Formed out of a merger of two of Austria’s oldest
insurers a decade ago, UNIQA has set a cracking growth pace,
spearheaded by its international expansion. The insurer’s new CEO
has just unveiled the outline of a strategy aimed at sustaining
growth at a vigorous level over the next 5 to 10
years.
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With a decade of solid growth behind it, Austria’s
second-largest insurer UNIQA Versicherungen has set itself further
stiff growth targets over the next five to 10 years. Andreas
Brandstetter, who became the composite insurer’s CEO on 1 July this
year, recently presented an outline of these objectives to the
media.
“Under our priority programmes, we
see a potential for improvement of earnings by up to €400m ($573m)
by 2015,” Brandstetter told journalists.
To put this target into
perspective, UNIQA reported a net profit of €152.8m ($215m) in 2010
while its best-ever net profit, €340m, was achieved in 2007.
Looking further ahead, Brandstetter said UNIQA wants to increase
its number of clients from 7.6m to 15m by 2020.
Brandstetter added that “in the
months to come” decisions on the details of the strategy required
to meet UNIQA’s objectives will be taken.
Indicating that significant
structural change is likely to be involved, he noted: “The
realisation of these potentials will initially require investments
that may affect
the result in the form of one-off effects.”
In addition, Brandstetter said that
in the past UNIQA has financed expansion from its own resources but
given its ambitious growth targets additional capital would be
required.
To this end, he continued, the
insurer is preparing for a “significant capital increase” which is
expected to be implemented in 2013.
Rating agency Standard & Poor’s
responded to the planned capital raising by confirming UNIQA’s A
rating and emphasising that it would further bolster the insurer’s
already strong financial position and flexibility.
The capital raising is anticipated
to see the free-float of UNIQA shares on the Vienna Stock Exchange
increase from the current 9.5% to 49%. In the process the insurer’s
two biggest shareholders will reduce their stakes.
The shareholders are Austrian bank
Raiffeisen Bank which has a 47.8% stake, and Austria
Versicherungsverein Beteiligungs-Verwaltungs and Collegialität
Versicherung which have a combined 39.5% stake. After the capital
raising, control will still remain in Austrian hands, Brandstetter
stressed.
Raiffeisen Bank is UNIQA’s primary
bancassurance partner in Austria and 14 Central and South-East
European countries. In 2010 the partnership accounted for 49.6% of
UNIQA’s total premium income.
UNIQA was established by its major
shareholders in 1999 through the merger of two of Austria’s oldest
insurers: Austria-Collegialität, which was founded in 1860, and
Bundesländer-Versicherung, which was founded in 1922.
Growth drivers
Over the past decade, UNIQA has set
a cracking growth pace in terms of total premium income which
increased by 152% between 2000 and 2010 from €2.5bn to €6.2bn. This
represented a CAGR of 9.7%.
Between 2000 and 2005, premium
income growth was led by UNIQA’s general insurance operations.
These increased their premium income contribution by 152% over the
period to €1.6bn in 2005 while life insurance premium income
increased by 46% to €1.5bn.
However, over the past five years
life insurance has spearheaded premium income growth, rising by 75%
between 2005 and 2010 to €2.7bn, while general insurance premium
income increased by 59% to €2.6bn.
Health insurance premium income has
been growing at a far slower pace, rising by 28% between 2000 and
2005 to €812m and by 19.5% between 2005 and 2010 to €970m.
Growth in UNIQA’s home market has
been modest, in keeping with the mature Austrian market as a whole.
The insurer’s premium income in Austria grew from €2.5bn in 2000 to
€3.8bn in 2010, a CAGR of 4.5%.
According to UNIQA, it had a 22.8%
share of Austria’s insurance market in 2010. In that year its life
premium income totalled €1.7bn which gave it a 22% market share.
The insurer’s general insurance premium income came in at €1.4bn
and health insurance premium income at €791m.
This overall performance ranked
UNIQA second behind Vienna Insurance Group (VIG) which reported a
market share of 24.1% in 2010.
VIG’s life insurance premium income
of €2.2bn gave it a market share of 28.3% and its general insurance
premium income of €1.9bn a market share of 20.8%.
Italian insurer Generali, which
ranks third in the Austrian insurance market, reported general
insurance premium income of €1.5bn in 2009 and life insurance
premium income of €718m.
International
markets
For UNIQA the big driver of its
overall premium income growth has been international markets in
which it has increased premium income almost twenty-fold, from
€121m in 2000 to €2.4bn in 2010. This represents a CAGR of almost
35%.
Although the two insurers that were
merged to form UNIQA made small-scale moves into Central and
South-East Europe in the early post-communist years, starting with
an entry into Slovakia in 1991, its drive into Central and
South-East Europe began in earnest with its entry into Poland in
2001.
UNIQA’s most recent expansion
eastwards came in 2009 with establishment in alliance with
Raiffeisen of a new insurance company in Russia branded as
Raiffeisen Life.
UNIQA now has a presence in 15 CEE
countries. In addition, it has operated in Italy since 1965,
Switzerland since 1979, Lithuania and Liechtenstein since 2003 and
Germany since 2004. All UNIQA’s non-Austrian interests, which
comprise more than 40 companies, are to be housed in a planned
public limited company, UNIQA International.
UNIQA has also made a tentative
move outside of Europe. This came in 2008 when UNIQA formed an
Islamic Shariah law-compliant life and health insurance company
joint venture (JV) with United Arab Emirates insurer Al Buhaira
National Insurance. UNIQA has a 15% stake in the venture, Takaful
Al-Emarat.
Commenting on UNIQA’s foreign
expansion, Brandstetter said: “Based on our decade-long experience,
we strive for a premium development that is significantly above the
average market growth with a modified, region-oriented business
model. Our tried-and-tested bank insurance model will also push
forward organic growth. In addition, we will selectively review
acquisition opportunities in Central and South-East Europe.”
Equity market investors also appear to be expecting well above
average growth from the insurer. At the end of June its shares were
trading at a price to earnings ratio of 39, more than two and a
half times the insurance sector average.
