UNIQA Insurance Group AG (UQA) Earnings Call Transcript & Summary

Ladies and gentlemen, good afternoon to all of you who are today in Europe, and good morning to all of you who are participating today from the U.S. We hope that this call finds you well and that you and your families are in good health. We feel very sorry that our Capital Market Day of 2020 cannot take place in a physical way, but in the name of the whole Management Board I thank you, however, for your time today and for your interest and for your participation in this virtual Capital Market Day. Especially, I want to thank also our CFO, Kurt Svoboda, for his participation after a long leave due to severe sickness. Kurt, very good to have you back on our team. We have been dividing, ladies and gentlemen, our presentation into 4 chapters, which you see on the screen. We have an overview about strategy of UNIQA 3.0. This is chapter #1, starting on Page 5 and consisting out of something like 15 pages, followed then by a summary of our 2 core markets: first, Austria, with a presence since like 200 years, all together something like 13 pages; followed then by a very compromised (sic) [ comprehensive ] presentation about Central and Eastern Europe, starting on Page 32; and then rounded up at the end by 20 pages around the most important KPIs of UNIQA 3.0. The strategy of UNIQA 3.0 is following UNIQA 2.0, which we have been introducing to you in the year 2011, and which is expiring this year. If you look on this house of UNIQA 2.0 on 5 pillars, we see some very positive developments. We see some, I would say, green lights. And we also see some clear room for improvement. The fundament of this house, the capital ratio is in a very positive form, and I think here we clearly can make a hook. Currently, after 9 months, as you might have seen, we are at around 215%. And after the acquisition of AXA, we will be somewhere of 180%, 185%. Always -- also, after the full integration of AXA, the company will remain and staying north of 170%. If we then go on to the left part of this presentation to the first pillar on the left, Customer Growth, you see that we managed to increase the number of our customers by something like 100%. So in the reference year 2010, the company had around 7.5 million customers and now we are after AXA acquisition at 15 million. On the very right-hand of this slide, we see that we managed really to focus on our core markets. So we could de-invest there where we do not -- didn't want to stay in the future. We sold our companies in Germany first and afterwards in Italy. And we sold also all participations which did not contribute in making our core business more profitable or bigger, meaning we sold all participations around hotels, around media, but instead of this we acquired the further participations around the health segment, which plays a role later on in my presentation. A clear room for improvement, we see in the pillar #2 and 3 here in the middle as far as the technical results are concerned. Yes, we managed to bring down the combined ratio from somewhere more than 100% down to 96% after 9 months in 2020. But you know that our old target had been 95% for the year-end 2020. If you look to the left, the cost ratio -- the net cost ratio, we see clearly the red part of the whole UNIQA strategy. And here is really, for sure, the biggest room for improvement. No big surprise. And you might have seen before in the presentation that bringing down the cost ratio is a key element, is an essential cornerstone of the whole UNIQA 3.0 presentation and strategy. Pillar #3 from the right is about attractive financials. Yes, we have been able to increase our dividend per share 7 times in a row starting 2012, from somewhere EUR 0.25 per share; up to 2018, where we have been north of EUR 0.50 per share. Then following recommendation of the European insurance market regulators, EIOPA, in Frankfurt and the Austrian financial market regulation FMA, we decided to cut our dividends for the year 2019 by 2/3, down to EUR 0.18 per share, and also to confirm not paying a dividend for the year 2020. So this is something what we know, what will be a clear improvement for the future. And if we look on our return on equity, also here we see that we did not reach our target of 13.5% operating ROE. You see that by 9 months this year we are somewhere at 10%, and this is why the improvement of our return on equity is a key element, is a key KPI of UNIQA 3.0 in the upcoming 5 years. You know our company. It's a well-balanced company with 2 homogenous and balanced portfolios in 2 markets. You see in the left-hand here, Austria, based on the year 2019, having gross written premiums of EUR 3.8 billion. And then moving to the right, you see, and this is also including annualized figures of AXA, CEE participation, with UNIQA amounting up to EUR 2.4 billion. If you look at our lines of business, we see a P&C portfolio which all together is representing more than 50% of our overall portfolio. This P&C portfolio shows a continuous growth with a very healthy combined ratio in Austria and, as my colleague, Wolfgang, will show in a second, a clear and very good track record in Eastern Europe, not only in the last couple of months but in the last couple of years. As far as Life is concerned, we see a different picture. We see a portfolio book in Austria which we have under control but where we have to