rates

The interest rate environment that remained low and volatile in 2015 meant that a restrictive approach was still required in terms of new products and asset liability management, particularly in life insurance.

Group guidelines ensure that products are subject to a standardised profitability test before being launched on the market and achieve minimum defined margins in terms of their expected value. The guaranteed discount rate for new traditional life insurance products was reduced even further in many UNIQA companies as a result of the interest rates, often below the relevant maximum rate permissible by statute.

The domestic market of Austria which continues to be characterised by strong customer demand for life insurance products should be mentioned as a particular example of this. Here, at UNIQA Austria and Raiffeisen Versicherung AG, the products in the traditional life insurance line were completely revised as of 1 January 2015 and given the title "New Classic" ("Klassik Neu"). The "New Classic" will give customers a 100 per cent capital guarantee on net premiums, high repurchase values from the beginning, along with the possibility of making variable additional payments and withdrawals during the term. In addition, costs and fees are spread out proportionally over the entire term and no longer taken from the premium but rather from the profit. The entire premium amount (excl. insurance tax) thus flows directly into the investment, resulting in a considerably higher savings premium from the beginning than is offered by conventional life insurance. This means the product offers customers much more transparency and flexibility.

From the Company's point of view, this product concept has the advantage that, among other things, the discount rate is set at 0 per cent, which leads, in particular on longer terms, to a reduction of the guarantee requirement. In addition, this new product concept also meets the future legal requirements concerning transparency and capital adequacy. The year 2015 was an impressive example of how the route followed meets both customer needs and earnings requirements, even though product developments are being introduced on a continuous basis. In Austria, for instance, more than 40.000 policies of the "New Classic" product were sold in 2015, which exceeded our expectations.

In Asset Liability Management (ALM), the process was consistently continued to reduce the duration gap even further, which involves more effectively adjusting the terms of the assets to the terms of the liabilities. The option of running a regular/year-round procedure to draw up the risk profile and associated limits represents a key element of the ALM process in UNIQA. Management is carried out on the basis of risk capital consumption and associated limits, which enables the Group to make strategic decisions on the basis of a value-based risk/return analysis.

In 2015, the Group focused not only on the necessary standard processes but also on scenario analyses, especially the possible changes in the liabilities profile depending on different interest rate situations. In this case, the analysis of the life insurance business plays a central role because it is difficult to predict a change in the lapse or surrender pattern for customer policies in response to a specific trend in interest rates. Associated risks were analysed and action implemented to cushion these risks.

7.3 Challenges and priorities in risk management for 2016 Challenges

The period of low interest rates experienced in 2014 also continued throughout 2015, with rates falling to historically low levels in some cases. This situation has a particularly marked effect in life insurance. Depending on the investment strategy, the persistently low interest rates can lead to a situation in which the income generated is insufficient to finance the guarantees made to policyholders. The topic of low interest rates continues to be of concern to the entire European insurance industry and is leading to intensive discussions about how insurance companies can ensure that customer options and guarantees (in both existing and new business) are financed over the long term. Significant measures taken by UNIQA within the defined life strategy have been to focus on implementing the ALM approach including stringent management rules (e.g. regarding the management of profit sharing) and to provide continuous portfolio management to support the new business strategy in the personal injury insurance business.

One specific issue is the question of requirements (which vary from country to country) to recognise supplementary discount rate provisions, i.e. requirements to set aside special provisions in the respective local accounting if interest rates are low. As at 31 December 2015, UNIQA had set aside a special provision exclusively in local accounting in the amount of €67.8 million in its Austrian companies because there is a statutory requirement in Austria to recognise this special provision. The corresponding regulations for forming the special provision were revised as part of the restructuring of the Insurance Supervision Act in Austria, whereby it must be emphasised that a part of the expenditure from 2016 represents a deduction item in the assessment basis for the profit participation. This special provision in the local accounting is to be seen alongside the liability adequacy test (LAT) to check whether the provisions in the IFRS financial statements are adequate. Depending on the interest rate situation and the resulting planning of investment income, there is the fundamental risk in the future of a potential provision requirement as a consequence of the LAT.

In terms of the insurance market in CEE, improved economic outlooks in the countries of Central and Eastern Europe provide better opportunities for growth for the insurance industry, considerably outperforming those in the already saturated insurance markets of Western Europe. However, the premium revenue remains patchy for 2015. For life insurance, the premium volume for the entire region fell slightly, primarily due to the continued heavy decrease in single premium business, particularly in the Czech Republic. In contrast, a series of insurance markets in Southeastern Europe recorded very strong growth in the life insurance business. The market generally grew in the non-life sector, although the intense price competition, particularly in the vehicle and property insurance lines in several Central and Eastern European markets, also resulted in lower premium revenues. Reforms to legal structural conditions combined with the exit or withdrawal of individual competitors should, however, help improve the competitive situation in individual markets. Expectations of higher premium revenue in 2016 remain cautiously optimistic in line with the changes in the insurance markets over the past year and the improved economic conditions. The additional effects of the current political crisis on the insurance industries in Ukraine and Russia are difficult to assess at the present time, although we do expect there to be a trend towards improvement in the market situation. Further political risks in the region are difficult to assess at the present time and cannot be ruled out completely, although they should be of less relevance to the Group in 2016. The risk of sustained or even more intense price competition can be categorised as comparatively higher, particularly in the non-life sector in the Central European markets.

The continued political uncertainty in Ukraine caused by the separatist movement in the east of the country raises questions about whether the country will be able to go on servicing some of its borrowing. As at 31 December 2015, the UNIQA Group's portfolio of Ukrainian government bonds came to a nominal value of €19.0 million and a fair value of €16.4 million. Of these, a nominal value of €16.9 million are invested in the Ukrainian subsidiary.

The Ukrainian currency, the hryvnia (UAH), weakened by approximately 27 per cent against the euro during the course of 2015 (exchange rate as at 31 December 2015: 0.0383. The total value of all the UAH securities in the UNIQA Group amounts to a fair value of €6.2 million.

The continued EU sanctions against Russia are impacting the exchange rate of the rouble to the euro (exchange rate as at 31 December 2015: 0.0124). In turn, this led to a volatile interest rate environment and the devaluation of government bonds. The fair value of the total portfolio of RUB securities in the UNIQA Group amounts to a fair value of €71.4 million, of which €52.1 million are invested in the Russian subsidiary. The nominal value of Russian government bonds in the UNIQA Group's portfolio amounts to €100.9 million (of which €61.2 million in the Russian subsidiary), with a fair value in the amount of €95.5 million.

In terms of technical risk, the further development of the motor business in CEE countries (comprehensive vehicle insurance, including liability insurance) continues to represent the greatest challenge because this business segment accounts for a considerable proportion of the property and casualty insurance in the CEE region. The most significant difficulties are, firstly, that there is a continuously changing legal environment leading to higher benefit payments in the event of personal injury claims and, secondly, that many markets are still subject to a price war as companies vie to win customer segments. UNIQA increasingly relies on a professional pricing approach. In addition to conducting ongoing market analyses, the Company carries out standardised profitability tests to ensure that pricing is appropriate. In addition, guidelines are intended to ensure that international insurance claims (known as green card claims) are settled within UNIQA affiliated companies or with exclusively specified partners.

In the second half of 2015, the agreements between all relevant UNIQA countries were amended accordingly. For the first time, there is an internal solution in place with UNIQA Assicurazioni as an expert partner in Italy; UNIQA Romania was the first country to switch in September 2015. The next focal point is on the selection of exclusive partners that meet our quality requirements in those countries in which we have no representation via a UNIQA company.

A structured review (leakage audit) was carried out in 12 countries in 2015 on closed claims with the aim of achieving ongoing improvements in the claims processes, with individual measures agreed with each country as a result. This will be continued in 2016. The focus will also be on "combating fraud" and measures aimed at countering the development of "personal injury".

The topic of the introduction of Solvency II continues to present a major challenge, particularly as the new legal framework is now coming into full effect for the first time. It must be highlighted here in particular that UNIQA has developed a partial internal model for property/casualty insurance which is being evaluated by the Austrian insurance supervisory authority as part of a pre-application phase. Sufficient resources must be dedicated to this task as a result of the high level of administrative effort involved in the official procedure.

Concerning operational risk, there is a need for capital investment in the renewal of IT infrastructure and systems. The present situation is currently marked by very elaborate business processes and the complexity resulting from them in the IT sector. The greatest risks in the IT sector are the increasing IT complexity, any destabilisation of older environments, monopoly of knowledge and the growing risk in the area of IT security. As a response to this, UNIQA began modernising its operating model within the IT sector in 2014, simultaneously standardising all IT processes and control bodies in the sector and reducing the operational risk in the IT field. These days, IT works exclusively based on individual tools and workflows that are standardised, with the workflows regulated by quality gates in the event of changes to the environments. Once the IT organisation has been modernised, UNIQA plans to modernise IT as a whole starting in 2016. This programme involves modernisation of the most important insurance programmes and thereby responds to the constant changes in the competitive environment, along with the requirements from customers and those related to products in today's insurance market. This solution will allow a reduction in the complexity in IT as well as in the length of time required for marketing inventions and new developments, with no need to continue relying solely on the knowledge of key individuals.

Priorities

The preparatory work on Solvency II now results in control processes that will take full effect for the first time in 2016. For instance, the reporting requirements (Pillar 3 of Solvency II) in particular present challenges that must be given the appropriate priority. It is the quantitative reporting requirements (QRTs) and associated data and process requirements that result in high additional effort within the organisation and that require attention accordingly. More qualitative reports are required for the supervisory authority in the form of the Regular Supervisory Report (RSR) and the Actuarial Function Report (AFR). Extensive preparations are also needed for the Solvency and Financial Condition Report (SFCR) in order to create a good publication for the first time in 2017 (for the reporting year 2016). As already mentioned with regard to the challenges, a high priority is also being assigned to the approval procedure for the partial internal model for property/casualty insurance and the associated resources it calls for.

UNIQA is working on developing its value-oriented control approach on a continuous basis, and this is being put on a more secure footing as a result of Solvency II coming into force. In the future, capital management and the planning of estimated income will be extensively based on the risk capital position in the Group, the individual operating units and their areas of business. We have set ourselves the objective of achieving a transparent presentation of our approach to capital, the most significant risks and related stress, the associated target returns and an appropriate dividend policy. From the starting point of a defined risk-bearing capacity, the target returns are to be selected such that the return on risk capital permanently exceeds the cost of capital, ensuring ongoing dividend payments, while at the same time not jeopardising riskbearing capacity. Assurances are in place to support this ambition which guarantee that a consistent framework is used for economic value creation, starting with the risk and earnings assessment in the new product process through to the analysis of the results.

Continuation of the strategic programmes relating to cost management, ensuring profitability in property/casualty insurance, the further development of the life insurance strategy, including portfolio management (in-force management), capital investment from an ALM perspective and the associated internal processes represent crucial strategic cornerstones as they have in previous years as a result of the ongoing period of low interest rates. All programmes are to make a contribution to enable the Group to achieve the planned profits in 2016 and sustain this level in the years ahead. Particularly in this period of low interest rates and significant volatility in capital markets, the successful implementation of projects that stabilise or improve net profit in the core operating business is central to our activities.

Starting in 2016, UNIQA will pay greater attention to the topic of further developing future IFRSs (IFRS 4 and IFRS 9). The major changes expected in the assessment (balance sheet as well as income statement) of the insurance business require an adequate lead time in order for the content and process-related challenges to be implemented accordingly. Despite UNIQA's good preparations within the scope of Solvency II, we still expect that significant additional effort will be required in order to be able to meet the upcoming IFRS requirements. Initial studies are due to be carried out for this purpose in 2016 with the aim of developing a tangible implementation plan for the coming years.

Work on developing a Target Operating Model (TOM) for finance processes is taking place for the first time in 2016 as part of the restructuring and optimisation of the finance division, similar to the work on the core processes in the last few years. "TOM Finance" is aimed at ensuring as uniform an acquisition process as possible within the Group, as well as improving and accelerating processes and eliminating any inefficiencies that may still exist. We see this as a further consistent step towards improving the quality of the figures while at the same time speeding up the compilation process.

The promotion of the digital single market as well as the further development of consumer protection provisions related to financial services for private customers will support us within the scope of regulatory changes. The Green Paper published by the European Commission in mid-December 2015 has already started a consultation process on the consequences of digitalisation of financial products, and examines the potential for developing new innovative products in this field. In addition to this, the European Commission is also examining the options for creating a beneficial environment for Pan-European Pension Products ("PEPPs") via a call-foradvice to EIOPA. The appeal of long-term infrastructure investments will also increasingly be incentivised through accompanying regulatory measures and will influence investment strategies. The EU Insurance Distribution Directive "IDD" which was decided at the end of 2015 must be implemented by the Member States within the next 24 months, and will again ensure increased transparency (including in relation to disclosing commissions, standardised information sheets and disclosing the total costs of life insurance).

7.4 Capitalisation

On the basis of the current regulatory requirements, available own funds and the risk capital requirement until the end of 2015 are calculated in accordance with Solvency I.

As Solvency II comes into force on 1 January 2016, the definitions and methods used to calculate available own funds as well as capital requirements and management standards are being replaced by Solvency II standards.

As at 31 December 2015, the solvency ratio on the basis of the regulatory provisions according to Solvency I was 301,7 per cent. Eligible equity amounted to €3,551.5 million; this included eligible subordinated liabilities of €250.0 million which constituted up to half of the equity requirement, and eligible subordinated liabilities in the amount of €290.9 million constituting up to a quarter of the equity requirement. The solvency requirement is €1,163.8 million.

7.4.1 Statutory requirements

Risk capital requirements and available equity are currently calculated according to Solvency I regulations. These will be replaced when the Solvency II provisions take effect. In order to guarantee a smooth transition between these two different calculation methods, UNIQA has completed parallel calculations since 2008. One consequence of these efforts was an early Group-wide introduction of the new methods and processes. Gaps and shortcomings will thus be identified early and promptly rectified.

7.4.2 Internal capital adequacy

UNIQA defines its risk appetite on the basis of an economic capital model (ECM). The cover for quantifiable risks with eligible own funds (capital ratio) should lie between 170 and 190 per cent in 2016.

As at 31 December 2014, the solvency ratio in accordance with the ECM was 150 per cent. Details for the reporting date of 31 December 2015, including a detailed analysis of changes, can be found in the ECM report.

7.4.3 Standard and Poor's model

In addition to regulatory and internal provisions, the Group also takes into account the capital requirements specified by an external rating agency to ensure that the Group's credit quality is presented objectively and can be compared with other entities. Therefore, UNIQA is regularly rated by the rating agency Standard & Poor's, which gives UNIQA Insurance Group AG a rating of "A–". UNIQA Österreich Versicherungen AG and UNIQA Re AG each have a rating of "A"; UNIQA Versicherung AG in Liechtenstein is rated with "A–". The supplementary capital bonds issued in 2013 (€350.0 million Tier 2, first call date 31 July 2023) and 2015 (€500.0 million Tier 2, first call date 27 July 2026) are rated "BBB" by Standard & Poor's. There are also further bonds with no rating (€250.0 million restricted Tier 1, first call date 31 December 2016). Standard & Poor's rates the outlook for all the companies as stable. UNIQA includes the impact on its rating in its capital planning process, with the objective of improving the rating over the long term as the corporate strategy is implemented.

7.5 Risk profile

UNIQA's risk profile is very heavily influenced by life insurance and health insurance portfolios in UNIQA Österreich Versicherungen AG and Raiffeisen Versicherung AG. This situation means that market risk plays a central role in UNIQA's risk profile. The composition of market risk is described in the section "Market risk".

The subsidiaries in Central Europe (CE: Hungary, Czech Republic, Slovakia and Poland) operate insurance business in the property and casualty segment and in the life and health insurance segment.

In the regions of Southeastern (SEE) and Eastern Europe (EE), insurance business is currently conducted primarily in the property/casualty segment, in particular in the motor vehicle insurance segment.

This structure is important to UNIQA, because it creates a high level of diversification from the life and health insurance lines dominated by the Austrian companies.

The distinctive risk features of the regions are also reflected in the risk profiles determined by using the internal measurement approach.

After every calculation for the life, non-life and composite insurers at UNIQA, benchmark profiles are created and compared with the risk profile for each company. The benchmark profiles show that, for composite insurers, there is a balance between market and actuarial risk. Composite insurers are also in a position to achieve the highest diversification effect.

Market risk

Based on the categories defined in the Solvency II standard formula, market risk comprises interest rate, spread, equity, real property, currency and liquidity risk. Market risk is heavily influenced by interest rate risk, which arises if there is a mismatch between asset and liability maturities. This particularly affects life insurance business. Besides this, the market risk and its composition are influenced to a considerable extent by the liabilities and their allocation to the various investment classes.

Asset allocation
in € thousand
31/12/2015 31/12/2014
Fixed income securities 19,557,462 19,281,012
Equities 374,323 280,652
Alternative investments 38,263 41,087
Equity investments 813,192 830,185
Loans 59,136 119,946
Real estate 1,623,425 1,702,738
Liquid funds 1,829,284 1,359,072
Total 24,295,085 23,614,692

Market risk categories

Interest rate risk

Interest rate risk arises on all statement of financial position asset and liability items the value of which fluctuates as a result of changes in risk-free yield curves or associated volatility. Given the investment structure and the high proportion of interest-bearing securities in the asset allocation, interest rate risk forms an important part of market risk. However, a structural reduction to the interest rate risk has been achieved in recent years as a result of the ALM-based investment strategy implemented in 2012.

The following table shows the maturity structure of interest-bearing securities and bonds reclassified as loans. The average coupon on interest-bearing securities is 3.0 per cent .

Exposure by term
in € thousand
31/12/2015 31/12/2014
Up to 1 year 1,095,058 1,315,407
More than 1 year up to 3 years 3,282,360 2,874,526
More than 3 years up to 5 years 2,845,054 2,681,542
More than 5 years up to 7 years 3,472,911 3,388,525
More than 7 years up to 10 years 2,954,254 3,209,569
More than 10 years up to 15 years 2,436,602 2,553,315
More than 15 years 3,273,532 3,073,726
Total 19,359,770 19,096,609

In comparison with this, the next table shows the actuarial provision before reinsurance in health and life insurance and the gross provision for unsettled insurance claims in non-life insurance, broken down into annual brackets. In health and life insurance the breakdown takes place using expected cash flows from the ALM process.

IFRS reserve by expected maturity date
in € thousand
31/12/2015 31/12/2014
Up to 1 year 1,276,255 2,463,429
More than 1 year up to 3 years 3,071,023 3,311,039
More than 3 years up to 5 years 1,914,474 1,931,252
More than 5 years up to 7 years 1,414,351 1,339,805
More than 7 years up to 10 years 2,039,901 1,829,623
More than 10 years up to 15 years 2,780,886 2,459,163
More than 15 years 6,497,525 5,666,888
Total 18,994,414 19,001,199

Spread risk

Due to the dominant proportion of interest-bearing securities in the asset allocation, the spread risk represents the largest share of the ECR market risk. Spread risk refers to the risk of changes in the price of statement of financial position asset or liability items as a consequence of changes in credit risk premiums or associated volatility. In the case of interest-bearing securities, this risk increases under the Solvency II standard formula depending on rating and duration. When investing in securities, UNIQA chooses securities with a wide variety of ratings, taking into consideration the potential risks and returns. At the same time, the book values represent the maximum creditworthiness and default risk on the assets side.

The credit quality of financial instruments that are neither overdue or impaired is presented below with reference to external ratings (if these are available) or to empirical values on default ratios for the relevant business partners.

Exposure by rating
31/12/2015
in € thousand
AAA
4,801,934
31/12/2014
4,964,965
AA
4,190,494
3,986,746
A
3,816,635
4,130,316
BBB
4,186,371
3,648,213
BB
1,219,575
1,394,028
B
687,580
363,890
<=CCC
102,039
158,390
Not rated
355,142
450,061
Total
19,359,770
19,096,609

Property risk

In line with their significant role in asset allocation, land and buildings and the risk associated with a fall in the price of land and buildings are responsible for the second largest share of ECR market risk.

Equity risk

Equity risk arises from movements in the value of equities and similar investments as a result of fluctuations in international stock markets. The effective equity weighting is controlled by hedging with the use of derivatives. UNIQA's equity risk resulting from investments in shares and equity has been reduced as part of the process in recent years to implement an ALM-based investment strategy, and now only plays a subordinate role in the composition of the ECR market risk.

Currency risk

Currency risk is caused by fluctuations in exchange rates and associated volatility. Given the international nature of the insurance business, UNIQA invests in securities denominated in different currencies, thus following the principle of matching liabilities with assets in the same currency to cover liabilities created by the products. Despite the use of derivative financial instruments for hedging purposes, the currency risks of the investments do not always match the currency risks in the technical provisions and liabilities. The greatest component of this risk arises from investments in US dollars. The following table shows a breakdown of assets and liabilities by currency.

Currency risk 31/12/2015
in € thousand Assets Provisions and liabilities
EUR 2,919,014 27,369,980
USD 807,472 48,595
CZK 518,265 433,386
HUF 399,072 493,462
PLN 927,607 816,640
RON 258,289 189,655
Other 977,508 551,798
Total 33,078,355 29,903,515
Currency risk 31/12/2014
in € thousand Assets Provisions and liabilities
EUR 29,492,947 27,734,138
USD 960,329 50,569
CZK 450,157 411,716
HUF 463,492 434,998
PLN 906,474 804,231
RON 183,090 121,490
Other 581,380 378,291
Total 33,037,868 29,935,434

Liquidity risk

UNIQA has payment obligations that it must meet on a daily basis. It therefore carries out detailed liquidity planning covering a period of one year. A minimum liquidity balance is specified by the Management Board and is made available as a cash reserve on a day-to-day basis.

