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However, around 600 jobs will be cut in Austria by 2022 to reduce costs, affecting one in ten. The Central and Eastern European region, which is becoming even more important as a result of recent AXA acquisitions, is also being investigated in terms of costs. The group wants to stay in shape with the new “Strategy 3.0”.
“More austerity programs are not being ruled out,” UNIQA CEO Andreas Brandstetter said Thursday, repeatedly describing the excessive costs as an “Achilles heel” of the group. By 2025, the cost rate will drop to at least 25 percent and the combined ratio (damages and costs measured against revenue) will drop below 94 percent. More recently, the expense ratio was 27 percent and the combined ratio was just under 96 percent. “They want to simplify processes” and remove complexity for colleagues in the back office, “the CEO said. Return on equity should be 8-10 percent in 2025. Starting in 2021, dividend policy will also resume progressive.
The € 1 billion acquisition of AXA’s business in Poland, the Czech Republic and Slovakia adds 2,000 employees to the group’s 12,700 current employees, according to Wolfgang Kindl, director of UNIQA International. The goal is to reduce common costs in these three countries by 20 percent, half in personnel costs and half in material costs. In the coming years, the AXA acquisition is expected to generate an average contribution of EGT 80 million per year, said UNIQA CFO Kurt Svoboda. This means that in future more than half of the contribution to earnings will come from the Central and Eastern Europe region. By the end of 2020, UNIQA’s solvency ratio will decrease from 215 percent by around 30 to 170 to 180 percent. After the acquisition, which was first listed in the fourth quarter, the group’s premium growth should average 3 percent per year.
With the elimination of 600 jobs in Austria, 150 will be natural exits that will not be filled. For the other 450 jobs, which will be cut by 2022, but for the most part already in 2021, a social plan has been negotiated with the works council in recent months, “the first in our company,” Brandstetter said. They strive to find amicable solutions with the help of the works council and have also planned outplacement programs, a labor foundation and a fund for special cases. Dismantling must also be understood as a clear step towards digitization. The need for digitization was demonstrated no less than by the Covid 19 pandemic. As a further effect of Corona, low interest rates are now “long-term consolidated.” Furthermore, economic power is shifting to Asia.
These job cuts this year would put a burden on the annual financial statements of up to 110 million euros, this includes 95 million euros for the social plan, the head of UNIQA said at an online press conference. However, these expenses would be offset by future savings of up to € 50 million per year. In addition, this year there would be impairments in goodwill in Serbia, Bulgaria and Romania of around 100 million euros, it was said Wednesday night. Bulgaria and Romania are now devalued to € 33 million and € 35 million respectively, Serbia to zero, CFO Svoboda said. The reason is that the interest, economic indicators, purchasing power and Covid indicators point downwards.
Due to the closure of 35 of the 105 service stations associated with the “Austrian location cost program”, the CEO referred to the sales force and general agencies: “We have a very clear objective of maintaining our local presence, but not always with its own spatial arrangement. “In any case, UNIQA wants and will be” the best financial services provider in Austria “in 2025, according to Brandstetter.
After the goal of doubling the number of customers from 7.5 million to 15 million, including the purchase of AXA, was achieved with the latest ‘Strategy 2.0’ of 2011, a new 10-year program is now not trusted. ” five years is long enough, “and he deliberately doesn’t set a 2025 customer goal. People generally look for more acquisitions, but nothing concrete is on the radar, according to the CEO. He was convinced that there will be a consolidation in the insurance industry globally in 2021, which also offers acquisition opportunities. According to the strategy, the banking market will also expand, keyword Raiffeisen.
In the first nine months, UNIQA maintained its profit before tax (EGT) at 213.8 million euros, practically on par with the previous year, almost a record with more than 150 million euros in the third quarter alone. , as well as the consolidated result of 166.5 million euros. The technical result even doubled to 124.9 million euros, although the Covid-19 pandemic meant that more than 70 million euros had to be spent on additional insurance benefits for business interruptions and canceled events. According to Brandstetter, these € 70 million were largely attributed to the tourism / gastronomy sector, mainly in the west, as well as business disruptions due to illness and freelance disruptions. Total insurance benefits (retention) fell 3.0 percent to € 2,705 million.
Total expenses for insurance operations increased 2.8 percent in the nine months to 1,047 million euros.
In terms of compensated premiums, 4,092 million euros were received, a slight decrease of 0.1 percent. Recurring premiums totaled 4,025 million euros (+0.2 percent), while single life premiums fell 16.7 percent to 66.7 million euros, in line with the strategy. Earned retained premiums (under IFRS) increased 0.3 percent to € 3,653 million.
In property / casualty, written premiums grew by 1.0 percent to 2,225 million euros, in the health insurance division by 3.2 percent to 882.8 million euros. In life insurance, which posted losses across the industry, revenue, including the savings portion of unit-linked and indexed life policies, fell 5.3 percent to € 983.8 million. The main driver of this development in life is “still lower demand caused by the persistent low interest rate environment.” Despite the immense pressure on the life insurance business in Austria, “we are clearly committed to this business,” emphasized the head of UNIQA, referring to bank insurance partner Raiffeisen.
The result of the investment fell from January to September by 8.9 percent to 397.8 million euros; last year there were around 45 million euros in profits realized from real estate sales, this year there were none. The Group’s investment portfolio grew as of September 30. compared to the end of 2019 from 20,625 million to 20,666 million euros.
UNIQA does not yet offer a forecast of results for the year as a whole “due to the persistently high level of uncertainty about macroeconomic and financial developments.”
Investors apparently liked the quarterly numbers and savings plans associated with the new strategy: UNIQA shares were up 2.9 percent at 1 p.m., VIG 0.6 percent down, and ATX 0. , 5 percent down.
In Vienna, UNIQA shares rose 2.91 percent to 6.02 euros at the end of the day.
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