reshape the business, including the new business. And we see Eastern Europe, which is a very profitable, very good growth development at very profitable and satisfying margins. Health, you know, is a cornerstone of UNIQA 2.0, and it will remain a cornerstone of UNIQA 3.0 as we see constant high profitability and a very stable political environment in this country. This in a nutshell was a look-back to the last couple of years. Now if we look ahead, what can you expect from UNIQA 3.0? In a nutshell, this is a story which is based on the strict cost management and on the strict improvement of the technical profitability in our home market, Austria. This is fact #1. Fact #2, this story is based on a continuous profitable growth in Eastern Europe. And those 2 factors together will lead to increasing earnings on the one hand and, by this, of course, a growing dividend payment year by year. This in a nutshell is the story of UNIQA 3.0. We have identified 4 cornerstones, 4 key messages for you. First, this company has 2 core markets, Austria and Central Europe, which leads more and more to a balanced earnings contribution within our group. This means the time when this company was depending from the earnings in Austria, those times are over, supported, of course, by the very important and, we think, highly profitable acquisition of the AXA companies in Czech Republic, in Poland and Slovakia. Letter B, core business improvement. Very clear, in the center of this whole program, as I mentioned before, is a further increase of our technical results, cost reduction and, of course, a clear improvement, a profit improvement of our Life book in Austria. Letter C, capital strength maintained. This means we will keep in a crystal clear way our way of a disciplined capital management and a very conservatively managed balance sheet. Last but not least, letter D. As I mentioned just a few minutes before, we expect sustainable increasing underlying earnings which enable us to pay dividends in a reliable way, growing year by year and by this providing attractive return to you as our shareholder. This in a nutshell are the 4 most important cornerstones of UNIQA 3.0. Now how did we come to this program? How did we end up there? And what is more or less the philosophy behind it? A team of around 60 leading manager of the UNIQA Group, between Switzerland in the very west and Russia in the very east, has been working 2 years on this program. We have been looking, and you see it on the very left on this slide, on the most relevant factors, the most relevant mega trends globally which have significant influence to our industry: everything around macroeconomics and the low interest environment, low for longer; second, demographic and social changes in all our markets, elderly population, moving towards the city, so saying urbanization; point #3 , innovation and digitization, clearly underlined and improved now with COVID-19. There's a very clear supporting factor for digitization now, especially in times like this. And we see a growing acceptance of all our digital efforts by a growing number of customers, no big surprise. And fourth, last but not least, the last mega trend here on the very left side, everything around sustainability and climate change, which is an incredibly relevant factor for our business. From this how (sic) [ why ], we developed a what, so meaning, what is this company going to stand for? What is the difference to our competition? And very clear, based on our incredible strong brand, which has a lot of trust from 15 million customers, we want to help our people, our customers, and this means retail customers plus corporate ones, to have a better and longer life in a [ risk faced ] community of currently 15 million people. How do we want to achieve our targets? And please be so kind just to focus on the top horizontal line on this slide. We are the first insurance group in this part of the world who really strictly has a purely customer-focused approach. And this means we have a crystal-clear end-to-end responsibility for first customer segment, Retail; second customer segment, Corporate plus Affinity; and last but not least, for the customer segment Bank due to the big piece of the cake which this segment has within our book. This is more or less, in a nutshell, how we've worked on our strategy program. If you look on one slide, it says that, in the next couple of years, we will increase our gross written premium from EUR 5.4 billion in the year 2019 to somewhere at EUR 7 billion in the year 2025. Second, and this is what I addressed before, we will decrease our net cost ratio from currently like 27% down to maximum 25%. We will see a clear further improvement of the net combined ratio coming from 96% and bringing it clearly somewhere at 93%. Capital, Solvency II ratio, as I mentioned, please expect this ratio to stay always north of 170%. Return on equity coming from something like 7% in 2019 to a KPI of more than 9% in 2025. As far as the 2 financials are concerned, the 2 most important, our payout ratio will be somewhere between 50% to 60%, not only in 2025 but already starting with the business year 2021. And we have a leverage ratio, which we've been bringing down from currently something like 42% to clearly below 35%. This on one slide, I think, is the best overview about the most relevant KPIs. We see our group in a completely different way. This