In addition, a majority of the securities portfolio is listed in liquid markets and can be sold quickly and without significant markdowns if cash is required. When investing in interestbearing securities and choosing the contractual maturities, UNIQA takes into account the existing contractual maturities in the business segment concerned.

Regarding private equity investments, there are still remaining payment obligations in the amount of €1.1 million .

Sensitivities

Market and credit risk management is integrated as a fixed part of the structured investment process. Key figures used to measure, monitor and actively manage investment risk include, in particular, data from stress tests and sensitivity analyses in addition to figures from the established market and credit risk models (MCEV, SCR, ECR, etc.).

The following table shows the most important market risks in the form of key sensitivity figures. These key figures represent a snapshot on the reporting date and are only intended as an indication of future changes in fair value. Depending on the measurement principle to be applied, any future losses from the valuation at fair value may result in different fluctuations in the net profit for the year or in other comprehensive income. The key figures are calculated theoretically on the basis of actuarial principles and do not take into consideration any diversification effects between the individual market risks or countermeasures taken in the various market scenarios.

The sensitivities are determined by simulating each scenario for each individual item, with all other parameters remaining constant in each case.

Sensitivities
Interest rate risk 31/12/2015 31/12/2014
in € thousand + 100 basis points –100 basis points + 100 basis points –100 basis points
High grade –988,515 869,960 –960,306 813,246
Corporates –154,464 83,429 –159,784 86,179
Other –7,595 2,819 –26,440 16,721
Total –1,150,574 956,209 –1,146,530 916,146
Spread risk: 31/12/2015 31/12/2014
in € thousand + +
AAA (0 basis points) 0 0 0 0
AA (25 basis points) –89,821 93,118 –90,756 89,770
A (50 basis points) –94,086 98,434 –106,631 87,171
BBB (75 basis points) –174,260 189,813 –152,255 116,279
BB (100 basis points) –44,242 47,749 –40,909 19,747
B (125 basis points) –76,073 108,363 –11,567 7,480
<=CCC (150 basis points) –14,780 22,192 –28,209 8,239
NR (100 basis points) –15,278 18,948 –14,539 11,371
Total –508,539 578,617 –444,866 340,058
Equity risk 31/12/2015 31/12/2014
in € thousand 30 % –30 % 30 % –30 %
Total 419,822 –234,195 206,603 –134,989
Currency risk 31/12/2015 31/12/2014
in € thousand 10 % –10 % 10 % –10 %
USD 47,582 –42,443 30,688 –28,308
HUF 21,702 –21,702 19,016 –19,042
RON 15,257 –15,257 14,314 –14,337
CZK 35,668 –35,668 30,455 –30,512
PLN 42,658 –42,658 40,800 –40,877
Other 50,161 –49,057 39,624 –37,819
Total 213,027 –206,784 174,897 –170,896
2015
in € thousand
Interest rate shock
(+ 100 bp)
Interest rate shock
(-100 bp)
Spread shock
(increase in spread)
Spread shock
(decrease in
spread)
Equity shock
(+ 30 %)
Equity shock
(-30 %)
Currency shock*
(+ 10 %)
Currency shock*
(-10 %)
Income
statement
608 3,446 –11,604 13,770 211,893 –83,817 181,010 –174,766
Equity –1,137,239 942,548 –486,372 553,414 207,929 –150,378 8,855 –8,855
Total –1,136,631 945,994 –497,976 567,185 419,822 –234,195 189,865 –183,622

Effects of changes to the fair value on the net income for the year and on the equity.

*Changes in market value without accounting impact included risk reclassified bonds in the case of interest rate and spread risk and properties in the case of currency risk

2014
in € thousand
Interest rate shock
(+ 100 bp)
Interest rate shock
(-100 bp)
Spread shock
(increase in
spread)
Spread shock
(decrease in
spread)
Equity shock
(+ 30 %)
Equity shock
(-30 %)
Currency shock*
(+ 10 %)
Currency shock*
(-10 %)
Income
statement
12,303 –3,801 247 6,451 120,821 –134,989 150,908 –146,889
Equity –1,158,833 919,947 –445,113 333,607 85,781 0 7,481 –7,496
Total –1,146,530 916,146 –444,866 340,058 206,603 –134,989 158,390 –154,385

* Currency shock from land and buildings amounting to € 16.5 million (+ 10 %) and € 16.5 million (-10 %) will not be incurred either on the income statement or in equity because real estate is recognised at book value, the carrying amount and shocks on a fair value basis.

Life insurance

In life insurance the interest rate assumptions are the crucial influencing factor on the liability adequacy test and the deferred acquisition costs. The impact of the implied new funds assumption (incl. reinvestment) is therefore stated below.

If new funds are assumed with a +100 bp increase, then the resulting net effect (after accounting for the deferred profit participation) amounts to +€9.0 million. A –100 bp reduction in this assumption results in net effect of –€21.3 million. The effects described relate to the changes in the deferred acquisition costs along with the impact on the liability adequacy test. The results were determined using the traditional companies in Italy and Austria which make up the majority of the actuarial provision in the Group.

Non-life insurance

The provision for unsettled insurance claims is formed based on reported claims and applying accepted statistical methods. One crucial assumption here is that the pattern of claims observed from the past can be sensibly extrapolated for the future. Additional adjustments need to be made in cases where this assumption is not possible.

The calculation of the claim provisions is associated with uncertainty based on the time required to process claims. In addition to the normal chance risk, there are also other factors that may influence the future processing of the claims that have already occurred.

The partial model in property/casualty insurance is a suitable instrument for quantifying the volatility involved in processing. Following analysis of these model results and after consulting experts it was determined that a deviation of 5 per cent from the basic provision determined may represent a realistic scenario. On basis of the current provision for claims outstanding of €2,307 million (excluding additional provisions such as provisions for claims settlement) in the Group on gross basis, this would mean an increase in claims incurred by €115.3 million.

Health insurance

Health insurance operated on the principles of life insurance is now also affected by the period of low interest rates, as the tariffs that are currently covered primarily result in discount rates of 3 per cent, but also in some cases of 2.5 per cent and in future even of 1.75 per cent. Since the average discount rate is still relatively high, the capital earnings may not be enough for the required addition to the coverage capital. A reduction in the capital earnings by 100 bp (based on investment results 2015) would reduce the profit from ordinary activities by €33 million.

Asset liability management (ALM)

Market and credit risks have different weightings and various degrees of seriousness, depending on the investment structure. The effects of the financial risks on the value of the investments also influence the level of technical liabilities. Thus, there is a dependence – particularly in life insurance – between the growth of assets and debts from insurance policies. UNIQA monitors the income expectations and risks of assets and liabilities arising from insurance policies as part of the asset liability management (ALM) process. The objective is to achieve a return on capital that is sustainably higher than the updating of the technical liabilities while retaining the greatest possible security. To do this, assets and debts are allocated to different accounting groups. The following table shows the main accounting groups generated by the various product categories.

Total 29,638,407 29,212,677
Short-term property and casualty insurance contracts 4,825,952 4,196,663
Long-term health insurance contracts 3,174,365 3,128,747
Long-term unit-linked and index-linked life insurance contracts 5,226,748 5,386,650
Long-term life insurance contracts with guaranteed interest and profit sharing 16,411,343 16,500,617
Investments
in € thousand
31/12/2015 31/12/2014

These values relate to the following statement of financial position items:

  • Property, plant and equipment
  • Investment property
  • Equity investments accounted for using the equity method
  • Investments
  • Investments in unit-linked and index-linked life insurance
  • Current bank balances and cash-in-hand
Technical provisions and liabilities (retained)
in € thousand
31/12/2015 31/12/2014
Long-term life insurance contracts with guaranteed interest and profit sharing 15,251,481 15,607,593
Long-term unit-linked and index-linked life insurance contracts 5,175,437 5,306,000
Long-term health insurance contracts 2,779,801 2,677,684
Short-term property and casualty insurance contracts 2,869,625 2,757,870
Total 26,076,345 26,349,146

These values relate to the following statement of financial position items:

• Technical provisions

  • Technical provisions for unit-linked and index-linked life insurance
  • Reinsurance liabilities (only securities account liabilities from reinsurance ceded)
  • Reinsurers' share of technical provisions
  • Reinsurers' share of technical provisions for unit-linked and index-linked life insurance

Due to the particular importance of the ALM process in life insurance, the focus below is placed on this segment. For practical reasons, it is not possible to fully achieve the objective of matching cash flows for assets and liabilities. The duration of the assets in life insurance is 6.7 years, while for liabilities it is longer. This is referred to as a duration gap. It gives rise to interest rate risk and this risk is backed by capital in the ECR model. The discount rate that may be used in the costing when new business is written is based in most UNIQA companies on a maximum discount rate imposed by the relevant local supervisory authority. In all those countries in which the maximum permissible discount rate is not imposed in this way, appropriate prudent, market-based assumptions are made by the actuaries responsible for the calculation. In the core market of Austria, the maximum discount rate is currently 1.0 per cent per year. However, the portfolio also includes older contracts with different discount rates. In the relevant markets of the UNIQA Group, these rates amount to as much as 4.0 per cent per year.

The following table provides an indication of the average discount rates for each region.

Average technical discount rates, core business by region and currency EUR USD Local
currency
in per cent
Austria (AT) 2.5 - -
Western Europe (WE) 1.8 - -
Central Europe (CE) 3.6 - 3.3
Eastern Europe (EE) 3.5 4.0 3.6
Southeastern Europe (SEE) 3.0 - 2.2
Russia (RU) 3.0 3.0 4.0

Definition of regions:

AT - Austria

WE - Italy, Liechtenstein CE - Poland, Hungary, Czech Republic, Slovakia

SEE - Bulgaria, Serbia, Bosnia and Herzegovina, Croatia, Albania, Montenegro, Kosovo, Macedonia

EE - Romania, Ukraine

RU - Russia

As these discount rates are guaranteed by the insurance company, the financial risk lies in not being able to generate these returns. Because traditional life insurance business predominantly invests in interest-bearing securities (bonds, loans, etc.), the unpredictability of long-term interest rate trends is the most significant financial risk for a life insurance company. Investment and reinvestment risk arises from the fact that premiums received in the future must be invested to achieve the rate of return guaranteed when a policy is written. However, it is entirely possible that no appropriate securities will be available at the time the premium is received. In the same way, future income must be reinvested to achieve a return equivalent to at least the original discount rate. For this reason, UNIQA has already decided to offer products to its key markets that are only based on a low or zero discount rate.

Actuarial risks

Non-life

The actuarial risk in the non-life segment is broken down into the three risk categories of premium, reserve and catastrophe risk.

Premium risk is defined as the risk that future benefits and expenses in connection with insurance operations will exceed the premiums collected for the insurance concerned. Such a loss may also be caused in insurance operations by exceptionally significant, but rare loss events, known as major claims. Appropriate distribution assumptions are made to ensure that these events are also adequately incorporated into risk modelling.

Natural disasters represent a further threat from events that are infrequent but that nevertheless cause substantial losses. This risk includes financial losses caused by natural hazards, such as floods, storms, hail or earthquakes. In contrast to major individual claims, insurance companies in this case refer to cumulative losses.

Reserve risk refers to the risk that technical provisions recognised for claims that have already occurred will turn out to be inadequate. The loss in this case is referred to as run-off loss. The claims reserve is calculated using actuarial methods. External factors, such as changes in the amount or frequency of claims, legal decisions, repair and/or handling costs, can lead to differences compared with estimates.

To counter and actively manage these risks, UNIQA runs a number of processes integrated into its insurance operations. For example, Group guidelines specify that new products may only be launched if they satisfy certain profitability criteria. Major claims and losses from natural disasters are appropriately managed by means of special risk management in the underwriting process (primarily in corporate activities) and by the provision of suitable reinsurance capacity.

In connection with claim reserves, guidelines also specify the procedures to be followed by local units when recognising such reserves in accordance with IFRS. A quarterly monitoring system and an internal validation process safeguard the quality of the reserves recognised in the whole of the Group.

An essential element in risk assessment and further risk management is the use of the nonlife partial model. This risk model uses stochastic simulations to quantify the risk capital requirement for each risk class at both Company and Group levels. The model also produces further key figures that are then used as part of the risk- and value-based management of the insurance business.

Life

The risk of an individual insurance contract lies in the occurrence of the insured event. The occurrence is considered random and therefore unpredictable. Various risks exist in life insurance, particularly in traditional life insurance. The insurance company takes on this risk for a corresponding premium. When calculating the premium, the actuary refers to the following carefully selected calculation bases:

  • Interest: The discount rate is set so low that it can be produced as expected in each year.
  • Mortality: The probabilities of dying are deliberately and carefully calculated for each type of insurance.
  • Costs: These are calculated in such a way that the costs incurred by the policy can be permanently covered by the premium.

Carefully selecting the calculation bases gives rise to well-planned profits, an appropriate amount of which is credited to the policyholders as part of profit sharing.

The calculation of the premium is also based on the acceptance of a large, homogenous inventory of independent risks, so that the randomness inherent in an individual insurance policy is balanced out by the law of large numbers.

The following risks exist for a life insurance company:

  • The calculation principles prove to be insufficient despite careful selection.
  • Random fluctuations prove disadvantageous for the insurer.
  • The policyholder exercises certain implicit options to his advantage.

The risks of the insurer can be roughly divided into actuarial and financial risks.

Long-term life insurance contracts with guaranteed interest and profit sharing
in € thousand
31/12/2015 31/12/2014
Austria (AT) 11,147,754 12,039,128
Western Europe (WE) 3,197,628 2,719,121
Central Europe (CE) 299,162 296,801
Eastern Europe (EE) 26,802 26,320
Southeastern Europe (SEE) 492,209 458,655
Russia (RU) 111,734 88,595
15,275,289 15,628,619
Long-term unit-linked and index-linked life insurance contracts
in € thousand
31/12/2015 31/12/2014
Austria (AT) 4,310,278 4,458,977
Western Europe (WE) 436,702 419,192
Central Europe (CE) 425,652 425,899
Eastern Europe (EE) 0 0
Southeastern Europe (SEE) 2,806 1,932
Russia (RU) 0 0
5,175,437 5,306,000

UNIQA's portfolio consists primarily of long-term insurance contracts. Short-term assurances payable at death play a minor role.

The table below shows the distribution of the premium portfolio by type and region.

Premium portfolio in % Endowment assurance Life insurance Pension insurance
2015 2014 2015 2014 2015 2014
Austria (AT) 46.5 46.3 9.0 9.0 15,1 14.1
Western Europe (WE) 69.7 72.2 7.9 8.0 15.0 16.3
Central Europe (CE) 17.6 18.2 2.6 2.8 0.2 0.2
Eastern Europe (EE) 54.3 53.8 5.5 9.1 0.0 0.0
Southeastern Europe (SEE) 82.2 85.4 5.2 5.1 0.5 0.6
Russia (RU) 96.5 94.4 0.0 0.0 0.0 0.0
Total 48.5 49.2 7.7 7.7 12.2 11.3
Premium portfolio in % Unit-linked and index-linked Residual debt insurance Other
2015 2014 2015 2014 2015 2014
Austria (AT) 28.3 29.6 0.0 0.0 1,0 1.1
Western Europe (WE) 7.4 3.5 0.0 0.0 0.0 0.0
Central Europe (CE) 57.6 56.1 8.6 10.9 13.4 11.8
Eastern Europe (EE) 0.0 0.0 39.5 30.4 0.6 6.7
Southeastern Europe (SEE) 2.0 1.4 0.7 0.8 9.4 6.7
Russia (RU) 0.0 0.0 3.5 5.6 0.0 0.0
Total 27.5 27.5 1.4 1.9 2.7 2.4

Definition of regions:

AT - Austria

WE - Italy, Liechtenstein

CEE - Poland, Hungary, Czech Republic, Slovakia

EE - Romania, Ukraine SEE - Bulgaria, Serbia, Bosnia and Herzegovina, Croatia, Albania, Montenegro*, Kosovo Macedonia

RU - Russia

* Not included in 2014

Mortality

With respect to assurance involving death risk, premiums are calculated based on an accounting table, implicitly allowing for the safety loading of risk premiums.

Using risk selection (health examinations) means that the mortality probabilities of the portfolio are consistently smaller than those of the overall population. In addition, the gradual improvement of mortality rates means that the real mortality probabilities are consistently smaller than the values shown in the accounting table. Analyses of mortality data carried out at Group level show that, historically, the level of premiums has been sufficient to cover the death benefits.

Due to the large number of lives insured by UNIQA in the Austrian market, the mortality trends are of particular importance here. According to the 2010/2012 mortality table published by Statistics Austria, life expectancy has increased and is over 80 years for new-borns for the first time.

Life expectancy at birth

Mortality table Men Women
1970 – 72 66.6 73.7
1980 – 82 69.2 76.4
1990 – 92 72.5 79.0
2000 – 02 75.5 81.5
2010 – 12 78.0 83.3

The reduction in the probability of dying at any given age is causing a huge amount of uncertainty in the annuity business. Improvements in mortality rates as a result of medical progress and changed lifestyles are virtually impossible to extrapolate.

Attempts to predict this effect were made when producing the generation tables. However, such tables only exist for the Austrian population and this data cannot be applied to other countries. In the UNIQA Group, longevity risk relates mainly to the Austrian life insurance companies because very few pension products are sold in the regions covered by the international business.

Homogeneity and independence of insurance risks

An insurance company takes great pains to compose a portfolio of the most homogenous, independent risks possible, in accordance with the classic, deterministic approach to calculating premiums. Because this is virtually impossible in practice, a considerable risk arises for the insurer due to random fluctuations, in particular from the outbreak of epidemic illnesses, as not only could the calculated mortality probabilities prove to be too low, the independence of the risks can also no longer be assumed.

Antiselection

UNIQA's portfolios contain large quantities of risk insurance policies with a premium adjustment clause, particularly in Austria. This allows the insurer to raise the premiums in case of an (unlikely) worsening of the mortality behaviour. However, this presents the danger of possible antiselection behaviour, meaning that policies for good risks tend to be terminated while worse ones remain in the portfolio.

The right to choose pensions for deferred retirement annuities also results in antiselection. Only those policyholders who feel very healthy choose the annuity payment; all others choose partial or full capital payment. In this way, the pension portfolio tends to consist of mostly healthier people, i.e. from the insurer's point of view worse risks than the population average.

This phenomenon is countered by corresponding modifications to the retirement mortality tables. A further possibility exists in the requirement that the intention to exercise the right to choose annuity payments must be announced no later than one year in advance of the expiration.

Costs

Besides the risks discussed above, the cost risk must also be mentioned: the insurer guarantees that it will deduct only the calculated costs for the entire term of the policy. The business risk here is that the cost premiums are insufficient (e.g. due to cost increases resulting from inflation).

Health

The health insurance business is operated primarily in Austria (92.4 per cent is domestic and 7.6 per cent is international). As a result, the focus lies on risk management in Austria.

Health insurance is a loss insurance which is calculated under consideration of biometric risks and is operated in Austria "similar to life insurance".

Terminations by the insurer are not possible except in the case of obligation violations by the insured. Premiums must therefore be calculated in such a way that the premiums are sufficient to cover the insurance benefits that generally increase with age, assuming probabilities that remain constant. The probabilities and cost structures can change frequently over time. For this reason, it is possible to adjust the premiums for health insurance as necessary to the changed calculation principles.

When taking on risks, the existing risk of the individual is also evaluated. If it is established that an illness already exists for which the cost risk is expected to be higher than for the calculated portfolio, then either this illness is excluded from the policy, an adequate risk surcharge is demanded or the risk is not underwritten.

In health insurance, assurance coverage ("aging provision") is built up through calculation according to the "type of life insurance" and reduced again in later years because this is used to finance an ever larger part of the benefits that increase with age.

The discount rate for this actuarial reserve is 3.0 or 2.5 per cent. If the discount rate of 3.0 per cent is not achieved by the investment, there are safety margins in the premiums that can be used to cover the insufficient investment results. Because a guideline was published by the FMA in October 2013 about the discount rate in health insurance, starting in January 2014 new business has been calculated with a discount rate of 2.5 per cent. There is now a further letter from the FMA providing that the tariffs for a new sale should include a discount rate of 1.75 per cent from 1 May 2016 at the latest. This results in a further improvement of the risk in cases where the investment results are insufficient. The average discount rate was approximately 2.95 per cent as at 31 December 2015.

The legal risks arise primarily from the effects that changes to legislation have on the existing private health insurance business model. This includes, in particular, changes to the legal framework that make it harder or impossible to adapt to changed circumstances or that sharply reduce the income opportunities. Developments in this area will be observed by the insurance association, and an attempt will be made, where necessary, to react to negative developments from the perspective of the private health insurer.

The EU Directive on the equal treatment of men and women in insurance, which is implemented in Austria by the Insurance Amendment Act 2006 (VersRÄG 2006), was also taken into account when calculating the premiums at the end of the second quarter of 2007. This stipulated that the costs of birth and pregnancy be distributed across both sexes. No significant risk to profit has been identified here.

In the meantime, a European Court of Justice (ECJ) decision regarding insurance policies brought about a new situation as of 21 December 2012: from this point on, only completely identical premiums are allowed for men and women, excluding considerations such as age and individual pre-existing conditions. Experience from 2013 to 2015 has shown that this has not resulted in any negative changes to the portfolio structure of new business.

The risk of the health insurance business outside Austria is currently dominated primarily by UNIQA Assicurazioni in Milan (approx. €33.5 million in annual premiums). This company presently has stable portfolios, meaning that insurance risk scarcely changes. For tariffs with outdated calculation principles, whose holdings are aging, the insured will be converted in the coming years to tariffs with a modern calculation basis. Because this affects tariffs that are not life-long, the conversion problem is less significant than it is for life-long tariffs.

The remaining premiums (approx. €43.4 million) are divided among multiple companies and are of only minor importance there. Only in Switzerland (Geneva) is health insurance the primary business (approx. €10.3 million); however, the Swiss Solvency Test showed there was sufficient risk capital.

Life-long health insurance policies without termination options by the insurer rarely exist outside of Austria, meaning that the risk can be considered low for this reason as well.

Other risks

Operational risks

Operational risk includes losses that are caused by insufficient or failed internal processes, as well as losses caused by systems, human resources or external events.

Operational risk includes legal risk, but not reputation or strategic risk. Legal risk is the risk of uncertainty due to lawsuits or uncertainty in the applicability or interpretation of contracts, laws or other legal requirements.

UNIQA's risk management process also defined the risk process for operational risks in terms of methodology, workflow and responsibilities. The risk manager is responsible for compliance in all subsidiaries.

A distinctive feature of operational risk is that it can surface in all processes and departments. This is why operational risk is identified and evaluated in every operational company at a very broad level within UNIQA. Risks are identified with the help of a standardised risk catalogue that is regularly checked for completeness. Scenarios are defined for evaluating these risks; these scenarios are meant to convey the likelihood of occurrence and the possible amount of the claim. The results are then presented by the risk manager in the form of a summarised risk report.

This process is usually conducted twice a year.

Business Continuity Management

According to international standards, the UNIQA Group – as a financial service provider – forms part of the critical infrastructure of key importance to the national community. If this infrastructure were to fail or become impaired, it would cause considerable disruption to public safety and security or lead to other drastic consequences.

As a rule, emergencies, crises and disasters are unexpected events for which it is impossible to plan. However, systems and processes can be put in place to deal with such events. The systems and processes must then be treated as a special responsibility of management and must be dealt with professionally, efficiently and as quickly as possible.

UNIQA has implemented a Business Continuity Management system (BCM) covering the issues of crisis prevention, crisis management and business recovery (including business continuity plans). The main objectives are as follows:

• to prevent personal injury to, or death of, employees or third parties,

  • to minimise the impact from failure of key business processes,
  • to be appropriately prepared with continuously updated emergency and recovery plans.

The UNIQA BCM model is based on international rules and standards and will continue to be implemented in 2016. The implementation of a BCM system forms part of UNIQA's response to the requirements imposed by relevant authorities (solvency, critical infrastructure) and the market (calls for tender). This holistic approach to a risk management system not only reduces potential losses following an event but also enhances the quality of day-to-day operations.

Reputational and strategic risks

Reputational risk describes the risk of loss that arises due to possible damage to the Company's reputation, a deterioration in prestige, or a negative overall impression due to negative perception by customers, business partners, shareholders or supervisory agencies.

Reputational risks that occur in the course of core processes such as claims processing or advising and service quality are identified, evaluated and managed as operational risks in our subsidiaries.

The most important reputational risks are presented, like operational risks, in an aggregated form in the risk report.

Group risk management then analyses whether the risk observed in the Group or in another unit may occur, and whether the danger of "contagion" within the Group is possible.

Strategic risk describes the risk that results from management decisions or insufficient implementation of management decisions that may influence current/future income or solvency. This includes the risk that arises from management decisions that are inadequate because they ignore a changed business environment.

Like operational and reputational risks, strategic risks are evaluated twice a year. Furthermore, important decisions in various committees, such as the Risk Committee, are discussed with the Management Board. As outlined in the explanation of the risk management process, the management receives a monthly update regarding the most significant risks in the form of a heat map.

7.6 Reinsurance

The Management Board of the holding company determines, directly and indirectly, the strategic contents of reinsurance policy with its decisions regarding risk and capital policy. The following principles can be derived from external reinsurance to inform purchasing.

Reinsurance structures sustainably support the optimisation of required risk capital and management of the use of this risk capital. Major significance accrues to the maximum use of diversification effects. Decisions regarding all reinsurance business ceded are taken with special consideration of their effects on required risk capital. Continuous analysis of reinsurance purchasing for efficiency characteristics is an essential component of internal risk management processes.

UNIQA Re AG in Zurich is responsible for the operational implementation of these tasks. It is responsible for and guarantees the implementation of reinsurance policies issued by the Management Board of the holding company. It is responsible for central guideline expertise on all activities, organisation and questions regarding internal and external reinsurance relationships. UNIQA Re AG is available to all Group companies as the risk carrier for their reinsurance needs. Naturally, internal risk transfers are subject to the same requirements and valuation processes in terms of efficiency measurement, risk capital optimisation and diversification as retrocessions to external reinsurance partners.

The assessment of the exposure of the portfolios assumed by the Group companies is of central importance. Periodic risk assessments have been performed for years in the interest of a value-based management of the capital commitment. Extensive data are used to assess risk capital requirements for affected units. Reinsurance programmes are constantly structured in a goal-oriented manner in accordance with their influence on the assignor's risk situation.

For the property and casualty insurer, promises of performance for protection against losses resulting from natural disasters frequently represent the greatest stress on risk capital by far due to the volatile nature of such claims and the conceivable amount of catastrophic damages. UNIQA has set up a specialised unit within UNIQA Re AG in order to deal with this problem. Exposure is constantly monitored and evaluated at the country and Group levels in cooperation with internal and external authorities. UNIQA substantially eases the pressure on its risk capital through the targeted utilisation of all applicable diversification effects and the launching of a highly efficient retrocession programme.

UNIQA Re AG has assumed almost all of the UNIQA Group's required reinsurance business ceded in the reporting period. Only in the life insurance line was a portion of the necessary cessions given directly to external reinsurance partners. The Group's retrocessions in the nonlife insurance line were done on a non-proportional basis. The Group assumes reasonable deductibles in the affected programmes based on risk and value-based approaches.

SEGMENT REPORTING

Operating segments UNIQA Austria Raiffeisen Insurance UNIQA International
In € thousand 1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014
Premiums written (gross), including savings portions from unit-linked
and index-linked life insurance
2,807,701 2,773,542 1,075,844 905,290 2,416,843 2,353,062
Premiums earned (net) including savings portions from the unit-linked
and index-linked life insurance
2,229,856 2,137,021 965,061 793,957 1,892,310 1,822,239
Savings portions in unit-linked and
index-linked life insurance (gross)
135,109 152,378 135,109 152,378 215,214 239,898
Savings portions in unit-linked and
index-linked life insurance (net)
127,051 143,121 127,051 143,121 215,214 239,898
Premiums written (gross) 2,672,593 2,621,163 940,736 752,912 2,201,629 2,113,164
Premiums earned (net) 2,102,805 1,993,900 838,010 650,837 1,677,097 1,582,342
Premiums earned (net) - intragroup – 546,003 – 587,892 – 96,383 – 91,943 – 410,764 – 446,736
Premiums earned (net) - non intragroup 2,648,808 2,581,791 934,392 742,780 2,087,860 2,029,078
Technical interest income 209,292 229,055 193,805 219,626 115,133 96,615
Other insurance income 1,900 3,137 997 917 21,340 25,931
Insurance benefits – 1,729,353 – 1,637,225 – 829,768 – 685,206 – 1,329,341 – 1,253,637
Operating expenses – 390,673 – 407,088 – 135,526 – 112,121 – 427,476 – 434,847
Other technical expenses – 23,295 – 37,881 – 11,560 – 14,841 – 47,022 – 50,823
Technical result 170,677 143,897 55,958 59,213 9,731 –34,419
Net investment income 343,170 376,128 254,738 277,712 195,321 174,330
Other income 7,304 7,513 201 1,736 19,012 26,774
Reclassification of technical interest income – 209,292 – 229,055 – 193,805 – 219,626 – 115,133 – 96,615
Other operating expenses – 11,781 – 12,049 – 503 – 123 – 34,809 – 40,688
Non-technical result 129,400 142,537 60,631 59,699 64,391 63,800
Operating profit/(loss) 300,077 286,434 116,589 118,911 74,122 29,381
Amortisation of goodwill and impairment losses – 918 – 1,875 – 624 – 189 – 19,476 – 30,228
Finance costs – 10,627 – 10,627 – 10,524 – 10,094 – 168 – 317
Earnings before taxes 288,532 273,932 105,441 108,628 54,477 –1,164
Combined ratio
(property and casualty insurance, after reinsurance) 93.9 % 91.8 % 82.7 % 88.1 % 99.1 % 102.3 %
Cost ratio (after reinsurance) 17.5 % 19.0 % 14.0 % 14.1 % 22.6 % 23.9 %

Impairment by segment

UNIQA Austria Raiffeisen Insurance UNIQA International
In € thousand 1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014
Goodwill
Impairments 0 0 0 0 – 13,081 – 25,000
Investments
Impairments – 29,196 – 20,665 – 9,079 – 37,458 – 510 – 193
Reversal of impairment losses 14,867 9,066 1,482 11,662 0 0
Reinsurance Group functions
and consolidation
Group
1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014
1,112,080 1,189,327 – 1,087,337 – 1,156,866 6,325,132 6,064,355
1,014,440 1,080,886 1,155 4,932 6,102,823 5,839,035
0 0 0 0 485,431 544,654
0 0 0 0 469,316 526,139
1,112,080 1,189,327 – 1,087,337 – 1,156,866 5,839,701 5,519,700
1,014,440 1,080,886 1,155 4,932 5,633,507 5,312,896
1,051,994 1,121,639 1,155 4,932 0 0
– 37,554 – 40,753 0 0 5,633,507 5,312,896
0 0 209 15,088 518,439 560,384
631 1,115 5,801 3,392 30,669 34,492
– 720,148 – 800,808 1,043 – 6,785 – 4,607,567 – 4,383,662
– 315,686 – 335,108 – 29,334 – 9,943 – 1,298,695 – 1,299,106
– 9,060 – 12,193 14,448 18,440 – 76,489 – 97,298
–29,823 –66,109 –6,678 25,124 199,864 127,706
27,652 31,325 10,264 28,657 831,145 888,151
2,240 5,270 13,767 21,135 42,525 62,428
0 0 – 209 – 15,088 – 518,439 – 560,384
– 2,204 – 975 – 11,695 – 16,499 – 60,993 – 70,334
27,687 35,621 12,128 18,204 294,238 319,860
–2,136 –30,488 5,450 43,328 494,102 447,566
0 0 0 0 – 21,018 – 32,292
0 0 – 28,923 – 16,304 – 50,243 – 37,343
–2,136 –30,488 –23,474 27,024 422,840 377,932
101.7 % 104.8 % 97.8 % 99.6 %
31.1 % 31.0 % 21.3 % 22.2 %
Group Group functions
and consolidation
Reinsurance
1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015
– 25,000 – 13,081 0 0 0 0
– 89,944 – 59,837 – 31,628 – 21,052 0 0
20,867 16,616 139 268 0 0

Operating segments – Classified by Business line

Property and casualty insurance UNIQA Austria Raiffeisen Insurance UNIQA International
In € thousand 1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014
Premiums written (gross) 1,380,604 1,362,614 160,149 153,154 1,085,832 1,084,898
Premiums earned (net) 826,865 753,037 83,280 79,775 595,753 588,155
Technical interest income 0 0 0 0 0 0
Other insurance income 1,173 2,278 177 139 16,369 19,818
Insurance benefits – 577,558 – 516,544 – 55,856 – 57,140 – 362,664 – 372,714
Operating expenses – 199,137 – 174,838 – 13,014 – 13,129 – 227,734 – 228,898
Other technical expenses – 9,727 – 16,556 – 475 – 992 – 34,766 – 34,283
Technical result 41,616 47,378 14,112 8,654 –13,040 –27,921
Net investment income 43,880 59,976 5,292 4,705 52,135 38,178
Other income 6,520 4,886 1 827 11,373 13,385
Reclassification of technical interest income 0 0 0 0 0 0
Other operating expenses – 10,994 – 11,516 – 472 – 120 – 16,702 – 16,851
Non-technical result 39,406 53,346 4,821 5,412 46,805 34,713
Operating profit/(loss) 81,021 100,723 18,932 14,066 33,765 6,791
Amortisation of goodwill and impairment losses 0 0 0 0 – 15,960 – 27,847
Finance costs 0 0 0 0 – 168 – 313
Earnings before taxes 81,021 100,723 18,932 14,066 17,636 –21,368
Health insurance UNIQA Austria Raiffeisen Insurance UNIQA International
In € thousand 1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014
Premiums written (gross) 921,619 887,275 0 0 76,928 73,547
Premiums earned (net) 921,923 886,949 0 0 75,591 71,725
Technical interest income 73,783 70,555 0 0 0 0
Other insurance income 230 118 0 0 1,324 1,406
Insurance benefits – 762,872 – 744,309 0 0 – 48,840 – 45,724
Operating expenses – 121,753 – 133,656 0 0 – 30,952 – 30,669
Other technical expenses – 2,056 – 6,685 0 0 – 431 – 371
Technical result 109,255 72,972 0 0 –3,308 –3,632
Net investment income 151,840 127,596 0 0 2,965 1,714
Other income 486 193 0 0 1,742 2,039
Reclassification of technical interest income – 73,783 – 70,555 0 0 0 0
Other operating expenses – 301 – 21 0 0 – 1,422 – 1,380
Non-technical result 78,241 57,212 0 0 3,285 2,374
Operating profit/(loss) 187,496 130,185 0 0 –23 –1,258
Amortisation of goodwill and impairment losses 0 0 0 0 0 0
Finance costs 0 0 0 0 0 0
Earnings before taxes 187,496 130,185 0 0 –23 –1,258
Group Group functions
and consolidation
Reinsurance
1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015
2,620,922 2,641,392 – 1,115,771 – 1,046,014 1,136,028 1,060,821
2,482,938 2,500,199 6,325 2,215 1,055,646 992,086
0 0 0 0 0 0
26,674 24,078 3,807 6,162 631 197
– 1,723,584 – 1,695,197 – 1,205 – 2,005 – 775,981 – 697,115
– 748,942 – 750,534 – 1,529 1,199 – 330,550 – 311,848
– 47,791 – 41,332 11,716 8,848 – 7,677 – 5,213
–10,705 37,214 19,115 16,420 –57,930 –21,892
137,573 125,552 15,182 6,824 19,532 17,421
35,119 30,035 10,785 9,959 5,237 2,183
0 0 0 0 0 0
– 36,061 – 42,252 – 6,649 – 11,961 – 926 – 2,122
136,631 113,335 19,318 4,822 23,843 17,482
125,926 150,549 38,433 21,241 –34,088 –4,410
– 27,847 – 15,960 0 0 0 0
– 37,104 – 50,089 – 36,791 – 49,921 0 0
60,975 84,499 1,642 –28,679 –34,088 –4,410
Reinsurance Group functions
and consolidation
1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014
646 1,544 – 1,288 – 1,591 997,906 960,776
227 1,424 – 643 – 112 997,098 959,986
0 0 0 0 73,783 70,555
0 0 0 0 1,553 1,524
– 338 – 252 10,865 9,762 – 801,184 – 780,523
– 24 – 503 – 11,929 – 2,231 – 164,658 – 167,058
0 0 – 227 – 247 – 2,714 – 7,302
–134 669 –1,934 7,172 103,879 77,182
0 6 – 12,014 – 8,612 142,791 120,704
2 0 3,421 1,819 5,650 4,051
0 0 0 0 – 73,783 – 70,555
0 0 – 14 0 – 1,736 – 1,401
2 7 –8,606 –6,794 72,922 52,799
–132 676 –10,540 379 176,802 129,981
0 0 0 0 0 0
0 0 – 154 – 234 – 154 – 234
–132 676 –10,694 144 176,648 129,747
Life insurance UNIQA Austria Raiffeisen Insurance UNIQA International
In € thousand 1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014
Premiums written (gross), including savings portions from unit-linked
and index-linked life insurance
505,478 523,653 915,695 752,137 1,254,083 1,194,618
Premiums earned (net) including savings portions from the unit-linked
and index-linked life insurance
481,068 497,034 881,781 714,182 1,220,966 1,162,360
Savings portions in unit-linked and
index-linked life insurance (gross)
135,109 152,378 135,109 152,378 215,214 239,898
Savings portions in unit-linked and
index-linked life insurance (net)
127,051 143,121 127,051 143,121 215,214 239,898
Premiums written (gross) 370,370 371,274 780,587 599,758 1,038,869 954,720
Premiums earned (net) 354,017 353,913 754,730 571,062 1,005,752 922,462
Technical interest income 135,509 158,500 193,805 219,626 115,133 96,615
Other insurance income 498 740 821 778 3,646 4,706
Insurance benefits – 388,923 – 376,372 – 773,912 – 628,066 – 917,837 – 835,200
Operating expenses – 69,782 – 98,595 – 122,511 – 98,992 – 168,791 – 175,280
Other technical expenses – 11,513 – 14,639 – 11,085 – 13,849 – 11,825 – 16,170
Technical result 19,806 23,547 41,846 50,559 26,079 –2,866
Net investment income 147,449 188,556 249,446 273,007 140,221 134,437
Other income 299 2,434 200 909 5,898 11,350
Reclassification of technical interest income – 135,509 – 158,500 – 193,805 – 219,626 – 115,133 – 96,615
Other operating expenses – 486 – 512 – 31 – 3 – 16,685 – 22,458
Non-technical result 11,753 31,979 55,811 54,287 14,301 26,714
Operating profit/(loss) 31,560 55,526 97,657 104,846 40,380 23,848
Amortisation of goodwill and impairment losses – 918 – 1,875 – 624 – 189 – 3,516 – 2,381
Finance costs – 10,627 – 10,627 – 10,524 – 10,094 0 – 5
Earnings before taxes 20,015 43,024 86,509 94,563 36,865 21,462

CONSOLIDATED FINANCIAL STATEMENTS 111

Reinsurance Group functions
and consolidation
Group
1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014
50,612 51,755 – 40,034 – 39,505 2,685,834 2,482,657
22,127 23,815 – 417 – 1,280 2,605,525 2,396,111
0 0 0 0 485,431 544,654
0 0 0 0 469,316 526,139
50,612 51,755 – 40,034 – 39,505 2,200,403 1,938,002
22,127 23,815 – 417 – 1,280 2,136,209 1,869,971
0 0 209 15,088 444,656 489,829
433 484 – 361 – 415 5,037 6,294
– 22,696 – 24,574 – 7,817 – 15,342 – 2,111,186 – 1,879,555
– 3,815 – 4,056 – 18,603 – 6,183 – 383,503 – 383,106
– 3,847 – 4,516 5,826 6,970 – 32,443 – 42,205
–7,797 –8,848 –21,164 –1,163 58,770 61,229
10,231 11,787 15,454 22,087 562,802 629,874
55 33 387 8,532 6,839 23,258
0 0 – 209 – 15,088 – 444,656 – 489,829
– 82 – 49 280 – 9,851 – 17,005 – 32,872
10,203 11,771 15,912 5,680 107,981 130,431
2,406 2,924 –5,252 4,517 166,751 191,660
0 0 0 0 – 5,058 – 4,445
0 0 21,151 20,721 0 – 5
2,406 2,924 15,899 25,238 161,693 187,210

UNIQA International classified according to regions

Premiums earned (net) Net investment income
In € thousand 1-12/2015 1-12/2014 1-12/2015 1-12/2014
Switzerland 10,240 8,592 224 251
Italy 875,696 777,831 98,066 79,525
Liechtenstein 2,540 1,223 1,254 1,616
Western Europe (WE) 888,475 787,646 99,545 81,392
Czech Republic 126,945 111,833 6,507 7,178
Hungary 57,282 56,556 4,205 5,152
Poland 160,166 181,181 21,069 15,136
Slovakia 73,364 57,566 3,819 4,201
Central Europe (CE) 417,756 407,136 35,599 31,667
Romania 51,352 58,081 3,427 4,526
Ukraine 40,708 59,278 14,739 9,766
Eastern Europe (EE) 92,060 117,358 18,166 14,292
Albania 25,321 20,229 225 733
Bosnia-Herzegovina 23,623 22,683 2,543 2,404
Bulgaria 40,358 38,715 1,142 649
Croatia 65,410 54,445 17,044 17,282
Montenegro 10,116 9,918 643 594
Macedonia 10,105 9,977 421 343
Serbia 42,003 37,400 4,328 6,579
Kosovo 13,400 11,255 0 246
Southeastern Europe (SEE) 230,336 204,623 26,346 28,828
Russia 48,470 65,578 15,275 19,541
Russia (RU) 48,470 65,578 15,275 19,541
Austria 0 0 391 – 1,389
Administration 0 0 391 –1,389
UNIQA International 1,677,097 1,582,342 195,321 174,330
Of which
Earnings before taxes
insurance companies
Impairment (Romania)
Impairment (Ukraine)
Earnings before taxes Operating expenses Insurance benefits
1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015
910 1,050 – 3,162 – 3,473 – 6,718 – 7,470
21,444 24,695 – 73,009 – 79,788 – 751,926 – 855,908
– 4,656 3,332 – 2,125 757 – 6,527 – 1,139
17,698 29,077 –78,296 –82,504 –765,172 –864,517
10,283 12,650 – 39,182 – 45,638 – 68,989 – 74,238
– 4,642 – 674 – 32,890 – 40,019 – 25,329 – 13,350
9,852 15,752 – 67,078 – 57,707 – 116,624 – 106,976
6,474 5,561 – 20,547 – 28,921 – 34,879 – 42,783
21,967 33,289 –159,698 –172,286 –245,821 –237,346
– 35,533 – 2,429 – 23,621 – 22,931 – 44,889 – 27,063
7,273 – 2,408 – 41,279 – 28,655 – 24,697 – 14,389
–28,261 –4,836 –64,899 –51,586 –69,586 –41,452
3,225 2,599 – 9,602 – 11,846 – 8,179 – 9,507
1,004 1,057 – 8,105 – 8,077 – 16,638 – 17,043
– 4,587 549 – 17,907 – 17,086 – 25,887 – 24,001
3,985 5,490 – 22,292 – 21,817 – 42,722 – 54,170
– 334 – 601 – 5,088 – 4,824 – 5,312 – 6,395
535 664 – 4,934 – 4,796 – 5,152 – 5,314
2,820 – 62 – 17,153 – 17,438 – 20,218 – 25,838
1,192 445 – 4,618 – 5,274 – 4,787 – 7,492
7,840 10,141 –89,699 –91,158 –128,895 –149,760
5,693 6,658 – 16,826 – 9,430 – 44,163 – 36,265
5,693 6,658 –16,826 –9,430 –44,163 –36,265
– 26,102 – 19,852 – 25,429 – 20,511 0 0
–26,102 –19,852 –25,429 –20,511 0 0
–1,164 54,477 –434,847 –427,476 –1,253,637 –1,329,341
49,938 74,329