customer-centric approach here again shown in different way says 3 customer segments which are treated equally across the group: retail, corporate and bank; and then 6 supporting functions, from financials to HR, to operations, to IT and personal lines. Don't expect us that we neglect the future. So we will invest into 2 very promising, I think, completely industry-breaking business models, but we will not burn money there. This is very important. We will invest a limited amount of capital. We will invest a limited amount of people there. And annually, year per year, we will evaluate how are we standing with our 2 corporate start-ups and will we continue or do those 2 investments might need a change here and there or a correction in the strategy. The first, CHERRISK, is a homegrown Hungarian company, which is a completely digital low-cost carrier, which showed successfully that it can serve 200,000 people in its ecosystem. And we decided to roll out this business model now in Germany, a very competitive and already highly digitized market. If by the year-end 2021, we see that this investment shows positive result, then we think about entering new markets, especially in Western Europe, maximum 4 markets by the year 2025. When I say that we will not burn money, just to give you a kind of guidance, around EUR 15 million, 1-5, we are going to invest in the next year into CHERRISK for its German expansion. Second, homegrown corporate start-up SanusX, completely different field of business. We'll see in a second our strong market position in health insurance in Austria, and trying to leverage the assets which we have there, everything around health insurance plus having our own hospitals plus running them. Plus always having been a frontrunner as far as innovation in the field of health is concerned, we say this is a company which shall tackle everything around health, everything around the ecosystem health and focusing on elderly care, on mental health and on corporate clinics for existing clients but maybe in the future also for nonexisting clients, so for the public. Also here, just to be on the clear side, we have a kind of overseeable investment. Also here, we talk about EUR 15 million, 1-5, investments for the year 2021. Sustainability, I mentioned. You have seen the presentation, our 5 pillars when it comes about sustainability and climate change. Let me just highlight one of it. It's the top-ranked one: investment policy. You can expect from UNIQA in the next couple of years until 2025 that we are going to invest EUR 1 billion into sustainable investments and that this company will be absolutely carbon neutral till the year 2040. This we do not say only as manager. This also we do say as European citizens and as fathers or mothers who have a responsibility towards their children and towards this planet. Let me address a few comments on our 2 core markets. This is no big surprise for you. We see on the one hand, Austria, on the left part of this slide, saying clear strong in health is going -- is what we are going to do; second, further on profitable growth in P&C.; and as I mentioned before, and as you go in to see in a second, a restructuring of our life business in order to increase our profitability there. If you then look further to the right, you see that we do not treat our markets equally in the future in Eastern Europe. We will focus on our 4 core markets, which are Poland, which are Slovakia, Czech Republic and Hungary. If you look on the numbers below, it's not a big surprise for you. The largest amount of our customers in Eastern Europe is coming from those 4 markets. The largest contribution as far as gross written premium is concerned is coming from those markets. And the largest contribution as far as profit is concerned now and in the future is contributed from those 4 markets. If you just look on the market rationale itself, you see that we do expect a market growth, an organic growth of around 1% in Austria and of something like 5% in CEE. So no big change to what we told you in the last couple of years that the catch-up potential in Eastern Europe didn't change at all. It was high, it is high, and it will remain high in the future. The way, as I mentioned a few minutes before, how we treat those markets is the same way. If it's about retail, it's about standardization, it's about standardization, and again, it's standardization of our products and processes. We have clearly to improve the profitability and the productivity there. It's about reducing complexity. This also has its meaning in the same way for our bank offers. If it's about health, it's about increasing our market share and market position in Austria by fostering our market leadership here. And if it's about life, it says keeping our high profitability in Eastern Europe, increasing the volume, especially the strong cooperation with the Raiffeisen banking group, with RBI. And in Austria, it's clearly about inforce management, acceleration of capital-light and biometric products and digitization of the processes, as we're going to show in a second. A different game is about Corporate/Affinity to the very right of this slide. Corporate/Affinity is not so much about the standardization. It's clearly saying portfolio optimization, especially in Austria. We have especially as far as third-party risks are concerned, here and there some room for improvement. And it means in Eastern Europe, especially, broadening our offers for employee benefit customers. If we then move on to the core business improvement itself, I addressed a few moments before the improvement of the net cost ratio by 2 percentage points until 2025. You will see in a second that despite the fact that we really reduced our costs in a significant way in Austria by EUR 125 million, that not all of those savings arrive in the P&L. The reason for this, I think you know. It's because we have to keep on investing in IT, in digitization and data. So this means we have to find a proper way where we make our running way, the way how we run our operations, to make them really less expensive. But a certain amount of the savings, a certain amount, we have keeping on in investing into our future. This is what we are going to do. We will find synergies also in Eastern Europe. Wolfgang is going to address it in a second, up to EUR 45 million, driven by increased cost efficiencies and, of course, by economies of scale following the AXA acquisition and, very important optimization, digitization and streamlining of end-to-end sales and aftersales processes. UNIQA 3.0 is not a defensive game. Yes, on the one hand it's a cost cutting, but on the other hand it's a clear positive program where we say we have so much opportunities, so much potential on our markets that we think we have really the potential for a significant profitable growth in Eastern Europe and in Austria. I mentioned the insurance technical result. You see here on this slide the improvement which is foreseen in the P&C business and in the health business, coming from something like EUR 170 million in the year 2019 and increasing by, in 2025, up to EUR 280 million, so more than EUR 100 million more arriving in the P&L. You may now ask, okay, why you do not include life book here. This is very simple. As I addressed before, life is under special observation. Life book needs special attention from management, and this is why, in my section and later on the section of Kurt, you will see a lot more facts on this topic. But as I mentioned before, very clear, crucial importance, significant profit improvement in the underlying insurance technical result. The capital is going to remain strong. As I said always, Solvency Ratio II, staying north of 170%. Please have in mind, and this is the third bullet point from the top, that we expect a fully internal model to take place in the year 2023. Kurt will come back to it later. But this also, of course, gives additional relief and boost to our solvency ratio starting onwards with 2023. Why it is good for the shareholder? Because ROE of some north of 9%, we assume, in times like this is attractive. The payout ratio will be somewhere between 50% to 60% and very important. Very clear and crucial for us to decrease our leverage ratio, as I mentioned, from currently somewhere of 42% to a KPI less than 35% in the year 2025. This in a nutshell was an overview how UNIQA 3.0 looks like. Now before Wolfgang is going to take over and to tell you how, in detail, the story for Eastern Europe looks like, a few comments on our home market, Austria. As I mentioned before, Austria is a game of cost reducing, of increasing profitability, of improving technical result and, yes, to keep on growing in this market where we are one of the market leaders. Having said so, very clear, letter A, not only in health, but also in P&C business, we want to be #1 in this market. Second, improving efficiency, as I mentioned, reduce the admin costs, achieving a better excellence in claims handling and also benefit for everything around artificial intelligence and AI if it comes about pricing. Letter C, as I mentioned, Life restructuring, and this needs special attention from the management. If I say market leader, we have to rely and we can rely on our very strong brand. This is a company which has not the kind of splitted up brand mix in its portfolio. We have a very clear one-brand strategy, both in Austria and international. If you look on these figures, you see that the awareness, the spontaneous awareness of UNIQA in Austria is incredibly high. So this is a highly trusted retail and customer company which is known all over the place. And of course, this gives us a strong base for further profitable growth. We are currently #2 in the P&C business with a market share of 17% in Austria. We have 45% of the market in health business, where we are #1. And we are #2 as far as life business is concerned, with a gross written premium of a little bit less than EUR 1 billion and a market share of 18%. Gross written premium, we have been demonstrating in the last couple of years that we can grow and that we can do it in a profitable way. You see combined ratios always between 92% and 94%. Again, there is room for improvement by, first, standardization of our product line, especially in the retail business and, second, by a very clear and very carefully and consequently managed restructuring program of our portfolio in the corporate business, especially, as I mentioned, in the third-party business. If it's about health, very interesting figures, which you might have seen before. First, we just tried to show you that there is a very strong need and a customer demand for private health services. We showed you here how the number of private physicians have been increasing in the last couple of