– 25,000

– 13,081

Consolidated statement of financial position – Classified by Business line

Property and casualty insurance Health insurance
31/12/2015 31/12/2014 31/12/2015 31/12/2014
Assets
Property, plant and equipment 165,176 136,214 28,946 27,494
Investment property 216,905 219,380 280,708 312,145
Intangible assets 480,918 483,441 232,798 225,769
Financial assets accounted for using the equity method 45,122 43,374 175,924 173,520
Investments 4,629,614 4,013,081 2,558,942 2,507,148
Unit-linked and index-linked life insurance investments 0 0 0 0
Reinsurers' share of technical provisions 179,622 155,799 895 1,002
Reinsurers' share of technical provisions for unit-linked and
index-linked life insurance
0 0 0 0
Receivables, including insurance receivables 986,588 1,089,632 149,193 193,922
Income tax receivables 69,533 38,209 21 1,111
Deferred tax assets 7,446 1,409 17 394
Cash and cash equivalents 304,398 234,646 159,177 143,859
Assets in disposal groups held for sale 0 0 0 0
Total assets by business line 7,085,322 6,415,185 3,586,622 3,586,363
Equity and liabilities
Subordinated liabilities 1,100,089 604,187 0 0
Technical provisions 3,059,858 2,914,745 2,780,075 2,677,800
Technical provisions for unit-linked and index-linked life
insurance
0 0 0 0
Financial liabilities 10,568 11,485 24,016 28,557
Other provisions 739,460 744,201 21,715 17,222
Liabilities and other items classified as equity and liabilities 707,787 700,514 89,394 190,332
Income tax liabilities 88,146 30,774 2,547 597
Deferred tax liabilities 62,887 77,773 144,872 141,392
Liabilities in disposal groups held for sale 0 0 0 0
Total equity and liabilities by business line 5,768,794 5,083,678 3,062,619 3,055,901
Group Consolidation Life insurance
31/12/2014 31/12/2015 31/12/2014 31/12/2015 31/12/2014 31/12/2015
283,506 307,741 0 0 119,798 113,618
1,504,483 1,392,590 0 0 972,958 894,977
1,517,058 1,472,476 0 – 10,350 807,848 769,110
528,681 514,165 0 0 311,788 293,119
20,629,354 21,392,476 – 557,603 – 477,555 14,666,728 14,681,475
5,386,650 5,226,748 0 0 5,386,650 5,226,748
563,540 548,966 0 – 4,724 406,739 373,173
332,974 315,646 0 0 332,974 315,646
1,094,544 911,477 – 836,164 – 758,826 647,154 534,523
53,917 87,270 0 0 14,596 17,716
6,630 9,427 0 0 4,827 1,965
975,764 890,083 0 0 597,258 426,508
161,053 9,289 0 0 161,053 9,289
33,038,153 33,078,355 –1,393,767 –1,251,455 24,430,371 23,657,867
600,000 1,095,745 – 314,187 – 414,344 310,000 410,000
21,220,068 21,100,072 – 1,178 – 15,168 15,628,701 15,275,307
5,306,000 5,175,437 0 0 5,306,000 5,175,437
49,181 33,580 – 258,173 – 74,667 267,312 73,664
801,837 796,442 0 – 12,979 40,414 48,246
1,400,828 1,271,572 – 818,840 – 731,576 1,328,823 1,205,967
43,272 95,970 0 0 11,901 5,277
355,424 334,696 0 0 136,259 126,937
159,107 0 0 0 159,107 0
29,935,719 29,903,515 –1,392,378 –1,248,733 23,188,517 22,320,835
3,102,434 3,174,840 Consolidated equity and non-controlling interests
33,038,153 33,078,355 Total equity and liabilities

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION DISCLOSURES

8. Property, plant and equipment

Acquisition costs
In € thousand
Land and buildings
for own use
Other property,
plant and
equipment
Total
As at 1 January 2014 295,133 234,434 529,567
Currency translation – 2,877 – 2,651 – 5,528
Change in consolidation scope 5,534 6,491 12,025
Additions 1,313 30,067 31,380
Disposals – 5,527 – 9,979 – 15,506
Reclassifications – 4,716 – 4,156 – 8,872
As at 31 December 2014 288,860 254,207 543,067
As at 1 January 2015 288,860 254,207 543,067
Currency translation 396 – 365 31
Change in consolidation scope 46,742 – 1,185 45,557
Additions 243 16,341 16,585
Disposals – 940 – 23,328 – 24,267
Reclassifications – 2,911 – 1,745 – 4,656
As at 31 December 2015 332,390 243,926 576,316
Accumulated amortisation and impairment losses
In € thousand
Land and buildings
for own use
Other property,
plant and
equipment
Total
As at 1 January 2014 –96,701 –146,278 –242,979
Currency translation 608 1,231 1,839
Change in consolidation scope – 951 – 4,907 – 5,858
Additions from amortisation – 8,268 – 16,462 – 24,731
Disposals 2,903 7,965 10,869
Reclassifications 1,295 4 1,299
As at 31 December 2014 –101,114 –158,447 –259,561
As at 1 January 2015 –101,114 –158,447 –259,561
Currency translation – 149 138 – 11
Change in consolidation scope 0 923 923
Additions from amortisation – 3,745 – 14,366 – 18,110
Additions from impairment – 6,203 0 – 6,203
Disposals 73 13,204 13,277
Reclassifications 1,108 0 1,108
Reversal of impairment 0 2 2
As at 31 December 2015 –110,029 –158,547 –268,575
Carrying amounts
In € thousand
Land and buildings
for own use
Other property,
plant and
equipment
Total
As at 1 January 2014 198,433 88,156 286,589
As at 31 December 2014 187,746 95,760 283,506
As at 31 December 2015 222,361 85,380 307,741

The fair values of the land and buildings used by the Group are derived from expert reports and are comprised as follows:

Fair values
In € thousand
Property and
casualty insurance
Health insurance Life insurance Total
As at 31 December 2014 105,658 13,849 150,082 269,589
As at 31 December 2015 174,877 13,876 143,952 332,705

Other property, plant and equipment refers mainly to technical systems and operating and office equipment.

9. Investment property

Acquisition costs
In € thousand
Total
As at 1 January 2014 2,217,125
Currency translation – 31,789
Change in consolidation scope 9,574
Additions 39,561
Disposals – 134,093
Reclassifications 8,872
As at 31 December 2014 2,109,251
As at 1 January 2015 2,109,251
Currency translation – 10,513
Change in consolidation scope 6,984
Additions 21,030
Disposals – 111,671
Reclassifications 5,197
As at 31 December 2015 2,020,279
Accumulated amortisation and impairment losses
In € thousand
Total
As at 1 January 2014 –564,640
Currency translation 8,663
Change in consolidation scope – 97
Additions from amortisation – 45,783
Additions from impairment – 33,282
Disposals 31,632
Reclassifications – 1,299
Reversal of impairment 38
As at 31 December 2014 –604,769
As at 1 January 2015 –604,769
Currency translation 4,036
Change in consolidation scope 0
Additions from amortisation – 57,590
Additions from impairment – 9,038
Disposals 40,911
Reclassifications – 1,108
Reversal of impairment – 132
As at 31 December 2015 –627,689
Carrying amounts
In € thousand
Total
As at 1 January 2014 1,652,485
As at 31 December 2014 1,504,483
As at 31 December 2015 1,392,590

The fair values of the investment property are derived from expert reports.

Fair values
In € thousand
Pr
operty and
casualty
insurance
H
ealth
insurance
ife insurance T
otal
As at 31 December 2014 384,130 497,845 1,354,047 2,236,021
As at 31 December 2015 383,185 511,614 1,290,594 2,185,392

The fair values of the investment property were reduced based on a reassessment of the development of future rental charges and the expected vacancy rate as well as an increase in the discount rate. This affected one property in Austria and five properties abroad, resulting in impairments in the amount of €9,038 thousand on the investment property. The impairments relate exclusively to the Group functions segment. The recoverable amount of the impaired land and buildings amounts to €25,589 thousand and reflects the fair value. Reference is made to the statements in the section "Use of discretionary decisions and estimates for a description of the measurement procedures applied".

10. Intangible assets

Acquisition costs
In € thousand
Deferred
acquisition costs
Insurance contract
portfolio
Goodwill Other intangible
assets
Total
As at 1 January 2014 994,501 175,942 567,646 176,227 1,914,317
Currency translation – 14,369 – 83 – 11,537 – 2,243 – 28,232
Change in consolidation scope 6,769 7,025 13,767 2,870 30,430
Additions 8,052 0 0 15,524 23,576
Disposals – 74,653 – 13,544 0 – 11,083 – 99,280
Reclassifications 0 0 3,075 0 3,075
Interest capitalised 79,197 0 0 0 79,197
Capitalisation 242,600 0 0 0 242,600
Depreciation (direct) – 243,145 0 0 0 – 243,145
As at 31 December 2014 998,952 169,340 572,951 181,295 1,922,538
As at 1 January 2015 998,952 169,340 572,951 181,295 1,922,538
Currency translation – 4,679 – 236 – 3,397 65 – 8,247
Change in consolidation scope – 42 0 0 – 406 – 448
Additions 0 – 79 0 22,320 22,240
Disposals 0 2 – 7,103 – 6,013 – 13,115
Reclassifications 0 0 0 – 541 – 541
Interest capitalised – 2,425 0 0 0 – 2,425
Capitalisation 123,518 0 0 0 123,518
Depreciation (direct) – 135,117 0 0 0 – 135,117
As at 31 December 2015 980,207 169,026 562,451 196,720 1,908,403
Accumulated amortisation and impairment losses
In € thousand
Deferred
acquisition costs
Insurance contract
portfolio
Goodwill Other intangible assets Total
As at 1 January 2014 0 –137,548 –95,866 –151,772 –385,186
Currency translation 0 50 – 16 1,335 1,368
Change in consolidation scope 0 0 2,972 – 2,111 862
Additions from amortisation 0 – 7,292 0 – 2,920 – 10,211
Additions from impairment 0 0 – 25,000 0 – 25,000
Disposals 0 13,544 0 2,218 15,762
Reclassifications 0 0 – 3,075 0 – 3,075
As at 31 December 2014 0 –131,246 –120,985 –153,249 –405,480
As at 1 January 2015 0 –131,246 –120,985 –153,249 –405,480
Currency translation 0 163 1 – 1,850 – 1,686
Change in consolidation scope 0 0 0 382 382
Additions from amortisation 0 – 7,858 0 – 10,701 – 18,559
Additions from impairment 0 0 – 13,081 0 – 13,081
Disposals 0 – 2 874 1,625 2,497
As at 31 December 2015 0 –138,943 –133,191 –163,794 –435,927
Carrying amounts
In € thousand
Deferred acquisition
costs
Insurance contract
portfolio
Goodwill Other intangible assets Total
As at 1 January 2014 994,501 38,394 471,780 24,455 1,529,131
As at 31 December 2014 998,952 38,093 451,966 28,046 1,517,058
As at 31 December 2015 980,207 30,083 429,260 32,926 1,472,476
Goodwill by CGU
In € thousand
31/12/2015 31/12/2014
UNIQA Austria 8,791 8,791
FINANCE LIFE 28,946 28,946
Albania, Kosovo, Macedonia as sub-group "Sigal Group" (SEE) 20,697 20,259
Bosnia-Herzegovina 1,887 1,887
Bulgaria 55,812 55,812
Czech Republic 7,848 7,647
Croatia 16,162 16,120
Hungary 16,924 16,948
Italy 115,488 121,718
Montenegro 81 81
Poland 27,881 27,820
Romania 104,097 105,054
Serbia 19,366 19,403
Russia 44 49
Slovakia 120 120
Ukraine 0 16,187
Other service companies 5,114 5,124
Total 429,260 451,966

The goodwill is distributed among the individual cash generating units as follows:

The other intangible assets comprise:

In € thousand 31/12/2015 31/12/2014
Computer software 20,495 22,561
Copyrights 0 13
Licences 180 904
Other intangible assets 12,251 4,569
Total 32,926 28,046

11. Financial assets accounted for using the equity method

The financial assets accounted for using the equity method include the shares in STRABAG SE. These represent the only essential shares that are accounted for using the equity method. The following table shows the fair value of the shares as at the reporting date.

Financial assets accounted for using the equity method
In € thousand
31/12/2015 31/12/2014
Current market value of associated companies listed on a public stock exchange
(STRABAG SE) 369,714 285,029
Net Profit/(loss) 23,205 19,970

As part of the accounting using the equity method, an assessment is made up until 31 December 2015 of the stake in STRABAG SE based on the interim financial statements as at 30 September 2015.

Summarised statement of comprehensive income STRABAG SE1)
In € thousand 1-9/2015 1-9/2014
Revenue 9,480,722 8,892,290
Depreciation – 287,985 – 285,543
Interest income 60,152 44,177
interest expenses – 74,116 – 69,031
Income taxes – 38,298 – 19,150
Net Profit/(loss) 63,540 20,275
Other comprehensive income 21,020 – 32,463
Total comprehensive income 84,560 –12,188
Dividends received from associated companies 7,841 7,057

The following tables illustrate summary financial information concerning STRABAG SE.

Summarised Statement of Financial Position STRABAG SE1)
In € thousand 30/09/2015 31/12/2014
Cash and cash equivalents 1,560,139 1,924,019
Other current assets 4,685,008 3,845,057
Current assets 6,245,147 5,769,076
Non-current assets 4,415,745 4,506,461
Total assets 10,660,892 10,275,537
Current financial liabilities 248,232 433,198
Other current liabilities 4,652,418 4,289,335
Current liabilities 4,900,650 4,722,533
Non-current liabilities 1,330,829 1,176,724
Other non-current liabilities 1,257,979 1,231,980
Non-current liabilities 2,588,808 2,408,704
Total liabilities 7,489,458 7,131,237
Net assets 3,171,434 3,144,300

All other financial assets accounted for using the equity method are negligible from the perspective of the Group when considered individually and are stated in aggregate form. The financial statements of the associates most recently published have been used for the purposes of the accounting using the equity method, and have been adjusted based on any essential transactions between the relevant reporting date and 31 December 2015.

Summary of information on associated companies that are not

material when considered on a stand alone basis
In € thousand 1-12/2015 1-12/2014
Group's share of profit from continuing operations 3,259 1,128
Group's share of loss from continuing operations – 12,386 – 1,781
Group's share of other comprehensive income – 1,954 14
Group's share of total comprehensive income – 11,081 – 639
Reconciliation of summarised financial
information
STRABAG SE Associated companies not material on stand alone basis 2)
In € thousand 20151) 2014 2015 2014
Net assets as at 1 January 2,884,712 2,948,749 258,750 265,645
Change in basis of consolidation 0 0 –32,215 0
Dividends –51,300 –46,170 –710 –2,307
Profit/(loss) after taxes 174,000 132,558 –52,950 –4,655
Other comprehensive income 21,944 –48,794 –8,416 68
Net assets as at 31 December 3,029,356 2,986,343 164,459 258,750
shares in associated companies 13.76 % 13.76 % various investment amounts
Carrying amount3) 463,039 456,464 51,127 72,217

1) Estimate for 31 Dec. 2015 based on the interim report as at 30 Sept. 2015 on Strabag SE available as at the reporting date 2) Values in accordance with the last financial statements and/or interim reports available as at the reporting date

3) The carrying amounts are calculated based on the shares in circulation. 2015: 15.29 %, 2014 15.29 %

Unrecognised losses from associated companies

In € thousand 2015 2014
Unrecognised losses in the reporting period 2,291 2,281
Cumulative unrecognised losses 9,016 6,725

12. Assets and liabilities in disposal groups held for sale

As part of the UNIQA 2.0 strategic programme, the UNIQA Group also sold its 29 per cent stake in Medial Beteiligungs-Gesellschaft m.b.H. (Vienna)(UNIQA International segment) in a contract of assignment dated 28 July 2015. The closing is expected in 2016 on account of conditions precedent. Reference is made here to the statements under note 2.4.

The following table shows the assets and liabilities in disposal groups held for sale:

In € thousand 31/12/2015 31/12/2014
Assets
Property, plant and equipment 7
Shares to Associated companies 9,289
Investments 52,226
Unit-linked and index-linked life insurance investments 96,368
Receivables, including insurance receivables 1,491
Income tax receivables 4
Deferred tax assets 58
Cash and cash equivalents 10,899
Assets in disposal groups held for sale 9,289 161,053
In € thousand 31/12/2015 31/12/2014
Equity and liabilities
Technical provisions 62,238
Technical provisions for unit-linked and index-linked life insurance 96,072
Other provisions 38
Liabilities and other items classified as equity and liabilities 380
Income tax liabilities 1
Deferred tax liabilities 377
Liabilities in disposal groups held for sale 0 159,107

13. Investments

The investments are subdivided into the following classes or categories of investments:

as at 31 December 2015
In € thousand
Variable-income
securities
Fixed-income
securities
Loans and other
investments
Derivative financial
instruments
Investments under
investment
contracts
Total
Investments at fair value through profit or loss 76,892 354,607 0 126,545 58,452 616,497
Available-for-sale financial assets 659,499 18,495,071 0 0 0 19,154,570
Loans and receivables 0 510,092 1,111,317 0 0 1,621,409
Total 736,391 19,359,770 1,111,317 126,545 58,452 21,392,476
of which fair value-option 76,892 354,607 0 0 0 431,500
as at 31 December 2014
In € thousand
Variable-income
securities
Fixed-income
securities
Loans and other
investments
Derivative financial
instruments
Investments under
investment
contracts
Total
Investments at fair value through profit or loss 98,005 364,630 0 122,340 53,664 638,639
Available-for-sale financial assets 625,189 18,016,323 0 0 0 18,641,512
Loans and receivables 0 715,656 633,546 0 0 1,349,202
Total 723,194 19,096,609 633,546 122,340 53,664 20,629,354
of which fair value-option 98,005 364,630 0 0 0 462,635

The fair values are comprised as follows:

as at 31 December 2015
In € thousand
Level 1 Level 2 Level 3 Total
Investments at fair value through profit or
loss 15,091,868 4,460,070 201,207 19,753,145
Available-for-sale financial assets 14,891,290 4,062,073 201,207 19,154,570
Variable-income securities 282,976 175,315 201,207 659,499
Fixed-income securities 14,608,314 3,886,758 0 18,495,071
Investments at fair value through profit or
loss 200,578 397,997 0 598,575
Variable-income securities 6,107 70,786 0 76,892
Fixed-income securities 152,355 202,252 0 354,607
Derivative financial instruments 0 108,623 0 108,623
Investments under investment contracts 42,116 16,336 0 58,452
as at 31 December 2014
In € thousand
Level 1 Level 2 Level 3 Total
Investments at fair value through profit or
loss 14,364,591 4,250,790 632,281 19,247,662
Available-for-sale financial assets 14,164,806 3,852,616 624,090 18,641,512
Variable-income securities 235,397 195,422 194,371 625,189
Fixed-income securities 13,929,409 3,657,195 429,719 18,016,323
Investments at fair value through profit or
loss 199,785 398,174 8,191 606,150
Variable-income securities 0 89,814 8,191 98,005
Fixed-income securities 158,976 205,654 0 364,630
Derivative financial instruments 0 89,851 0 89,851
Investments under investment contracts 40,808 12,855 0 53,664

Measurement procedures and input factors in ascertaining the fair values

Level Financial instruments Valuation method Input factors
1 Listed securities Market value oriented Nominal values, stock exchange prices
2 not listed securities, derivatives, loans Net present value approach Cash flows already fixed or determined
via forward rates, yield curve, credit risk
of the contracting parties
2 Asset Backed Securities Net present value approach Probability of default
Loss given default
Expected advance payment
Discount rate
3 Other shareholdings Net present value approach WACC
(long-term) revenue growth rate
(long-term) profit margins
control premium

Net results by measurement categories in accordance with IFRS 7

1-12/2015 1-12/2014
Net results of which:
impairment
Net results of which:
impairment
Investments at fair value through profit or
loss
- of which held for trading –52,062 0 –97,252 0
- of which fair value-option 14,467 0 –9,525 0
Total –37,595 0 –106,778 0
Available-for-sale financial assets
- of which recognised in profit/(loss) for the
period 796,539 –24,686 989,967 –30,287
- of which recognised in other comprehensive
income –152,429 8,213 1,143,498 220
- of which reclassification from equity to
consolidated income statement –87,860 28,737 –174,736 3,149
Total 556,251 12,265 1,958,730 –26,918
Financial liabilities measured at
amortised cost –50,243 0 –37,343 0

The overall interest expenditure from financial instruments amounts to 51,902 thousand (2014: 35,797 thousand). The income from financial instruments amounts to 665,580 thousand (2014: 693,342 thousand).