years and how the number of so-called panel doctors more or less is stagnating since the year 2006. If you then look further below and you see how much people are going to spend for health care in the year 2017, in 2025 and how the relevant number is expected to be in 2030, you see why this sector is so relevant for UNIQA and why we are so happy about our strong market position there. What we're going to do, we try to bring offers to the market which go beyond insurances and which foster our market leadership: private hospitals, telemedicine, VitalCoaches and, don't forget the new services which we are going to deliver around SanusX around elderly care, around mental health and around corporate clinics. Health is a profitable business. If you're familiar with our company, the contracts price and the valid are more or less for the rest of the customers' life. You know that it's quite difficult in Austria to change the insurance company once that you are a customer with one of the insurance companies because if you would change your insurance company, you would lose your aging reserve, and this means that the amount of premium which you would have to pay at the new insurance company would rise in a very quick way. And second, you also know this, that we are entitled by law each year, mostly in January, February, to increase our premium in the same way as the health care cost index is increasing year by year, and this is an amount somewhere of 3%. So this is the reason why we see a continuous success story in this business line. Insurance technical result, Austria only. A few minutes ago, I addressed the whole group, but Austria only comes from EUR 125 million in the year 2019 and is expected to rise up to EUR 205 million in the year 2025. Costs. EUR 125 million, I mentioned a few minutes ago, divided into EUR 40 million run costs from savings on the personnel line. You know that we have been rolling out the program that we set free 600 people here in Austria. Plus, we reduced our material costs by 30%. This is in absolute terms EUR 85 million. Why not everything of this is arriving in the P&L, I'll try to mention the details you see on this slide. This is what we expect in the next years to take place between 2019 and 2022. So we have a cost base of EUR 600 million roughly in the year 2019 and then we have investments, additional investments, new investments in IT and data, in digitization. Of course, we have some regular personnel cost increase driven by the Austrian law. So we end up somewhere at EUR 675 million. And we deduct from this savings of EUR 125 million, so we end up somewhere at around EUR 550 million. Very important for you, around EUR 50 million, EUR 30 million plus EUR 20 million, as you can see here, on the right part of this slide, we are going to invest into technologies which make us innovative, more customer orientated, flexible and, of course, more profitable then in the future. Life, I mentioned a few times. Kurt is going to address this topic later on in his section when it's about financial and the most relevant KPIs there. So you see that in the year 2019, the overall Austrian life book was a little bit less than EUR 1 billion, and we expect a further shrinking. Why? Yes, of course, we expect our portfolio in biometrics and unit-linked to grow. This, we do in a profitable way. We see that the new business, especially in unit-linked, currently is growing somewhere at 25%, 30%, which is fine. But of course, the classical life insurance book is further on decreasing. This is very clear. So what are we doing here? First, optimize, of course, as all of us are trying to do, our product portfolio; second, significantly reduce the admin costs in order to create scope for saving product returns; third, improving our asset management further on, Kurt is going to address it in a second; and point #4, of course, bringing new products to the market which are capital-light and which have better returns and lower guarantees. This is what they're going to do. And I think, if you look back what happened in the last couple of years, I think we can be quite satisfied with what we have been achieving until so far. But still there's a long way to go. And again, very clear, we want to have more returns than in the past from the life book. Often, we are asked, how is the comparison between the Austrian and the German life market? And sometimes we have the feeling there's a little bit of mixed knowledge and confusion herein. So we tried to show it on one slide how situation looks like. First, if it's about the guarantee, you see 2.38% here in Austria. This is the market average in the year 2019 versus 2.7-something-percent in Germany. So this is something why we say that the Austrian market is much better off. If it's about the new business 2020, this is the maximum interest currently number which you see here. The maximum interest current rate is 0.5% in Austria versus at 0.9% in Germany. Profit sharing. It's a completely different system, as all of you are aware about. In Austria, all profit sources are aggregated and then at least 85% of aggregated gross surplus is shared with the policyholder. And if you look to the German market, it's a different system because all profit sources are shared independently of each other. ZZR means the additional interest reserve, and you see the factors also here differentiated by the market. In the Austrian market, we currently have a level of something like EUR 1 billion, a little bit more. On the German market, you see a level of EUR 75 billion. So this is why we bring it up here on purpose because we want to show you that the Austrian market in many aspects is much better off as we know it from our German markets. Having said so, in a nutshell, before I hand over to Wolfgang. The Austrian market more or less for the next couple of years, 2021 to 2025, shows the following 3 most relevant figures. First of all, you can expect us on our home market, where we are the market leader, to grow by EUR 300 million up to the year 2025. Second, we are going to reduce our admin costs by 3% up to 2025. And last but not least, as a consequence out of those factors, we will increase our earnings in this time period by 35% to 50%. So this in a nutshell was about our first home market, Austria. And I invite you now to follow the explanations of Wolfgang, who will lead you through Central and Eastern Europe.

Many thanks, Andreas. It's a big pleasure to guide you now through the slide deck dealing with Central and Eastern Europe. Basically, I will divide my presentation in 3 parts, as listed here on Page 33. In the first section, I would like to reflect and assess on the achievements during our strategy program UNIQA 2.0, followed by some highlights of the recent AXA acquisition in Central, Eastern Europe where, without any doubt, the proven track record during UNIQA 2.0 was a kind of prerequisite to successfully accomplish the tender process of the AXA CEE book. And taking section A and B into account, I think the prerequisites are there in order to elevate to the next level. And this is what I would like to deal with in the future outlook and how we would like to achieve to provide significant contribution to the group earnings and to the growth. If we turn to the CEE market, and I'm talking about a marketplace with a population of roughly 155 million inhabitants, so 20x the market size of Austria, we see that there is still a significant catch-up potential. I think someone might assume when looking to the figures that the road to convergence might have slowed down, but it's definitely still intact. You see, if you take into account insurance density, namely, the gross written premium per capita, that Austria with a level of EUR 2,000 per capita per year is still on a significant higher level than Central and Eastern Europe here, excluding Russia. So it's 8.5x higher than in the CEE region. But you also see that, in comparison to the year 2011, this already is an improvement from the point of view of Central, Eastern Europe as at that point of time it was 10x. I think this is the most important message, that we are still here active on a marketplace which shows us a tremendous potential for future growth. And as Andy already mentioned out, and here you see it as well is listed, the core markets of our CEE business, Czech Republic, Slovakia, Poland and Hungary, those markets are already much more mature than the rest of the very heterogenous marketplace in Central, Eastern Europe. And you see that when it comes to insurance density, those markets already catched up and have a 4 to 5x lower insurance density than Austria. This was more or less the macroeconomic outlook, which confirms that this is still a very important marketplace, which forms the basis for our second strategic pillar in our group strategy. If now turning to our proven track record within Central and Eastern Europe, I think it's a great pleasure to present you all the achievements of the UNIQA 2.0 program, a program we launched in the year 2011 and where we pointed out, for the very first time, clearly in the very explicit that Central, Eastern Europe is the second key strategic pillar of our group for the future. You see as well, if you look to the regional presence to our footprint, that definitely we have not been the first-mover in that region. But definitely what we can say is that establishing our footprint right before we launched our insurance program UNIQA 2.0 in 2011, namely 15 markets throughout the entire region, we had a huge catch-up track record over the recent 8, 9 years. You see that we increased the gross written premium level throughout the region by 45%. 45% is very remarkable, taking into account, and I will explain to you later onwards, that we also sanitated our portfolio on the one hand, and on the other hand that the overall market growth at the same point of time was roughly 13%. So UNIQA was outgrowing the market in a pace of 3.5x faster than the average. This also led, and you see from the share of the gross written premium at the starting point of UNIQA 2.0, the share was slightly below 20% in our group. Nowadays, the gross written premium share amounts almost to 30%. And now taking the AXA acquisition into account, you can add another 10 percentage points. So the weight of our international business when it comes to the gross written premium throughout the entire group is now it is close to 40%. When we look to the share of customers, which is a very important indicator for you in order to leverage what we have been elaborating on the previous slide, namely the catch-up potential, the convergence potential throughout the entire region. You see that, nowadays, already 65% of our group-wide customers are embedded in the CEE region, namely 6.5 million customers. And 