Level 3 financial instruments The shares in Raiffeisen Zentralbank Österreich Aktiengesellschaft (RZB shares) are essentially allocated to level 3 in accordance with the hierarchy according to IFRS 13. They come under the category "Available-for-sale"

Financial instrument Fair value as at 31/12/2015 Valuation method Non-observable input factors
WACC
(long-term) revenue growth rate
(long-term) profit margins
RZB shares 135,848 DFC-method control premium
WACC
(long-term) revenue growth rate
(long-term) profit margins
Other 65,360 DFC-method control premium

The following table shows the changes to the fair values of securities whose measurement procedures are not based on observable input factors.

In € thousand RZB shares ABS Other Total
As at 1 January 2015 138,935 437,638 55,707 632,281
Transfers into level 2 0 – 215,062 – 53 – 215,115
Gains and losses recognised
in the income statement 0 31,765 0 31,765
Gains and losses recognised
in other comprehensive
income – 3,087 610 5,850 3,372
Purchases 0 73,482 4,145 77,627
Sales/redemptions 0 – 328,433 – 287 – 328,721
Changes from currency
translation 0 0 – 2 – 2
Change in basis of
consolidation 0 0 0 0
As at 31 December 2015 135,848 0 65,360 201,207

The sensitivity analysis was determined in the course of a valuation report and relates to a change in the discount interest rate and the increase or decrease in the growth rate.

The sensitivity analyses for the RZB shares are shown below.

Sensitivity analysis for RZB 2015 2015 2014
In € thousand Upside Downside Upside Downside
Through income statement 0 0 0 0
Through equity 19,886 – 15,813 18,600 – 14,900
Effect of changes in the discount rate (+/–
1 %) 19,886 –15,813 18,600 –14,900
Through income statement 0 0 0 0
Through equity 455 – 557 300 – 400
Effect of changes in the growth rate (+/– 1 %) 455 –557 300 –400
Carrying amounts
In € thousand 31/12/2015 31/12/2014
Loans to affiliated companies 1,600 1,800
Loans to participations 8,000 0
Mortgage loans 27,962 34,651
Loans and advance payments on policies 12,674 14,236
Other loans 8,901 69,260
Reclassified bonds 510,092 715,656
Total 569,228 835,603
In € thousand 31/12/2015 31/12/2014
impairments 30,101 30,382

On 1 July 2008, securities previously available for sale were reclassified in accordance with IAS 39/50E as other loans. Overall, fixed-income securities with a carrying amount of €2,129,552 thousand were reclassified. The corresponding amount from the measurement of the financial instruments available-for-sale as at 30 June 2008 was €–98,208 thousand.

Reclassified bonds
In € thousand
2015 2014 2013 2012 2011 2010 2009 2008
Carrying amount as at 31 December 510,092 715,656 788,061 906,435 1,089,093 1,379,806 1,796,941 2,102,704
Fair value as at 31 December 534,468 759,872 812,455 928,162 981,394 1,345,580 1,732,644 1,889,108
Change in fair value – 19,839 19,822 129,426 129,426 – 73,987 30,586 149,299 – 213,596
Redemption income/expense – 697 2,391 348 348 332 473 5,917 – 61
Impairment 0 – 3,539 0 0 – 25 – 8,043 0 0
Fair values
In € thousand
In € thousand 31/12/2015 31/12/2014
Loans to affiliated companies 1,600 1,800
Loans to participations 8,000 0
Mortgage loans 27,962 34,651
Loans and advance payments on policies 12,674 14,236
Other loans 8,901 69,260
Registered bonds
Reclassified bonds 534,468 759,872
Total 593,604 879,818
Contractual maturities Fair values
In € thousand
In € thousand 31/12/2015 31/12/2014
No maturity date 8,000 10,647
up to 1 year 280,963 426,904
more than 1 year up to 5 years 176,383 282,047
more than 5 years up to 10 years 35,139 61,301
more than 10 years 93,119 98,920
Total 593,604 879,818
Impairment
Figures in € thousand
31/12/2015 31/12/2014
Change in impairment for current year 3,084 5,507

of which recognised in profit or loss 3,084 5,507

14. Receivables including insurance receivables

In € thousand 31/12/2015 31/12/2014
Reinsurance receivables
Receivables from reinsurance business 51,753 45,883
51,753 45,883
Other receivables
Insurance receivables
from policyholders 244,639 298,295
from insurance intermediaries 56,785 66,628
from insurance companies 13,836 19,842
315,260 384,765
Other receivables
Interest and rent 238,024 244,462
Other tax refund claims 3,653 58,583
Receivables from employees 1,434 3,055
Other receivables 269,535 323,829
512,646 629,929
Total other receivables 827,906 1,014,694
Subtotal 879,659 1,060,577
of which receivables with a remaining maturity of
up to 1 year 840,486 1,048,215
more than 1 year 10,780 12,362
851,266 1,060,577
of which receivables with values not yet impaired
up to 3 months overdue 14,771 12,774
more than 3 months overdue 4,626 2,515
Other assets
Prepaid expenses and deferred charges 31,818 33,967
31,818 33,967
Total receivables including insurance receivables 911,477 1,094,544
Value adjustments 2015
In € thousand
Receivables net
(carrying amount)
impairments Receivables gross
Reinsurance receivables
Receivables from reinsurance business 51,753 –19 51,772
51,753 –19 51,772
Other receivables
Insurance receivables
from policyholders1) 244,639 0 244,639
from insurance intermediaries 56,785 –3,977 60,762
from insurance companies 13,836 0 13,836
315,260 –3,977 319,237
Other receivables 0
Interest and rent 238,024 –9,679 247,703
Other tax refund claims 3,653 –614 4,266
Receivables from employees 1,434 0 1,434
Other receivables 269,535 –497 270,032
512,646 –10,790 523,435
Total other receivables 879,659 –14,785 894,444

1) Impairment losses related to policyholders are shown under the cancellation provision.

Value adjustments 2014
In € thousand
Receivables net
(carrying amount)
impairments Receivables gross
Reinsurance receivables
Receivables from reinsurance business 45,883 0 45,883
45,883 0 45,883
Other receivables
Insurance receivables
from policyholders1) 298,295 0 298,295
from insurance intermediaries 66,628 –2,259 68,887
from insurance companies 19,842 0 19,842
384,765 –2,259 387,024
Other receivables
Interest and rent 244,462 –8,688 253,150
Other tax refund claims 58,583 –614 59,197
Receivables from employees 3,055 0 3,055
Other receivables 323,829 –2 323,831
629,929 –9,304 639,233
Total other receivables 1,060,577 –11,563 1,072,140

1) Impairment losses related to policyholders are shown under the cancellation provision.

There are no essential overdue liabilities that have not been impaired.

15. Income tax receivables

In € thousand 31/12/2015 31/12/2014
Income tax receivables 87,270 53,917
of which receivables with a remaining maturity of
up to 1 year 87,103 52,536
more than 1 year 167 1,381

16. Deferred taxes

Deferred taxes
In € thousand
31/12/2015 31/12/2014
Deferred tax assets 9,427 6,630
Deferred tax liabilities – 334,696 – 355,424
Net deferred taxes –325,268 –348,794
Maturity (gross - before offsetting) 31/12/2015 31/12/2015 31/12/2014 31/12/2014
In € thousand up to 1 year more than 1 year up to 1 year more than 1 year
Deferred tax assets 26,899 161,930 16,482 160,233
Deferred tax liabilities – 104,526 – 409,572 – 42,092 – 483,417

The differences between the tax carrying amounts and the carrying amounts in the IFRS consolidated statement of financial position have the following effect:

Deferred tax assets

In € thousand 31/12/2015 31/12/2014
Technical items 54,319 53,975
Investments 24,531 18,854
Actuarial gains and losses on defined benefit obligations 70,426 74,611
Loss carried forward 11,664 8,513
Partial depreciation in accordance with § 12 KStG 0 0
Other items 27,890 20,762
Deferred tax liabilities
Technical items – 225,671 – 228,606
Investments – 198,165 – 247,057
Actuarial gains and losses on defined benefit obligations – 18 – 114
Other items – 90,244 – 49,732
Net deferred taxes –325,268 –348,794

The deferred tax assets and deferred tax liabilities stated in the consolidated statement of financial position performed as follows:

In € thousand Net deferred taxes
As at 1 January 2014 –190,285
Changes recognised in profit/(loss) – 47,534
Changes recognised in other comprehensive income – 107,319
Changes due to acquisitions – 2,919
Foreign exchange differences – 737
As at 31 December 2014 –348,794
As at 1 January 2015 –348,794
Changes recognised in profit/(loss) – 5,392
Changes recognised in other comprehensive income 29,540
Changes due to acquisitions 355
Foreign exchange differences – 977
As at 31 December 2015 –325,268

Changes recorded in other comprehensive income essentially relate to measurements of financial instruments available-for-sale and revaluation of defined benefit obligations.

The following deferred tax assets were not recognised as realisation of these in the near future cannot be assumed.

In € thousand 31/12/2015 31/12/2014
Tax assets from loss carryforwards 9,767 7,782

For tax loss carryforwards amounting to €7,501 thousand (2014: €14,979 thousand) there were no deferred tax assets recognised. These tax assets are forfeited as follows:

In € thousand 31/12/2015 31/12/2014
up to 1 year 0 0
2 to 5 years 1,200 2,397
more than 5 years 0 0
Total 1,200 2,397

17. Cash and cash equivalents

The cash and cash equivalents in the reporting year amounted to 890,083 thousand (2014: 975,764 thousand) and these correspond with the fund of liquid assets pursuant to IAS 7. The cash and cash equivalents have a maximum commitment period of three months as at the reporting date.

18. Shareholders' equity

Subscribed capital The share capital is comprised of 309,000,000 no-par bearer shares as in the previous year.

Items recognised in other comprehensive income Unrealised gains and losses from the revaluation of available-for-sale financial instruments impacted the equity in the item "Other comprehensive income", taking into account deferred profit participation (for life insurance) and deferred taxes.

Actuarial gains and losses from pension and termination benefit provisions were posted as "Revaluation from defined benefit obligations" after deducting deferred policyholder profit participation and deferred taxes.

Deferred taxes

Change in the tax amounts included in the equity without affecting income
Figures in € thousand
31/12/2015 31/12/2014
Deferred taxes 29,540 – 107,319
Total 29,540 –107,319

Capital requirements Business performance as a result of organic growth and acquisitions influences the capital requirements of the UNIQA Group. In the context of Group management, the appropriate coverage of the solvency requirement on a consolidated basis is constantly monitored.

As at 31 December 2015 the adjusted equity amounted to 3,511,505 thousand (2014: 3,442,237 thousand. In ascertaining the adjusted equity, intangible economic assets (in particular goodwill) and equity investments in banks and insurance companies are deducted from equity and various forms of hybrid capital (in particular supplemental capital) and latent reserves in investments (in particular in land and buildings) are added.

With a statutory requirement for adjusted equity of 1,163,799 thousand (2014: 1,165,169 thousand) in accordance with the Solvency I Regime the statutory requirements were exceeded by 2,347,705 thousand (2014: €2,277,068 thousand), resulting in a coverage rate of 301.7 per cent (2014: 295.4 per cent). Reference is made to the statements under note 7.2.3 in relation to the introduction of Solvency II. With the change to Section 81h(2) of the Insurance Supervisory Act (VAG), the volatility reserve was added as part of the available capital as of the third quarter of 2008. This increased the adjusted equity by 136,010 thousand (2014: €135,391 thousand).

The adjusted equity funding is ascertained on the basis of the available consolidated financial statements (in accordance with Section 80b of the Insurance Supervisory Act).

In € thousand 31/12/2015 31/12/2014
Adjusted equity without deduction acc. to Section 86h paragraph 5 of the Insurance
Supervision Act 3,511,505 3,442,237
Adjusted equity with deduction acc. to Section 86h paragraph 5 of the Insurance
Supervision Act 3,375,495 3,306,846

Authorisations of the Management Board In accordance with the resolution of the Annual General Meeting dated 26 May 2014, the Management Board is authorised to increase the Company's share capital up to and including 30 June 2019 with the approval of the Supervisory Board by a total of up to €81,000,000 by issuing up to 81,000,000 no-par value bearer or registered shares in exchange for payment in cash or in kind, one time or several times.

In accordance with the resolution of the Annual General Meeting dated 26 May 2015 the Management Board was authorised to acquire treasury shares for a period of 30 months from 28 November 2015. The newly acquired shares may reach a maximum of 10 per cent of the share capital together with the own shares that already exist. The own shares can be broken down as follows:

31/12/2015 31/12/2014
Shares held by:
UNIQA Insurance Group AG
Acquisition costs 10,857 10,857
Number of shares 819,650 819,650
Share of subscribed capital in % 0.27 0.27

In the figure for "earnings per share", the consolidated profit/(loss) is set against the average number of ordinary shares in circulation.

Earnings per share 2015 2014
Consolidated profit in € thousand 331,087 289,863
Own shares as at 31st. Dec. 819,650 819,650
Average number of shares in circulation 308,180,350 308,180,350
Earnings per share (in €)1) 1.07 0.94
Dividend per share in Euros2) 0.47 0.42
Dividend payment in € thousand2) 144,845 129,436

1) Calculated based on consolidated profit for the year

2) For the financial year, subject to resolution being passed by the Annual General Meeting.

The diluted earnings per share is equal to the basic earnings per share in the financial year and in the previous year.

19. Non-controlling interests in equity

In € thousand 31/12/2015 31/12/2014
In valuation of financial instruments available for sale 1,994 – 1,377
In actuarial gains and losses on defined benefit plans – 705 0
In retained profit 5,829 4,686
In other equity 15,008 16,884
Total 22,127 20,193

20. Subordinated liabilities

In € thousand 31/12/2015 31/12/2014
Supplementary capital 1,095,745 600,000
Fair values
In € thousand
31/12/2015 31/12/2014
Supplementary capital 1,159,720 663,648

In December 2006, UNIQA Insurance Group AG issued bearer debentures with a nominal value of €150 million for deposited supplementary capital in accordance with section 73c(2) of the Austrian Insurance Supervisory Act. According to the terms and conditions of the bearer debentures, the contributed capital of UNIQA Insurance Group AG is agreed to remain at the Company's disposal for at least 5 years, with no ordinary or extraordinary cancellation possible. Interest is applied only insofar as this is covered in the net profit for the year of the issuer. The interest rate up to December 2016 is 5.079 per cent, after which a variable interest rate applies.

In January 2007, UNIQA Insurance Group AG issued bearer debentures with a nominal value of €100 million for deposited supplementary capital in accordance with section 73c(2) of the Austrian Insurance Supervisory Act. According to the terms and conditions of the bearer debentures, the contributed capital of UNIQA Insurance Group AG is agreed to remain at the Company's disposal for at least 5 years, with no ordinary or extraordinary cancellation possible. Interest is applied only insofar as this is covered in the net profit for the year of the issuer. The interest rate up to December 2016 is 5.342 per cent, after which a variable interest rate applies.

In July 2013, UNIQA Insurance Group AG successfully placed a supplementary capital bond in the volume of €350 million with institutional investors in Europe. The bond has a maturity period of 30 years and may only be cancelled after 10 years. The coupon equals 6.875 per cent per annum during the first 10 years, after which a variable interest rate applies. The supplementary capital bond meets both the supervisory requirements related to equity netting as supplementary capital under Solvency I, along with the requirements for equity netting as tier-2 capital under the Solvency II regime, which has been in force since 1 January 2016. The issue was also aimed at replacing older supplementary capital bonds from Austrian insurance groups and at bolstering UNIQA's capital resources and capital structure in preparation for Solvency II and optimising these over the long term. The supplementary capital bond has been listed on the Luxembourg Stock Exchange since the end of July 2013. The issue price was set at 100 per cent.

In July 2015, UNIQA Insurance Group AG successfully placed a subordinated capital bond (Tier 2) to the value of €500 million with institutional investors in Europe. The bond is eligible for netting as tier-2 capital under Solvency II. It is not eligible under Solvency I. The bond is scheduled for repayment after a period of 31 years and subject to certain conditions, and can only be cancelled by UNIQA after 11 years have elapsed and under certain conditions. The coupon amounts to 6.00 per cent per annum during the first 11 years, after which a variable interest rate applies. The bond has been listed on the Vienna Stock Market since July 2015. The issue price was set at 100 per cent.

21. Reinsurers' share of technical provisions

In € thousand 31/12/2015 31/12/2014
Unearned premiums 21,962 16,030
Property and casualty insurance 21,883 15,939
Krankenversicherung 79 92
Actuarial provision 357,577 394,307
Property and casualty insurance 14 135
Krankenversicherung 794 886
Lebensversicherung 356,769 393,286
Provision for unsettled claims 167,874 151,240
Property and casualty insurance 151,645 137,605
Krankenversicherung 22 25
Lebensversicherung 16,206 13,610
Sonstige versicherungstechnische Rückstellungen 1,553 1,964
Total 548,966 563,540

22. Unearned premiums

In € thousand 31/12/2015 31/12/2014
Property and casualty insurance
Gross 616,780 607,373
Reinsurers' share – 21,883 – 15,939
594,897 591,435
Health insurance
Gross 19,077 19,268
Reinsurers' share – 79 – 92
18,998 19,176
In the consolidated
financial statements
Gross 635,857 626,641
Reinsurers' share – 21,962 – 16,030
Total 613,895 610,611

23. Insurance provision

In € thousand 31/12/2015 31/12/2014
Property and casualty insurance
Gross 12,344 12,565
Reinsurers' share – 14 – 135
12,330 12,431
Health insurance
Gross 2,561,667 2,436,865
Reinsurers' share – 794 – 886
2,560,873 2,435,979
Life insurance
Gross 14,061,089 14,323,869
Reinsurers' share – 356,769 – 393,286
13,704,320 13,930,583
In the consolidated
financial statements
Gross 16,635,100 16,773,299
Reinsurers' share – 357,577 – 394,307
Total 16,277,523 16,378,992

The interest rates used as an accounting basis were as follows:

For
Figures in percent
Health insurance
acc. to SFAS 60
Life insurance
acc. to SFAS 120
2015
For actuarial provision 2.25 – 5.50 0.00 – 4.00
For deferred acquisition costs 2.25 – 5.50 3.33 – 3.56
2014
For actuarial provision 2.50 – 5.50 0.00 – 4.00
For deferred acquisition costs 2.50 – 5.50 3.20 – 3.77

24. Provision for unsettled claims

In € thousand 31/12/2015 31/12/2014
Property and casualty insurance
Gross 2,371,658 2,240,465
Reinsurers' share – 151,645 – 137,605
2,220,013 2,102,860
Health insurance
Gross 157,917 165,204
Reinsurers' share – 22 – 25
157,895 165,179
Life insurance
Gross 193,741 179,174
Reinsurers' share – 16,206 – 13,610
177,535 165,565
In the consolidated
financial statements
Gross 2,723,316 2,584,844
Reinsurers' share – 167,874 – 151,240
Total 2,555,443 2,433,604

The provision for unsettled claims (claim provision) developed in the property and casualty insurance as follows:

In € thousand 2015 2014
1. Provisions for outstanding claims as at 1 January
a) Gross 2,240,465 2,054,700
b) Reinsurers' share – 137,605 – 112,623
c) Net 2,102,860 1,942,077
2. Plus (net) claims expenditures
a) Current year claims 1,376,992 1,584,660
b) Prior-year claims 10,474 – 1,077
c) Total 1,387,466 1,583,583
3. Less (net) claims paid
a) Current year claims – 650,301 – 748,529
b) Prior-year claims – 619,931 – 691,517
c) Total –1,270,232 –1,440,046
4. Currency translation 723 –13,638
5. Change in consolidation scope 0 32,736
6. Other changes –803 –1,851
7. Claim provision as at 31 December
a) Gross 2,371,658 2,240,465
b) Reinsurers' share – 151,645 – 137,605
c) Net 2,220,013 2,102,860
Claims payments
In € thousand
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total
Financial year 523,210 581,983 618,113 706,057 769,753 776,876 733,463 800,067 831,534 786,038 794,016
1 year later 814,005 884,326 958,737 1,073,178 1,164,904 1,160,537 1,109,179 1,195,298 1,242,907 1,207,284
2 years later 887,138 967,317 1,043,705 1,166,793 1,268,544 1,258,170 1,223,779 1,319,003 1,363,432
3 years later 917,008 1,006,410 1,087,343 1,213,167 1,330,393 1,308,475 1,275,777 1,377,165
4 years later 936,752 1,031,764 1,121,544 1,241,698 1,358,817 1,334,978 1,305,553
5 years later 953,618 1,045,830 1,140,705 1,263,366 1,377,228 1,354,962
6 years later 963,841 1,058,452 1,155,846 1,277,050 1,393,176
7 years later 975,209 1,069,189 1,167,044 1,290,790
8 years later 983,117 1,075,870 1,177,992
9 years later 989,278 1,085,168
10 years later 994,298
Cumulated payments and
provision for outstanding claims
In € thousand
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Financial year 1,044,733 1,129,365 1,221,222 1,323,499 1,439,517 1,439,838 1,407,767 1,519,755 1,579,194 1,613,892 1,621,985
1 year later 1,040,851 1,144,371 1,209,144 1,326,067 1,458,485 1,442,195 1,409,757 1,518,203 1,568,880 1,598,412
2 years later 1,041,599 1,128,449 1,213,701 1,341,516 1,465,215 1,446,195 1,412,978 1,531,862 1,593,265
3 years later 1,022,203 1,128,640 1,213,806 1,343,576 1,460,849 1,434,378 1,416,140 1,538,025
4 years later 1,020,900 1,126,022 1,222,436 1,340,638 1,456,551 1,439,324 1,413,386
5 years later 1,020,818 1,126,412 1,230,254 1,339,602 1,459,601 1,442,302
6 years later 1,022,787 1,120,868 1,233,181 1,347,216 1,460,901
7 years later 1,022,708 1,123,015 1,237,468 1,349,966
8 years later 1,027,339 1,125,569 1,234,839
9 years later 1,026,410 1,126,554
10 years later 1,027,192
Run-off – 782 – 985 2,630 – 2,749 – 1,300 – 2,977 2,753 – 6,164 – 24,385 15,479 - – 18,480
profit and loss reserve before 2005 – 7,648
Total run-off –26,128
Provision for outstanding claims 32,894 41,386 56,847 59,176 67,726 87,340 107,833 160,861 229,832 391,129 827,969 2,062,993
Provision for outstanding claims for
accident years before 2005
243,921
Plus other reserve components
(internal claims regulation costs,
etc.)
64,745
Provisions for outstanding
claims (gross) as at 31.
December 2015
2,371,658

25. Provision for premium refunds

Provision for non-profit related premium refunds

Gross
in € thousand
2015 2014
As at 1 January 49,743 46,479
Changes due to:
Other changes – 6,260 3,264
As at 31 December 43,483 49,743

Provision for profit-related premium refunds and/or policyholder profit participation:

Gross 2015 2014
in € thousand
Provision for profit-related premium refunds and /or policyholder profit
participation
As at 1 January 188,481 218,323
Other changes – 76,385 – 29,842
As at 31 December 112,096 188,481
Deferred profit participation
As at 1 January 952,801 116,430
Fluctuation in value, available-for-sale securities – 86,990 821,266
Actuarial gains and losses on defined benefit obligations – 7,062 – 9,779
Revaluations through profit or loss 46,271 24,884
As at 31 December 905,019 952,801
Total 1,017,115 1,141,282

26. Technical provisions

Gross
In € thousand
Unearned
premiums
Actuarial
provisions
Provision for
outstanding
claims
Provision for profit-
unrelated premium
refunds
Provision for profit
related premium
refunds and /or
policyholder profit
participation
Other technical
provisions
Total
in € thousand
Property and casualty insurance
As at 1 January 2015 607,373 12,565 2,240,465 35,468 952 16,825 2,913,649
Foreign exchange differences – 2,268 1 1,032 – 1 14 149 – 1,072
Portfolio changes – 98 2,454 2,356
Additions 17 108 1,760 1,619 3,503
Disposals – 240 – 8,392 – 1,571 – 2,831 – 13,033
Premiums written 1,690,385 1,690,385
Premiums earned – 1,678,614 – 1,678,614
Claims reporting year 1,432,622 1,432,622
Claims payments reporting year – 658,568 – 658,568
Change in claims previous years 11,189 11,189
Claims payments previous years – 657,537 – 657,537
As at 31 December 2015 616,780 12,344 2,371,658 27,183 1,155 15,761 3,044,881
Health insurance
As at 1 January 2015 19,268 2,436,865 165,204 10,823 44,652 989 2,677,800
Foreign exchange differences – 260 132 149 – 1 0 37 58
Additions 124,640 10,910 1 284 135,835
Disposals 30 – 8,922 – 17,436 – 98 – 26,425
Premiums written 935,525 935,525
Premiums earned – 935,455 – 935,455
Claims reporting year 663,884 663,884
Claims payments reporting year – 478,162 – 478,162
Change in claims previous years – 3,624 – 3,624
Claims payments previous years
As at 31 December 2015
19,077 2,561,667 – 189,533
157,917
12,811 27,218 1,212 – 189,533
2,779,902
Life insurance
As at 1 January 2015
14,323,869 179,174 3,452 1,095,678 26,446 15,628,619
Foreign exchange differences – 8,115 23 – 1 41 – 4 – 8,056
Portfolio changes 18,353 154 – 18,130 378
Additions 625,972 38 – 1,634 8,840 633,216
Disposals – 898,991 – 87,213 – 7,054 – 993,257
Claims reporting year 1,966,271 1,966,271
Claims payments reporting year – 1,772,876 – 1,772,876
Change in claims previous years 32,346 32,346
Claims payments previous years – 211,351 – 211,351
As at 31 December 2015 14,061,089 193,741 3,489 988,743 28,228 15,275,289
Total
As at 1 January 2015 626,641 16,773,299 2,584,844 49,743 1,141,282 44,260 21,220,068
Foreign exchange differences – 2,528 – 7,981 1,204 – 2 55 181 – 9,070
Portfolio changes – 98 18,353 2,608 – 18,130 2,734
Additions 750,629 11,056 127 10,742 772,554
Disposals – 899,200 – 17,313 – 106,220 – 9,982 – 1,032,716
Premiums written 2,625,910 2,625,910
Premiums earned – 2,614,069 – 2,614,069
Claims reporting year 4,062,778 4,062,778
Claims payments reporting year – 2,909,607 – 2,909,607
Change in claims previous years 39,911 39,911
Claims payments previous years – 1,058,421 – 1,058,421
As at 31 December 2015 635,857 16,635,100 2,723,316 43,483 1,017,115 45,201 21,100,072
Reinsurers' share
In € thousand
Unearned
premiums
Actuarial
provisions
Provision for
outstanding claims
Provision for profit-
Provision for profit
unrelated premium
related premium
refunds
refunds and /or
policyholder profit
participation
Other technical
provisions
Total
Property and casualty insurance
As at 1 January 2015 15,939 135 137,605 2,120 155,799
Foreign exchange differences – 29 0 310 – 1 280
Portfolio changes – 284 3,257 2,973
Additions 215 215
Disposals – 121 – 604 – 725
Premiums written 46,676 46,676
Premiums earned – 40,419 – 40,419
Claims reporting year 55,631 55,631
Claims payments reporting year – 8,267 – 8,267
Change in claims previous years 716 716
Claims payments previous years – 37,606 – 37,606
As at 31 December 2015 21,883 14 151,645 1,730 175,272
Health insurance
As at 1 January 2015 92 886 25 1,002
Foreign exchange differences 1 0 2
Portfolio changes – 40 – 40
Disposals – 92 – 92
Premiums written 69 69
Premiums earned – 44 – 44
Claims reporting year 3 3
Claims payments reporting year – 30 – 30
Change in claims previous years 26 26
Claims payments previous years – 2 – 2
As at 31 December 2015 79 794 22 895
Life insurance
As at 1 January 2015 393,286 13,610 –156 406,739
Foreign exchange differences – 29 0 0 – 29
Portfolio changes – 13,237 – 90 – 13,327
Additions 3,978 3,978
Disposals – 27,230 – 20 – 27,250
Claims reporting year 3,529 3,529
Claims payments reporting year – 464 – 464
Change in claims previous years 305 305
Claims payments previous years – 683 – 683
As at 31 December 2015 356,769 16,206 –177 372,798
Total
As at 1 January 2015 16,030 394,307 151,240 1,964 563,540
Foreign exchange differences – 27 – 29 310 – 1 252
Portfolio changes – 324 – 13,237 3,167 – 10,395
Additions 3,978 215 4,194
Disposals – 27,442 – 624 – 28,067
Premiums written 46,745 46,745
Premiums earned – 40,462 – 40,462
Claims reporting year 59,163 59,163
Claims payments reporting year – 8,761 – 8,761
Change in claims previous years 1,047 1,047
Claims payments previous years – 38,291 – 38,291
As at 31 December 2015 21,962 357,577 167,874 1,553 548,966
Retention
Figures in € thousand
Unearned
premiums
Actuarial
provisions
Provision
for outstanding
claims
Provision for
profit-unrelated
premium refunds
Provision for profit
related premium
refunds and /or
policyholder profit
participation
Other technical
provisions
Total
Property and casualty insurance
As at 1 January 2015 591,435 12,431 2,102,860 35,468 952 14,704 2,757,850
Foreign exchange differences – 2,239 2 723 – 1 14 150 – 1,352
Portfolio changes 187 – 803 – 617
Additions 17 108 1,760 1,403 3,288
Disposals – 119 – 8,392 – 1,571 – 2,227 – 12,309
Premiums written 1,643,710 1,643,710
Premiums earned – 1,638,195 – 1,638,195
Claims reporting year 1,376,992 1,376,992
Claims payments reporting year – 650,301 – 650,301
Change in claims previous years 10,474 10,474
Claims payments previous years – 619,931 – 619,931
As at 31 December 2015 594,897 12,330 2,220,013 27,183 1,155 14,031 2,869,608
44,652
989
2,676,798
0
37
57
40
284
135,835
– 98
– 26,334
935,456
– 935,412
663,881
– 478,132
– 3,651
– 189,531
1,212
2,779,007
1
– 17,436
27,218
Life insurance
As at 1 January 2015 13,930,583 165,565 3,452 1,095,678 26,603 15,221,880
Foreign exchange differences – 8,086 23 – 1 41 – 4 – 8,028
Portfolio changes 31,591 244 – 18,130 13,705
Additions 621,994 38 – 1,634 8,840 629,237
Disposals – 871,761 – 87,213 – 7,033 – 966,007
Claims reporting year 1,962,743 1,962,743
Claims payments reporting year – 1,772,412 – 1,772,412
Change in claims previous years 32,041 32,041
Claims payments previous years – 210,668 – 210,668
As at 31 December 2015 13,704,320 177,535 3,489 988,743 28,405 14,902,491
Total
As at 1 January 2015 610,611 16,378,992 2,433,604 49,743 1,141,282 42,296 20,656,528
Foreign exchange differences – 2,500 – 7,952 894 – 2 55 183 – 9,323
Portfolio changes 227 31,591 – 559 – 18,130 13,128
Additions 746,651 11,056 127 10,527 768,361
Disposals – 871,758 – 17,313 – 106,220 – 9,358 – 1,004,649
Premiums written 2,579,165 2,579,165
Premiums earned – 2,573,607 – 2,573,607
Claims reporting year 4,003,615 4,003,615
Claims payments reporting year – 2,900,846 – 2,900,846
Change in claims previous years 38,864 38,864
Claims payments previous years – 1,020,130 – 1,020,130
As at 31 December 2015 613,895 16,277,523 2,555,443 43,483 1,017,115 43,648 20,551,107
Total 4,859,791 4,973,026
Reinsurers' share – 315,646 – 332,974
Gross 5,175,437 5,306,000
In € thousand 31/12/2015 31/12/2014

As a general rule, the valuation of the technical provisions for unit-linked and index-linked life insurance policies corresponds to the investments in unit-linked and index-linked life insurance investments reported at current fair values. The share of reinsurers is accompanied by a liability for deposits in the same amount.

28. Financial liabilities

In € thousand 2015 long term 2015 short term 2014 long term 2014 short term
Liabilities from loans 15,613 45 16,507 184
Derivative financial instruments 2,711 15,211 19,903 12,586
Financial liabilities 18,324 15,256 36,410 12,771
Subordinated liabilities 845,745 250,000 600,000 0
Total 864,070 265,256 636,410 12,771

With the exception of the subordinated liabilities, the carrying amounts of the financial liabilities are equal to the fair values.

In € thousand Liabilities from loans Derivative financial
instruments
Subordinated liabilities
Carrying amount as at 1 January 2014 18,535 8,301 600,000
Aufnahmen 2 24,188 0
Changes from currency translation – 5 0 0
Ordinary amortisation – 1,840 0 0
Carrying amount as at 1 January 2015 16,692 32,489 600,000
Aufnahmen 6 1,401 495,745
Changes from currency translation – 1 0 0
Profit or loss from changes of exchange rates 0 – 1,059 0
Ordinary amortisation – 1,039 – 14,909 0
Carrying amount as at 31 December 2015 15,658 17,922 1,095,745
Maturity as at 31 December 2015 Funds flow
In € thousand 2016 2017 2018 2019 2020 >2020
Liabilities from loans 978 969 960 951 942 11,380
Derivative financial instruments 4,800 2,262 2,192 2,076 1,670 8,174
Subordinated liabilities 318,140 54,813 54,813 54,813 54,964 1,105,773
Total 323,918 58,044 57,965 57,840 57,575 1,125,327
Maturity as at 31 December 2014 Funds flow
In € thousand 2015 2016 2017 2018 2019 >2019
Liabilities from loans 1,003 978 969 960 951 12,358
Derivative financial instruments 13,741 3,012 2,076 2,001 1,909 13,485
Subordinated liabilities 37,537 287,640 24,397 24,397 24,397 447,654
Total 52,282 291,630 27,442 27,358 27,257 473,496

29. Other provisions

In € thousand 31/12/2015 31/12/2014
Other provisions 196,049 190,167
Defined benefit obligations 600,394 611,670
Total 796,442 801,837

Defined benefit obligations

In € thousand Defined benefit
obligations for
pensions
Plan assets at fair
value
Net defined benefit
obligations for
pensions
Defined benefit
obligations for
termination benefits
Total defined benefit
obligations
As at 1 January 2015 503,899 –71,492 432,407 179,263 611,670
Current service costs 18,026 0 18,026 7,164 25,189
Interest expense/income 12,264 – 1,829 10,436 3,697 14,133
Past service costs – 47,782 0 – 47,782 – 13,398 – 61,180
Components of defined benefit obligations recognised
in the income statement –17,492 –1,829 –19,321 –2,537 –21,858
Return on plan assets recognised in other comprehensive
income 0 – 409 – 409 0 – 409
Actuarial gains and losses that arise from changes in
demographic assumptions
0 0 0 147 147
Actuarial gains and losses that arise from changes in financial
assumptions 33,519 0 33,519 16,434 49,953
Actuarial gains and losses that arise from experience
adjustments 11,008 0 11,008 – 2,701 8,307
Other comprehensive income 44,527 –409 44,118 13,881 57,999
Changes from currency translation 1 0 1 0 1
Payments – 21,900 0 – 21,900 – 16,786 – 38,687
Contribution to plan assets 0 – 6,261 – 6,261 0 – 6,261
Transfer in 0 0 0 458 458
Transfer out – 7,772 2,728 – 5,044 – 461 – 5,505
Change in basis of consolidation 620 17 637 1,940 2,577
As at 31 December 2015 501,883 –77,246 424,637 175,757 600,394
In € thousand Defined benefit
obligations for
pensions
Plan assets at fair
value
Net defined benefit
obligations for
pensions
Defined benefit
obligations for
termination benefits
Total defined benefit
obligations
As at 1 January 2014 454,768 –62,816 391,952 194,805 586,757
Current service costs 15,694 0 15,694 7,718 23,412
Interest expense/income 12,928 – 1,936 10,992 4,268 15,259
Past service costs 4,737 0 4,737 0 4,737
Components of defined benefit obligations recognised
in the income statement 33,358 –1,936 31,422 11,986 43,409
Return on plan assets recognised in other comprehensive
income 0 – 4,182 – 4,182 0 – 4,182
Actuarial gains and losses that arise from changes in
demographic assumptions
0 0 0 – 3 – 3
Actuarial gains and losses that arise from changes in financial
assumptions
42,467 0 42,467 6,514 48,981
Actuarial gains and losses that arise from experience
adjustments – 500 0 – 500 1,746 1,246
Other comprehensive income 41,967 –4,182 37,785 8,257 46,042
Changes from currency translation – 5 0 – 5 – 5 – 10
Payments – 20,076 0 – 20,076 – 35,780 – 55,856
Contribution to plan assets 0 – 7,971 – 7,971 0 – 7,971
Transfer out – 6,113 5,413 – 700 0 – 701
Change in basis of consolidation 0 0 0 0 0
As at 31 December 2014 503,899 –71,492 432,407 179,263 611,670

The provisions for social capital from the repositioning of UNIQA (2014: €17,088 thousand) were released entirely in the financial year.

Amendments were made to the works agreements for the pension fund scheme in the 2015 financial year. They resulted in a positive effect on the retrospective service cost amounting to €50,565 thousand.

31/12/2015 31/12/2014
Listed Not listed Listed Not listed
Bonds - euro 28.8 % 0.0 % 35.1 % 0.1 %
Bonds - euro high yield 4.4 % 2.3 % 2.7 % 0.6 %
Corporate bonds - euro 19.6 % 2.2 % 16.1 % 1.7 %
Equities - euro 7.4 % 0.0 % 7.4 % 0.0 %
Equities - non-euro 5.9 % 0.0 % 6.9 % 0.0 %
Equities - emerging markets 0.3 % 0.0 % 3.5 % 0.1 %
Alternative investment instruments 1.3 % 0.0 % 0.9 % 0.0 %
Land and buildings 0.0 % 1.6 % 0.0 % 0.0 %
Cash 0.0 % 10.1 % 0.0 % 6.4 %
HTM bonds / term deposits 16.1 % 0.0 % 16.4 % 2.2 %
Total 83.8% 16.2% 89.1% 10.9%

The plan assets for the defined benefit obligations are comprised as follows:

The measurement of the defined benefit obligations is based on the following actuarial calculation parameters:

Calculation factors applied
Figures in percent
2015 2014
Discount rate
Termination benefits 1.3 2.5
Pensions 2.0 2.5
Valorisation of remuneration 3.0 3.0
Valorisation of pensions 2.0 2.0
Employee turnover rate dependent on years of service dependent on years of service
AVÖ 2008 P - Pagler & Pagler / AVÖ 2008 P - Pagler & Pagler /
Calculation principles Angestellte Angestellte
Weighted average duration in years Pensions Termination benefits
31/12/2015 13.8 8.4
31/12/2014 19.4 8.4

Investment risk The cash value of the defined benefit obligations is calculated using a discount rate which is determined based on the returns from high-quality corporate bonds. There will be a deficit if the changes in the plan assets fall below these returns. The plans for the different benefit obligations include a diversified mix of securities. These primarily include annuities, corporate bonds, equities and other equity instruments, etc. By reducing the duration of the plans, the Group intends to reduce the investment risk by continuously adjusting the portfolio of assets to the requirements of the defined benefit plans.

Interest rate change risk A fall in the return on corporate bonds results in an increase in the cash value of the defined benefit obligations. However, this effect is absorbed in part by the increase in the plan assets or by higher income from the plan assets.

Life expectancy The cash value of the benefit obligations from pensions is heavily dependent inter alia on the life expectancy of the beneficiaries. An increase in the life expectancy of the beneficiaries results in an increase in the defined benefit obligations.

Salary risk The cash value of the defined benefit obligations is ascertained based on the future salaries of the beneficiaries. In this respect, any salary increases result in an increase in the defined benefit obligations. The majority of the assets from the plan assets are not indexed to any rates of inflation or salary increase.

The sensitivity of the defined benefit obligations on changes in the weighted actuarial calculation parameters is:

Sensitivity analysis 2015 Pensions Termination benefits
figures in percent
Average remaining life expectancy
Change in DBO (+ 1 year) 3.2
Change in DBO (-1 year) – 3.4
Discount rate
Change in DBO (+ 1 %) – 11.9 – 7.1
Change in DBO (-1 %) 14.8 9.0
Future salary increase rate
Change in DBO (+ 0.75 %) 1.6 5.9
Change in DBO (-0.75 %) – 1.5 – 6.0
Future pension increase rate
Change in DBO (+ 0.25 %) 3.0
Change in DBO (-0.25 %) – 2.9
Sensitivity analysis 2014
figures in percent
Pensions Termination benefits
Average remaining life expectancy
Change in DBO (+ 1 year) 3.9
Change in DBO (-1 year) – 4.1
Discount rate
Change in DBO (+ 1 %) – 16.1 – 8.0
Change in DBO (-1 %) 21.7 9.1
Future salary increase rate
Change in DBO (+ 0.75 %) 1.7 6.6
Change in DBO (-0.75 %) – 1.6 – 6.1
Future pension increase rate
Change in DBO (+ 0.25 %) 3.4
Change in DBO (-0.25 %) – 3.2

Under the defined contribution company pension scheme, the employer pays the fixed amounts into company pension funds. The employer has satisfied their obligation by making these contributions.