6.5 million customers means that we almost doubled our customer base since the starting point in 2011. So we had really a very tremendous and successful growth path with respect to premium growth as well with respect to customer growth. And also here, adding the recent AXA acquisition, we come to a share of our customer base in Central and Eastern Europe of 75% now by the beginning of 2020. The next thing, and I stated it before, growth is one aspect, but we also turned our attention to turn this loss-making book in 2011 after we more or less consolidated all the acquisitions we have conducted the recent years before. We turned our focus within the program of UNIQA 2.0 as well to improve the profitability of our program. And you see here that we could manage to improve the P&C segment in the combined ratio by more than 12 percentage points. And what is also important, that this source of improvement is more or less balanced out in a very good manner. You see that the costs contribute roughly 40% to these improvements, whereby the claims contributed up to 60% of this improvement. And how we achieved this. When it comes to the claims, it was our clear aim to reestablish a profitable motor book. Our motor book was deeply in the red. We had combined ratios seen far north of 110% combined ratio, and we managed to bring this down below 100%. And our clear midterm goal, and I will refer to this later onwards, is to establish on a sustainable basis a combined ratio in the motor book of around 95% despite this year we are even close to 90%, but we have to be honest and fair we have to take into account lower frequencies due to the COVID situation. The other topic was not only on the one hand to have an underwriting discipline and sometimes in shrinking our motor book throughout the region but also to enhance our capabilities and to enhance our efforts in the non-motor book. And here we have been on a tremendous track record as well. We increased steadily the share of the non-motor business within our P&C segment. And nowadays within the UNIQA portfolio, the non-motor business accounts for 52%, and 52% is 7 percentage points higher than the average in the CEE region. So 7 percentage points better than the market. This is so far very important as, at least within our UNIQA book, the non-motor book has a combined ratio which is on average 10 percentage points better than our motor combined ratio, which, as I explained before, is nowadays as well below EUR 100 million. So the second thing when it comes to the cost was, of course, that we could really achieve the admin costs stay stable even in nominal value throughout the entire region. And if you take into account that our admin costs of slightly above EUR 200 million in the 15 countries throughout Central and Southeastern Europe stay stable at the time frame where we increased the premium by 45% and where at the same point of time in the entire CEE region the average gross wages were increased by roughly 50%. So I think this is a tremendous achievement which, at the end of the day, led to this significant improvement also on the cost ratio side. And let me elaborate on that also briefly. We implemented in the previous year a target operating model which was applied throughout the entire region. Here, we are leveraging also our one-brand strategy which enables us to form and to unify this heterogenous set of countries and to guide them towards joint efforts in order to leverage scale and skill, something which is very important, and I will come to this when we come to the AXA acquisition. And the AXA acquisition is for us now at the end of the strategy program UNIQA 2.0, and at the beginning of our new program UNIQA 3.0 more or less the cherry on the cake, because it enables us to elevate throughout the entire region from a marketplace #7 to a top-5 player throughout the entire region, increasing our market share from roughly 4.1% to more than 6.5%. And here it's very important that with this AXA acquisition, we can further scale up and we can further leverage also on the skills, on the complementary assets we acquired with this transaction. And just bear in mind, when I'm talking about complementary assets, we are back in the bancassurance business in Poland thanks to the mBank cooperation on the AXA side. We also added a very profitable pension fund business to our existing portfolio. We see a very strong tendency towards digitalization across all 3 countries in the AXA portfolio, also something which is definitely of key importance in the upcoming future. So with other words, this was not only a top line trim acquisition, it was definitely also something where we can leverage on the scale effects but as well on the skill effects. And this skill, we would like not only to leverage throughout the 3 countries where the acquisition took place, definitely we would like to make this skill set accessible and available for our entire CEE book. So for instance, we are planning to establish a product competence center, competence hub in Prague as well as we intend to establish a competence center in pricing in Warsaw. So you see there is much more embedded into this transaction. And I also have to say this was not coming out of the blue for us. We were screening M&A opportunities throughout the region for several years. And I can disclose this now: the AXA CEE book was definitely on top of our ranking