In € thousand 31/12/2015 31/12/2014
Contributions to company pension funds 2,048 2,293

Other provisions

In € thousand Provisions for
jubilee benefits
Customer services
and marketing
provision
Provision for legal
and consulting
expenses
Provision for
premium
adjustment of
insurance
contracts
Provision for
portfolio
maintenance
commission
Miscellaneous
other provisions
Total
As at 1 January 2014 15,343 73,675 8,853 9,354 2,667 96,541 206,433
Additions 265 69,026 1,522 3,489 705 61,460 136,467
Reversal of unused provisions – 674 – 3,539 – 562 0 0 – 18,690 – 23,465
Addition due to unwinding of the 0
discount 0 0 0 0 0 0
Change in basis of consolidation 0 100 0 0 0 – 322 – 222
Reclassifications 0 0 – 1,111 0 0 1,228 117
Recognised in profit/(loss) for the 0
year 0 0 0 0 0 0
Use in current year – 50 – 63,336 – 747 – 4,922 – 173 – 59,537 – 128,766
Foreign exchange differences 0 – 163 – 7 – 10 – 25 – 192 – 397
As at 31 December 2014 14,884 75,763 7,948 7,911 3,174 80,487 190,167
As at 1 January 2015 14,884 75,763 7,948 7,911 3,174 80,487 190,167
Additions 1,414 73,879 2,504 2,768 1,792 61,708 144,065
Reversal of unused provisions – 917 – 3,137 – 2,099 – 3 0 – 19,860 – 26,017
Addition due to unwinding of the 321
discount 321 0 0 0 0 0
Change in basis of consolidation 0 0 – 1 0 0 1,691 1,690
Reclassifications 0 2 0 0 0 – 2 0
Recognised in profit/(loss) for the 0
year 0 0 0 0 0 0
Use in current year – 10 – 71,219 – 2,932 – 4,853 – 1,023 – 34,171 – 114,208
Foreign exchange differences 0 – 10 0 7 57 – 23 30
As at 31 December 2015 15,692 75,279 5,420 5,829 4,000 89,830 196,049

Other provisions include a provision of €10,000 thousand (2014: €10,000 thousand) for liability in connection with the sale of Mannheimer AG Holding.

30. Liabilities and other items classified as equity and liabilities

In € thousand 31/12/2015 31/12/2014
Reinsurance liabilities
Deposits retained on assumed reinsurance 665,447 719,592
Reinsurance settlement liabilities 34,980 38,991
700,427 758,583
Other liabilities
Liabilities under insurance business
Liabilities under direct insurance business
to policyholders 129,512 178,926
to insurance brokers 51,764 70,611
to insurance companies 9,633 12,781
190,909 262,317
Other liabilities 358,301 353,300
of which for taxes 61,059 46,814
of which for social security 14,182 12,605
of which from fund consolidation 2,224 2,645
Total other liabilities 549,210 615,617
Subtotal 1,249,637 1,374,200
of which liabilities with a maturity of
up to 1 year 723,678 984,243
more than 1 year up to 5 years 3,983 3,033
more than 5 years 521,975 386,924
1,249,637 1,374,200
Other liabilities
Deferred income 21,935 26,628
Total liabilities and other items classified as equity and liabilities 1,271,572 1,400,828

The item "Deferred income" basically comprises the balance of the deferred income from the settlement of indirect business.

31. Income tax liabilities

In € thousand 31/12/2015 31/12/2014
Income tax liabilities 95,970 43,272
of which liabilities with a maturity of
up to 1 year 13,089 18,545
more than 1 year up to 5 years 82,881 24,728
more than 5 years 0 0

NOTES TO THE CONSOLIDATED INCOME STATEMENT

32. Premiums

Premiums
in € thousand
1-12/2015 1-12/2014
Premiums written - gross 5,839,701 5,519,700
Premiums written - reinsurer's share – 203,678 – 211,288
Premiums written - net 5,636,023 5,308,413
Change in premiums earned - gross – 10,187 3,517
Change in premiums earned - reinsurers' share 7,671 966
Premiums earned 5,633,507 5,312,896
Direct insurance
in € thousand
1-12/2015 1-12/2014
Property and casualty insurance 2,603,942 2,581,315
Health insurance 997,904 960,775
Life insurance 2,187,818 1,923,396
Total 5,789,664 5,465,486
Of which written in:
Austria 3,607,781 3,362,882
Remaining EU member states and other states which are party to the Agreement on the
European Economic Area
1,924,659 1,751,709
Other countries 257,225 350,894
Total 5,789,664 5,465,486
Indirect insurance
in € thousand
1-12/2015 1-12/2014
Property and casualty insurance 37,449 39,608
Health insurance 1 1
Life insurance 12,586 14,606
Total 50,036 54,215
In € thousand 1-12/2015 1-12/2014

Total 5,839,701 5,519,700

Property and casualty insurance premiums written
in € thousand
1
-12/2015
1
-12/2014
Direct insurance
Fire and business interruption insurance 257,710 255,537
Household insurance 174,015 146,551
Other property insurance 234,401 238,409
Motor TPL insurance 655,268 658,865
Other motor insurance 456,416 471,215
Casualty insurance 346,892 326,029
Liability insurance 255,891 245,851
Legal expense insurance 82,112 76,905
Marine, aviation and transport insurance 73,636 87,285
Other forms of insurance 67,601 74,667
Total 2,603,942 2,581,315
Indirect insurance
Marine, aviation and transport insurance 874 2,036
Other forms of insurance 36,576 37,571
Total 37,449 39,608
Total direct and indirect insurance
(amount consolidated) 2,641,392 2,620,922
Reinsurance premiums ceded 1
-12/2015
1
-12/2014
in € thousand
Property and casualty insurance
137,700 142,388
Health insurance 1,116 961
Life insurance 64,862 67,938
Total 203,678 211,288
Premiums earned
in € thousand
1
-12/2015
1
-12/2014
Property and casualty insurance 2,500,199 2,482,938
Gross 2,630,236 2,624,349
Reinsurers' share – 130,036 – 141,411
Health insurance 997,098 959,986
Gross 998,187 960,949
Reinsurers' share – 1,088 – 962
Life insurance 2,136,209 1,869,971
Gross 2,201,092 1,937,919
Reinsurers' share – 64,882 – 67,948
Total 5,633,507 5,312,896
Premiums earned - indirect insurance
in € thousand
1
-12/2015
1
-12/2014
recognised simultaneously 2,860 6,581
recognised with a delay of up to 1 year 26,587 32,229
Property and casualty insurance 29,447 38,810
recognised simultaneously 642 0
recognised with a delay of up to 1 year 1 1
Health insurance 644 1
recognised with a delay of up to 1 year 10,667 14,606
Life insurance 10,667 14,606
Total 40,758 53,417
Earnings - indirect insurance
in € thousand
1-12/2015 1-12/2014
Property and casualty insurance 26,442 7,616
Health insurance 123 – 9
Life insurance 1,898 768
Total 28,463 8,375

33. Insurance benefits

Gross Reinsurers' share Retention
In € thousand 1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014
Property and casualty insurance
Claims expenses
Claims paid 1,611,093 1,583,498 – 60,263 – 45,185 1,550,830 1,538,314
Change in provision for unsettled claims 127,777 164,927 – 16,879 – 23,849 110,898 141,078
Total 1,738,869 1,748,425 –77,142 –69,034 1,661,727 1,679,391
Change in insurance provision – 240 58 100 14 – 140 72
Change in other technical provisions – 848 2,001 0 0 – 848 2,001
Non-profit related and profit-related premium refund
expenses 34,458 42,120 0 0 34,458 42,120
Total benefits 1,772,240 1,792,604 –77,042 –69,020 1,695,197 1,723,584
Health insurance
Claims expenses
Claims paid 665,876 647,507 – 325 – 152 665,551 647,355
Change in provision for unsettled claims – 76 – 3,843 2 – 3 – 73 – 3,846
Total 665,801 643,664 –323 –155 665,478 643,509
Change in insurance provision 124,693 109,281 92 99 124,784 109,380
Change in other technical provisions 207 77 0 0 207 77
Non-profit related and profit-related premium refund
expenses 10,715 27,557 0 0 10,715 27,557
Total benefits 801,415 780,579 –231 –56 801,184 780,523
Life insurance
Claims expenses
Claims paid 2,441,125 1,857,028 – 74,619 – 154,102 2,366,506 1,702,925
Change in provision for unsettled claims – 18,347 89,726 – 2,832 – 2,437 – 21,179 87,289
Total 2,422,778 1,946,754 –77,451 –156,540 2,345,326 1,790,214
Change in insurance provision – 317,950 – 72,149 12,415 91,577 – 305,535 19,428
Change in other technical provisions 2,122 480 0 0 2,122 480
Non-profit related and profit-related premium refund
expenses and/or (deferred) benefit participation expenses 69,272 69,432 0 0 69,272 69,432
Total benefits 2,176,222 1,944,517 –65,037 –64,962 2,111,186 1,879,555
Total 4,749,877 4,517,700 –142,310 –134,038 4,607,567 4,383,662

34. Operating expenses

In € thousand 1-12/2015 1-12/2014
Property and casualty insurance
a) Acquisition costs
Payments 568,589 560,109
Change in deferred acquisition costs – 2,431 – 4,908
b) Other operating expenses 195,251 204,240
c) Reinsurance commission and share of profit from reinsurance ceded – 10,874 – 10,499
750,534 748,942
Health insurance
a) Acquisition costs
Payments 95,728 101,717
Change in deferred acquisition costs – 6,561 – 532
b) Other operating expenses 76,017 66,337
c) Reinsurance commission and share of profit from reinsurance ceded – 526 – 463
164,658 167,058
Life insurance
a) Acquisition costs
Payments 271,999 294,000
Change in deferred acquisition costs 23,067 – 11,794
b) Other operating expenses 101,876 115,982
c) Reinsurance commission and share of profit from reinsurance ceded – 13,439 – 15,082
383,503 383,106
Total 1,298,695 1,299,106

35. Net investment income

Classified by business line Property and casualty
insurance
Health insurance Life insurance Group
In € thousand 1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014 1-12/2015 1-12/2014
Investment property 1,802 15,440 32,213 7,933 76,941 95,198 110,956 118,571
Financial assets accounted for using the equity method 3,171 435 12,439 11,715 7,596 11,434 23,205 23,583
Variable-income securities 13,543 16,880 6,280 5,769 31,590 17,856 51,414 40,505
Available for sale 13,221 16,352 5,863 5,229 28,940 11,228 48,024 32,809
At fair value through profit or loss 322 528 418 540 2,651 6,628 3,390 7,696
Fixed-income securities 110,609 111,341 101,237 113,181 459,887 540,680 671,733 765,202
Available for sale 110,488 111,680 100,947 112,651 449,221 558,091 660,656 782,422
At fair value through profit or loss 122 – 339 290 530 10,666 – 17,412 11,077 – 17,221
Loans and other investments 7,687 13,338 7,534 10,404 52,465 72,011 67,686 95,753
Loans 433 1,501 5,931 3,684 17,474 18,825 23,838 24,009
Other investments 7,255 11,838 1,603 6,721 34,990 53,186 43,848 71,745
IV. Derivative financial instruments (trading portfolio) 245 –6,674 –9,425 –19,388 –42,883 –71,190 –52,062 –97,252
Investment administration expenses, interest paid and other
investment expenses –11,506 –13,187 –7,486 –8,909 –22,794 –36,114 –41,786 –58,210
Total 125,552 137,573 142,791 120,704 562,802 629,874 831,145 888,151

Income from available-for-sale fixed-income securities includes gains of 32,833 thousand and income from fixed income securities at fair value through profit or loss includes losses of 1,068 thousand from Level 3 valuations (hierarchy for instruments recognised at fair value in the statement of financial position).

The adjustment of valuation allowances relates to both the reversal of impairment losses as well as the impairment of financial assets, excluding assets held for trading and financial assets at fair value through profit or loss. The interest income from impaired portfolio items amounts to 9,900 thousand (2014: 19,148 thousand). The net investment income of 831,145 thousand includes realised and unrealised gains and losses amounting to 165,566 thousand, which include currency gains of 44,715 thousand. These currency gains are essentially the result of investments in US dollars. The currency gains in the underlying US dollar securities amounted to around €106,545 thousand, and these were accompanied by expenditures from derivative financial instruments within the scope of hedging transactions amounting to €66,083 thousand. In addition, currency effects amounting to 4,216 thousand were recognised directly in equity.

Income from investment property includes rent revenues in the amount of €112,908 thousand (2014: €112,048 thousand) and direct operational expenses in the amount of €33,036 thousand (2014: €34,591 thousand).

36. Other income

In € thousand 1-12/2015 1-12/2014
Other non-technical income 42,525 55,669
Property and casualty insurance 30,035 28,360
Health insurance 5,650 4,051
Life insurance 6,839 23,258
of which
services 8,733 5,797
changes in exchange rates 10,949 28,862
other 22,843 21,010
Other income 0 6,758
from currency translation 0 517
from other 0 6,242
Total 42,525 62,428

37. Other operating expenses

In € thousand 1-12/2015 1-12/2014
a) Other non-technical expenses 56,103 64,182
Property and casualty insurance 37,386 29,909
Health insurance 1,736 1,401
Life insurance 16,982 32,872
of which
services 723 467
exchange rate losses 20,034 34,816
motor vehicle registration 6,422 9,028
other 28,924 19,870
b) Other expenses 4,890 6,153
for currency translation 1,833 4,611
other 3,057 1,541
Total 60,993 70,334

38. Income taxes

Income tax
1-12/2015
1-12/2014
Figures € thousand
Actual tax - reporting year
93,948
50,732
Actual tax - previous years
– 11,086
– 13,212
Deferred taxes
5,392
47,534
Total
88,254
85,055
2015
Reconciliation statement
Figures in € thousand
2014
A. Earnings before taxes
422,840
377,932
B. Expected tax expenses (A.*Group tax rate)
105,710
94,483
Adjusted by tax effects from
Tax-free investment income
– 8,266
– 7,103
Amortisation and impairment of intangible assets
3,270
6,250
Tax-neutral consolidation effect 321
– 1,112
Other non-deductible expenses/other tax-exempt income
5,397
3,866
Changes in tax rates 0
– 237
Deviations in tax rates
– 2,236
196
Taxes for previous years
– 11,086
– 13,212
Lapse of loss carried forward and other
– 4,857
1,925
C. Income tax expenses
88,254
85,055
Average effective tax burden Figures in percent
20.9
22.5

The basic corporate income tax rate applied for all segments was 25 per cent. Deviating corporate tax rates arise in life insurance in which minimum taxation is applied – with an assumed profit participation of 85 per cent.

The calculation of deferred taxes is based on the specific tax rates of each country that the Group companies are based in, which were between 9 and 34 per cent in 2015. Changes in tax rates already decided effective 31 December 2015 are taken into account.

39. Other disclosures

Employees

Personnel expenses
In € thousand
2015 2014
Salaries and wages 391,763 388,352
Expenses for severance payments 2,106 3,573
Pension expenses 60,200 52,375
Expenditure on mandatory social security contributions as well as income-based charges
and compulsory contributions
106,466 108,676
Other social expenditures 7,350 8,498
Total 567,886 561,473
of which sales 142,148 160,183
of which administration 395,966 368,358
of which retirees 29,772 32,932
Average number of employees 2015 2014
Total 14,113 14,336
of which sales 5,427 5,821
of which administration 8,686 8,515
In € thousand 2015 2014
Expenses for defined benefit obligations amounted to:
Members of the Management Board and Executives as defined by section 80 1 of the
Stock Corporation Act
4,716 8,319
Other employees 52,760 39,013

All disclosures on the Management Board remuneration now exclusively include amounts disbursed in the financial year. This is a departure from the mixed presentation from previous years (partially remuneration, partially expenditure) in order to provide readers of the financial statements with an even clearer picture. The amounts from the previous years have been adjusted accordingly in order to ensure that the figures can be compared with the current financial year.

The active salaries of the members of the Management Board at UNIQA Insurance Group AG amounted to €3,498 thousand in the reporting year (2014: €4,710 thousand). The amount expended on pensions in the reporting year for former members of the Management Board and their survivors was €2,751 thousand (2014: €2,705 thousand).

The compensation to the members of the Supervisory Board for their work in the 2014 financial year was €474 thousand. Provisions of €425 thousand have been recognised for the remuneration to be paid for this work in 2015. The amount paid out in attendance fees and cash expenditures in the financial year was €49 thousand (2014: €33 thousand).

There are no advance payments or loans to or liabilities for members of the Management Board and the Supervisory Board.

Share-based remuneration agreement with cash settlement In the 2013 financial year, the UNIQA Group introduced a share-based remuneration programme for members of the Management Board of UNIQA Insurance Group AG and for selected members of the Management Board of UNIQA Österreich Versicherungen AG, Raiffeisen Versicherung AG and UNIQA International AG. In accordance with this programme, entitled employees are conditionally awarded virtual shares effective 1 January of the relevant financial year which give them the right to a cash payment after the end of the benefit period. The first conditional award took place retrospectively effective 1 January 2013 and included 246,888 virtual shares in the UNIQA Insurance Group AG. The length of the benefit period for each tranche runs until 31 December 2016. No further shares were awarded.

The precise payment amount is contingent upon achieving performance targets, building up and holding UNIQA ordinary shares in real terms and holding an employment contract as a member of the Management Board by the end of the relevant benefit period. The amount of the cash payment at the end of the fourth year is linked to the average price for the ordinary share in the second half of 2016 and on achieving both performance targets, which are both weighted 50 per cent.

• Performance Target 1– Total Shareholder Return (TSR): The degree of target achievement depends on the rank of the TSR of the UNIQA ordinary share among the companies managed in the DJ EuroStoxx TMI Insurance index.

• Performance Target 2– Return on Equity (ROE): The degree of target achievement depends on the rank of the ROE of UNIQA among the companies managed in the DJ EuroStoxx TMI Insurance index.

Determination of the fair values Determination of the first component (Performance Target 1) is based purely on market-based criteria (TSR), which results in an expected degree of achievement of 0 per cent. The fair value was determined using Monte Carlo modelling. No employment and market independent performance conditions (Performance Target 2) linked to business transactions were taken into account in determining the fair value. Measurement of the second component (Performance Target 2) is contingent upon non-market based criteria. The expected degree of achievement of 80 per cent was determined based on performance as at 31 December 2014 and 31 December 2015.

The provision amount determined at year-end is split up into both components of the sharebased obligation as follows:

In € thousand 31/12/2015 31/12/2014
TSR tranche (performance target 1) 0 214
ROE tranche (performance target 2) 531 380
Total provision 531 594

The following parameters were used to determine the fair value on the date of the award and on the measurement date for the virtual shares:

Award date
1/1/2013
Valuationdate
31/12/2015
TSR tranche (performance target 1)
Fair value (in €) 6.69 0.00
Share price (in €) 9.32 7.52
Simulated share price as at 31/12/2016 7.16
Exercise price (in €) 0.00 0.00
Expected volatility (weighted average, in percent) - 25.8
Expected life (weighted average, in years) 4.0 1.0
Discount rate (based on AA corporate bonds, in percent) 1.2 – 0.2
ROE tranche (performance target 2)
Fair value (in €) 8.75 5.73
Share price (in €) 9.32 7.52
Exercise price (in €) 0.00 0.0
Expected volatility (weighted average, in percent) 0.0 0.0
Expected life (weighted average, in years) 4.0 1.0
Discount rate (based on AA corporate bonds, in percent) 1.2 – 0.2

The expected volatility is based on an assessment of historical volatility for the Company's share price over the past year.

No virtual shares were forfeited or exercised in the current financial year. The obligations from share-based remuneration are stated under "Other provisions" (Note 29) and are also included under the statements on "Related party transactions – individuals".

Group holding company The parent company of the UNIQA Group is UNIQA Insurance Group AG. In addition to its duties as Group holding company, this company also performs the duties of a group reinsurer.

Related companies and persons Companies in the UNIQA Group maintain various relationships with related companies and persons.

In accordance with IAS 24, related companies are identified as those companies which either exercise a controlling or crucial influence on UNIQA. The group of companies also includes the non-consolidated subsidiaries, associates and joint ventures of UNIQA.

The related individuals include the members of management holding key positions for the purposes of IAS 24 along with their close family members. This also includes in particular the members of management in key positions at those companies which either exercise a controlling or crucial influence on UNIQA, along with their close family members.

Related party transactions – companies

Companies with Affiliated but not Associated
significant influence consolidated companies of Other related
In € thousand on UNIQA Group companies UNIQA Group parties Total
Transactions 2015
Premiums written (gross) 0 2,001 1,091 33,821 36,913
Interest income and expenses due to loans with companies that are related
parties 0 1,271 45 1,530 2,847
Interest income and expenses from loans with banks that are related parties and
from investments in companies that are related parties 0 490 7,295 3,522 11,306
As at 31 December 2015
Investments at fair value 135,848 11,820 445,464 133,323 726,455
Bank deposits 0 0 0 294,286 294,286
Companies with Affiliated but not Associated
significant influence consolidated companies of Other related
In € thousand on UNIQA Group companies UNIQA Group parties Total
Transactions 2014
Premiums written (gross) 318 1,592 812 58,659 61,381
Interest income and expenses due to loans with companies that are related
parties 0 1,400 0 1,546 2,946
Interest income and expenses from loans with banks that are related parties and
from investments in companies that are related parties 374 4,366 10,110 30,874 45,724
At 31 December 2014
Investments at fair value 138,935 198,305 519,123 385,211 1,241,574
Bank deposits 0 0 0 358,177 358,177

Related party transactions – individuals

In € thousand 2015 2014
Premiums written (gross) 1,066 824
Salaries and short term benefits 1) 4,526 3,725
Pension expenses 819 857
Compensation on termination of employment contract – 324 45
Share-based payments 1,941 89
Other income 236 251

1) This item includes fixed and variable Management Board and Supervisory Board remuneration components.

Other financial obligations and contingent liabilities

In € thousand 31/12/2015 31/12/2014
Contingent liabilities from risks of litigation 0 24,189
Austria 0 0
other countries 0 24,189
Other contingent liabilities 13,535 12,125
Austria 13,262 12,125
other countries 273 0
Total 13,535 36,313

The UNIQA companies are involved in court proceedings in Austria and other countries in connection with their ordinary business operations as insurance companies. The result of the pending or threatened proceedings is often impossible to determine or predict.

In consideration of the provisions set aside for these proceedings, the management is of the opinion that these proceedings have no significant effects on UNIQA's financial situation or the operating earnings.

Ukraine (Non-Life) – Option to purchase granted Since the acquisition of the shares in the Ukrainian "Closed JSC Credo-Classic Insurance Company" (now "Insurance Company 'UNIQA'", Kiev), the shares held by UNIQA since 2006 have been gradually increased to the current level of 92.23%. The existing option agreements with the two remaining minority shareholders were agreed again in 2015. This gives UNIQA the option of acquiring further shares in the company from the local minority shareholders based on previously agreed purchase price formulas in option windows in 2017 and 2020.

Lease expenses

In € thousand 2015 2014
Current lease expenses 3,664 7,826
Future lease payments in connection with the financing of the UNIQA Group headquarters in
Vienna
up to 1 year 0 5,102
more than 1 year up to 5 years 0 17,859
more than 5 years 0 0
Total 0 22,961
Income from sublease 0 550

We moved into the UNIQA Group headquarters – the UNIQA Tower – in 2004. In the second Quarter of 2015 UNIQA Immobilien-Projekterrichtungs GmbH was acquired by UNIQA, meaning that no more future lease payments will be incurred in connection with the financing of the head office in Vienna.

Expenses for the auditor of the financial statements The auditor fees in the financial year were €1,965 thousand (2014: €1,100 thousand); of which €307 thousand (2014: €280 thousand) is attributable to the annual audit, €1,590 thousand (2014: €652 thousand) to other auditing services and €68 thousand (2014: €168 thousand) to other services.

Affiliated companies and associates
Company
Type Location Equity interest as at
31.12.2015
Equity interest as at
31/12/2014
Domestic insurance companies Figures in percent Figures in percent
UNIQA Insurance Group AG (Group Holding Company) Vienna
UNIQA Österreich Versicherungen AG Fully consolidated Vienna 100.0 100.0
Salzburger Landes-Versicherung AG Fully consolidated Salzburg 100.0 100.0
Raiffeisen Versicherung AG Fully consolidated Vienna 100.0 100.0
FINANCE LIFE Lebensversicherung AG Fully consolidated Vienna 100.0 100.0
SK Versicherung Aktiengesellschaft At equity Vienna 25.0 25.0
Foreign insurance companies
UNIQA Assurances SA Fully consolidated Switzerland, Geneva 100.0 100.0
UNIQA Re AG Fully consolidated Switzerland, Zurich 100.0 100.0
UNIQA Assicurazioni S.p.A. Fully consolidated Italy, Milan 99.7 99.7
UNIQA poistovña a.s. Fully consolidated Slovakia, Bratislava 99.9 99.9
UNIQA pojištovna, a.s. Fully consolidated Czech Republic, Prague 100.0 100.0
UNIQA osiguranje d.d. Fully consolidated Croatia, Zagreb 100.0 100.0
UNIQA Towarzystwo Ubezpieczen S.A. Fully consolidated Poland, Lodz 98.6 98.6
UNIQA Towarzystwo Ubezpieczen na Zycie S.A. Fully consolidated Poland, Lodz 99.8 99.8
UNIQA Biztosító Zrt. Fully consolidated Hungary, Budapest 100.0 100.0
UNIQA Lebensversicherung AG (Deconsolidation
31.03.2015)
Liechtenstein, Vaduz 100.0
UNIQA Versicherung AG Fully consolidated Liechtenstein, Vaduz 100.0 100.0
UNIQA Previdenza S.p.A. Fully consolidated Italy, Milan 99.7 99.7
UNIQA Osiguranje d.d. Fully consolidated Bosnia and Herzegovina,
Sarajevo
99.8 99.8
UNIQA Insurance plc Fully consolidated Bulgaria, Sofia 99.9 99.9
UNIQA Life Insurance plc Fully consolidated Bulgaria, Sofia 99.6 99.6
UNIQA životno osiguranje a.d. Fully consolidated Serbia, Belgrade 100.0 100.0
Insurance company "UNIQA" Private Joint Stock Company Fully consolidated Ukraine, Kiev 100.0 100.0
UNIQA LIFE Private Joint Stock Company Fully consolidated Ukraine, Kiev 100.0 100.0
UNIQA životno osiguranje a.d. Fully consolidated Montenegro, Podgorica 100.0 100.0
UNIQA neživotno osiguranje a.d. Fully consolidated Serbia, Belgrade 100.0 100.0
UNIQA neživotno osiguranje a.d. Fully consolidated Montenegro, Podgorica 100.0 100.0
UNIQA Asigurari SA Fully consolidated Romania, Bucharest 100.0 100.0
UNIQA Asigurari De Viata SA Fully consolidated Romania, Bucharest 100.0 100.0
Raiffeisen Life Insurance Company LLC Fully consolidated Russia, Moscow 75.0 75.0
UNIQA Life S.p.A. Fully consolidated Italy, Milan 89.7 89.7
SIGAL UNIQA Group AUSTRIA Sh.A. Fully consolidated Albania, Tirana 86.9 68.6
UNIQA AD Skopje Fully consolidated Macedonia, Skopje 86.9 68.6
SIGAL LIFE UNIQA Group AUSTRIA Sh.A. Fully consolidated Albania, Tirana 86.9 68.6
SIGAL UNIQA GROUP AUSTRIA SH.A. Fully consolidated Kosovo, Pristina 86.9 68.6
UNIQA Life AD Skopje Fully consolidated Macedonia, Skopje 86.9 68.6
SIGAL Life UNIQA GROUP AUSTRIA sh.a Fully consolidated Kosovo, Pristina 86.9 68.6
SH.A.F.P SIGAL LIFE UNIQA GROUP AUSTRIA Sh.A. Fully consolidated Albania, Tirana 44.3 35.0
Group domestic service companies
UNIQA Real Estate Management GmbH Fully consolidated Vienna 100.0 100.0
Versicherungsmarkt-Servicegesellschaft m.b.H. Fully consolidated Vienna 100.0 100.0
Agenta Risiko- und Finanzierungsberatung Gesellschaft
m.b.H.
Fully consolidated Vienna 100.0 100.0
Raiffeisen Versicherungsmakler Vorarlberg GmbH At equity Bregenz 50.0 50.0
Dr. E. Hackhofer EDV-Softwareberatung Gesellschaft m.b.H. Fully consolidated Vienna 100.0 100.0
UNIQA IT Services GmbH Fully consolidated Vienna 100.0 100.0
UNIQA Capital Markets GmbH Fully consolidated Vienna 100.0 100.0
Company Type Location Equity interest as at
31.12.2015
Figures in percent
Equity interest as at
31/12/2014
Figures in percent
call us Assistance International GmbH Fully consolidated Vienna 50.2 50.2
UNIQA International AG Fully consolidated Vienna 100.0 100.0
UNIQA internationale Beteiligungs-Verwaltungs GmbH Fully consolidated Vienna 100.0 100.0
Assistance Beteiligungs-GesmbH Fully consolidated Vienna 64.0 64.0
UNIQA Real Estate Beteiligungsverwaltung GmbH Fully consolidated Vienna 100.0 100.0
UNIQA Real Estate Finanzierungs GmbH Fully consolidated Vienna 100.0 100.0
UNIQA Group Audit GmbH Fully consolidated Vienna 100.0 100.0
Valida Holding AG At equity Vienna 40.1 40.1
RHG Management GmbH Fully consolidated Vienna 100.0 100.0
UNIQA Finanzbeteiligung GmbH Fully consolidated Vienna 100.0 100.0
Group foreign service companies
UNIQA Raiffeisen Software Service Kft. Fully consolidated Hungary, Budapest 60.0 60.0
InsData spol. s.r.o. Fully consolidated Slovakia, Nitra 98.0 98.0
UNIPARTNER s.r.o. Fully consolidated Slovakia, Bratislava 99.9 99.9
UNIQA InsService spol. s.r.o. Fully consolidated Slovakia, Bratislava 99.9 99.9
UNIQA Ingatlanhasznosító Kft. Fully consolidated Hungary, Budapest 100.0 100.0
UNIQA Szolgáltató Kft. Fully consolidated Hungary, Budapest 100.0 100.0
UNIQA Számitástechnikai Szolgáltató Kft. Fully consolidated Hungary, Budapest 100.0 100.0
Vitosha Auto OOD Fully consolidated Bulgaria, Sofia 99.8 99.8
UNIQA Raiffeisen Software Service S.R.L. Fully consolidated Romania, Cluj-Napoca 60.0 60.0
sTech d.o.o. (Erstkonsolidierung: 31.12.2015) Fully consolidated Serbia, Belgrade 100.0
Poliklinika Medico (Deconsolidation 31.03.2015) Croatia, Rijeka 100.0
DEKRA-Expert Műszaki Szakértői Kft. At equity Hungary, Budapest 50.0 50.0
Financial and strategic domestic shareholdings
Medial Beteiligungs-Gesellschaft m.b.H. (seit 30.09.2015 als
Vermögenswert, der zur Veräußerung gehalten wird,
klassifiziert)
At equity Vienna 29.6 29.6
UNIQA Leasing GmbH (First consolidation: 31.12.2015) At equity Vienna 25.0 25.0
UNIQA Internationale Anteilsverwaltung GmbH
(Deconsolidation 30.09.2015)
Vienna 100.0
PremiQaMed Holding GmbH Fully consolidated Vienna 100.0 100.0
PremiQaMed Privatkliniken GmbH Fully consolidated Vienna 100.0 100.0
Ambulatorien Betriebsgesellschaft m.b.H. Fully consolidated Vienna 100.0 100.0
STRABAG SE At equity Villach 13.8 13.8
PremiaMed Management GmbH Fully consolidated Vienna 100.0 100.0
UNIQA Beteiligungs-Holding GmbH Fully consolidated Vienna 100.0 100.0
UNIQA Erwerb von Beteiligungen Gesellschaft m.b.H. Fully consolidated Vienna 100.0 100.0
Diakonissen & Wehrle Privatklinik GmbH (First consolidation
31.3.2015)
PremiQaMed Beteiligungs GmbH (First consolidation
Fully consolidated
Fully consolidated
Gallneukirchen
Vienna
60.0
100.0
31.3.2015)
Real-estate companies
UNIQA Real Estate CZ, s.r.o. Fully consolidated Czech Republic, Prague 100.0 100.0
UNIQA Real s.r.o. Fully consolidated Slovakia, Bratislava 100.0 100.0
UNIQA Real II s.r.o. Fully consolidated Slovakia, Bratislava 100.0 100.0
UNIQA Immobilien-Projekterrichtungs GmbH (First
consolidation: 30.6.2015)
Fully consolidated Vienna 100.0
Raiffeisen evolution project development GmbH At equity Vienna 20.0 20.0
DIANA-BAD Errichtungs- und Betriebs GmbH At equity Vienna 33.0 33.0
UNIQA Real Estate GmbH Fully consolidated Vienna 100.0 100.0
PremiQaMed Immobilien GmbH Fully consolidated Vienna 100.0 100.0
UNIQA Real Estate Zweite Beteiligungsverwaltung GmbH Fully consolidated Vienna 100.0 100.0

CONSOLIDATED FINANCIAL STATEMENTS 163

Company Type Location Equity interest as at
31.12.2015
Figures in percent
Equity interest as at
31/12/2014
Figures in percent
Design Tower GmbH Fully consolidated Vienna 100.0 100.0
Aspernbrückengasse Errichtungs- und Betriebs GmbH Fully consolidated Vienna 99.0 99.0
UNIQA Real Estate Holding GmbH Fully consolidated Vienna 100.0 100.0
UNIQA Real Estate Dritte Beteiligungsverwaltung GmbH Fully consolidated Vienna 100.0 100.0
Design Tower GmbH Fully consolidated Vienna 100.0 100.0
Aspernbrückengasse Errichtungs- und Betriebs GmbH Fully consolidated Vienna 99.0 99.0
UNIQA Real Estate Holding GmbH Fully consolidated Vienna 100.0 100.0
UNIQA Real Estate Dritte Beteiligungsverwaltung GmbH Fully consolidated Vienna 100.0 100.0
UNIQA Real Estate Vierte Beteiligungsverwaltung GmbH Fully consolidated Vienna 100.0 100.0
"Hotel am Bahnhof" Errichtungs GmbH & Co KG Fully consolidated Vienna 100.0 100.0
GLM ErrichtungsGmbH Fully consolidated Vienna 100.0 100.0
EZL Entwicklung Zone Lassallestraße GmbH & Co. KG Fully consolidated Vienna 100.0 100.0
Fleischmarkt Inzersdorf Vermietungs GmbH Fully consolidated Vienna 100.0 100.0
Praterstraße Eins Hotelbetriebs GmbH Fully consolidated Vienna 100.0 100.0
UNIQA Plaza Irohadáz és Ingatlankezelő Kft. Fully consolidated Hungary, Budapest 100.0 100.0
Floreasca Tower SRL Fully consolidated Romania, Bucharest 100.0 100.0
Pretium Ingatlan Kft. Fully consolidated Hungary, Budapest 100.0 100.0
UNIQA poslovni centar Korzo d.o.o. Fully consolidated Croatia, Rijeka 100.0 100.0
UNIQA-Invest Kft. Fully consolidated Hungary, Budapest 100.0 100.0
Knesebeckstraße 8 – 9 Grundstücksgesellschaft mbH Fully consolidated Germany, Berlin 100.0 100.0
UNIQA Real Estate Bulgaria EOOD Fully consolidated Bulgaria, Sofia 100.0 100.0
UNIQA Real Estate BH nekretnine, d.o.o. Fully consolidated Bosnia and Herzegovina, 100.0 100.0
Sarajevo
UNIQA Real Estate d.o.o. Fully consolidated Serbia, Belgrade 100.0 100.0
Renaissance Plaza d.o.o. Fully consolidated Serbia, Belgrade 100.0 100.0
IPM International Property Management Kft. Fully consolidated Hungary, Budapest 100.0 100.0
UNIQA Real Estate Polska Sp. z o.o. Fully consolidated Poland, Warsaw 100.0 100.0
Black Sea Investment Capital Fully consolidated Ukraine, Kiev 100.0 100.0
LEGIWATON INVESTMENTS LIMITED Fully consolidated Cyprus, Limassol 100.0 100.0
UNIQA Real III, spol. s.r.o. Fully consolidated Slovakia, Bratislava 100.0 100.0
UNIQA Real Estate BV Fully consolidated Netherlands, Hoofddorp 100.0 100.0
UNIQA Real Estate Ukraine Ukraine, Kiev 100.0
Reytarske Fully consolidated Ukraine, Kiev 100.0 100.0
ALBARAMA LIMITED Fully consolidated Cyprus, Nikosia 100.0 100.0
AVE-PLAZA LLC Fully consolidated Ukraine, Kharkiv 100.0 100.0
Asena CJSC Fully consolidated Ukraine, Nikolaew 100.0 100.0
BSIC Holding Fully consolidated Ukraine, Kiev 100.0 100.0
Suoreva Ltd. (Deconsolidation: 31.03.2015) Cyprus, Limassol 100.0
Sedmi element d.o.o. Fully consolidated Croatia, Zagreb 100.0 100.0
Deveti element d.o.o. Fully consolidated Croatia, Zagreb 100.0 100.0
Kremser Landstraße Projektentwicklung GmbH Fully consolidated Vienna 100.0 100.0
Schöpferstrasse Projektentwicklung GmbH Fully consolidated Vienna 100.0 100.0
"BONADEA" Immobilien GmbH Fully consolidated Vienna 100.0 100.0
"Graben 27 – 28" Besitzgesellschaft m.b.H. Fully consolidated Vienna 100.0 100.0
Hotel Burgenland Betriebs GmbH Fully consolidated Vienna 100.0 100.0
R-FMZ Immobilienholding GmbH Fully consolidated Vienna 100.0 100.0
Neue Marktgasse Einkaufspassage Stockerau GmbH Fully consolidated Vienna 100.0 100.0
DEVELOP Baudurchführungs- und Fully consolidated Vienna 100.0 100.0
Stadtentwicklungs-Gesellschaft m.b.H.
Raiffeisen-Fachmarktzentrum Mercurius GmbH Fully consolidated Vienna 100.0 100.0
Raiffeisen-Fachmarktzentrum ZWEI GmbH Fully consolidated Vienna 100.0 100.0
Raiffeisen-Fachmarktzentrum Ivesis GmbH Fully consolidated Vienna 100.0 100.0
Raiffeisen-Fachmarktzentrum VIER GmbH Fully consolidated Vienna 100.0 100.0
Raiffeisen-Fachmarktzentrum SIEBEN GmbH Fully consolidated Vienna 100.0 100.0
R-FMZ "MERCATUS" Holding GmbH Fully consolidated Vienna 100.0 100.0

Approval for publication

These consolidated financial statements were prepared by the Management Board as of the date of signing and approved for publication.

Declaration of the legal representatives

Pursuant to Section 82(4) of the Austrian Stock Market Act, the Management Board of UNIQA Insurance Group AG hereby confirms that, to the best of our knowledge, the consolidated financial statements, which were prepared in accordance with the relevant accounting standards, give a true and fair view of the financial position, financial performance and cash flows of the Group, and that the Group management report describes the relevant risks and uncertainties which the Group faces.

Vienna, 18 March 2016

Andreas Brandstetter Chairman of the Management Board

Thomas Münkel Member of the Management Board

Hannes Bogner

Member of the Management Board

Kurt Svoboda Member of the Management Board

Wolfgang Kindl Member of the Management Board

Audit opinion

Report on the consolidated financial statements

We have audited the enclosed consolidated financial statements of UNIQA Insurance Group AG, Vienna, consisting of the consolidated statement of financial position as at 31 December 2015, the separate consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of cash flows and consolidated statement of changes in equity for the financial year ending on this reporting date as well as the Notes to the Consolidated Financial Statements.

Management's responsibility for the consolidated financial statements The legal representatives are responsible for the preparation and proper overall presentation of these consolidated financial statements in accordance with the International Financial Reporting Standards (IFRSs) as applicable in the EU, and the additional requirements of section 245a of the Austrian Commercial Code and section 80b of the Austrian Insurance Supervision Act, and for the internal controls which the legal representatives consider to be required in order to enable the preparation of consolidated financial statements that are free from material intentional or unintentional false representations.

The auditor's responsibility

Our responsibility is to provide an assessment of these consolidated financial statements based on our audit. We have conducted an audit of these financial statements in accordance with the Austrian principles of proper auditing of financial statements. These principles require the application of international audit standards (International Standards on Auditing). In accordance with these principles, we must meet the requirements for professional conduct and plan and carry out the audit of the financial statements in such a way that reasonable assurance is obtained regarding whether the consolidated financial statements are free from material misstatement.

An audit of financial statements involves performing procedures to obtain audit evidence about the amounts and other disclosures contained in the consolidated financial statements. The procedures selected depend on the auditor's judgement. This includes an assessment of the risks of material misstatements in the consolidated financial statements, whether due to fraud or error. In evaluating these risks, the auditor takes into account the internal control system which is relevant for preparation and proper overall presentation of the consolidated financial statements by the Group in order to plan audit actions that are reasonable under the given circumstances, but not with the objective of providing an audit assessment on the effectiveness of the Group's internal control system. An audit also includes an assessment of the reasonableness of the accounting principles applied and of the validity of the values estimated by the legal representatives in the accounting along with as assessment of the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit assessment.

Audit opinion

Our audit did not give rise to any objections. In our opinion, the consolidated financial statements comply with the legal requirements and provide a true and fair view of the Group's financial position and of the Groups' earnings position as at 31 December 2015 for the financial year ending on this reporting date, in accordance with the International Financial Reporting Standards (IFRSs) as applicable in the EU and the additional requirements of section 245a of the Austrian Commercial Code and the supplementary provisions of section 80b of the Austrian Insurance Supervision Act.

Comments on the Group Management Report

Pursuant to statutory provisions, the management report for the Group is to be audited as to whether it is consistent with the consolidated financial statements and as to whether the other disclosures are not misleading with respect to the Company's position. The auditor's report also has to contain a statement as to whether the management report for the Group is consistent with the consolidated financial statements and whether the disclosures pursuant to Section 243a of the Austrian Commercial Code are appropriate.

In our opinion, the management report for the Group is consistent with the consolidated financial statements. The disclosures pursuant to Section 243a of the Austrian Commercial Code are appropriate.

Vienna, 18 March 2016

PwC Wirtschaftsprüfung GmbH

Liane Hirner Wirtschaftsprüfer (Austrian Certified Public Accountant)

Disclosure, publication and duplication of the consolidated financial statements together with the auditor's report according to Section 281(2) of the Austrian Commercial Code in a form not in accordance with statutory requirements and differing from the version audited by us is not permitted. Reference to our audit may not be made without prior written permission from us.

IMPRINT

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

Concept, advice, editorial work and design

be.public Corporate & Financial Communications Gmbh / www.bepublic.at Rosebud, Inc. / www.rosebud-inc.com Translation and linguistic consulting ASI GmbH / www.asint.at Photography and image editing Outline Pictures / www.outline-pictures.com Paper Munken Pure, 240/120/90 g/m2 Printed by AV+Astoria Druckzentrum GmbH

Contact

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

www.uniqagroup.com

Information

UNIQA's Group Report is published in German and English and can be downloaded as a PDF file from the Investor Relations area on our Group website. The interactive online version is also available at reports.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 us 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 Group Report of UNIQA Group. In case of any divergences, the German original is legally binding.

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