because there is a 100% complementary -- complementarity to our book. And based on the achievements we have done so far in UNIQA 2.0, this was the perfect strategic fit to put it on top. And I mentioned before, we entered the top 5 in the entire region. It goes without saying as well that we will enter the top 5 in every single country listed here, from Poland to Czech Republic and Slovakia. And I think for UNIQA's CEE strategy, it was of utmost important and very crucial the acquisition in Poland, because being market ranked #10, being definitely subscale, there was a big strategic question mark behind our presence in Poland. I think this we can tick now with the AXA acquisition. And I think this is a tremendous good starting point in order to elevate further as well in a country where we have been subscale so far. So we will add roughly around EUR 850 million on premium to our existing book of EUR 1.6 billion. You see that we will also add a net income of roughly EUR 80 million. Last year, we had a net income in the UNIQA book, EBT, before of around EUR 70 million. So we had the customer base. I already mentioned all that. And it will allow to leverage certain synergies. But before I turn to the synergies, also, I have to state very transparently that short-term investments are required, especially in those 3 countries, in order to leverage on the synergies. But what is very important for you, roughly 85% to 90% of the investments required in order to get the synergies I will refer in 1 minute, 85% to 90% of these investments required, we will already have in our books in the year 2020 and 2021. So only a 1-digit percentage of the investments will be in 2022, whereby -- and this is very important, and you see it on the next page -- we aim to achieve already a level of 75% of the synergies we would like to achieve throughout the entire journey in 2022. So we want to be fast. We really want to get all these run rate cost savings already into our books from the year 2022 onwards, as I stated, 75%. You see here that we would like to achieve a saving potential of roughly 20% of our joint cost base in Czech Republic, Slovakia and Poland; joint cost base, I mean, UNIQA companies in their respective markets; as well as AXA companies in their respective markets. And this translates into a run rate cost saving of around EUR 45 million. Also to put it very transparent and clear here, EUR 45 million will divide roughly 50% in personnel costs and 50% in material cost. And this 50% personnel cost translate in full-time equivalent synergies or, let's call it, head count reductions between 600 and 700 head counts in these 3 countries in order to achieve this synergy potential on the personnel cost side. This will be achieved by reorganization. Also, to give you here a flavor that we are quite fast in the entire process, within 1 week after the closing of the deal, and please bear in mind we signed the deal in February, we closed the deal in October. I think this is already remarkable taking the COVID challenge into account. Only 1 week after closing, we already announced the joint Boards, the joint future Boards who will drive our companies in their respective countries. So we had clearance from the very first moment onwards who is in the driver seat. Moreover, last Friday, we already accomplished to finalize the Board, minus 1 appointment, in both areas, namely in Czech Republic, Slovakia and in Poland. And here, also very important for you that you see how we would also leverage the skill set we get into our book. For instance, in Poland, 2/3 of the new Board, minus 1 appointment, are recruited from the AXA side. So you see we are really walking the talk. We are quite fast. We also used the time between signing and closing. We support that we entered the companies with clean teams, and we did our utmost in order to prepare all the plans and the budgets and to have a clear picture also regarding the target operating model we would like to leverage from January 1, 2021 onwards. Regarding the digitalization, the automation, I think it's also very important for you to know that the target application landscape has already been defined. This is already in place. So we have already defined our target systems. We also have defined the clear road map in the upcoming 2 years. So we have a clear road map towards harmonization of our IT landscape in the respective countries. And basically, I can say we are estimating that we will downsize the number of systems in place taking into account all 3 countries with all companies, AXA and UNIQA, by roughly 50% down the road to 2022. And also very important for you, when it comes to reorganization, we will also piggyback on the existing AXA structure in Czech Republic and Slovakia. And from the next year onwards, we will manage our Slovak operation as a branch concept from Prague, and also this will lead to additional savings and to additional synergy effects. So now turning to my last page in the presentation, turning to the section of the future outlook. Andreas mentioned it before, and also indicated it on the first page: I think we had great achievements throughout UNIQA 2.0. We have a great starting position into our UNIQA 3.0 program thanks to the successful AXA acquisition. But definitely, in order to elevate to the next level, we also have to improve. We also have to reinvent ourselves. And this starts by a clear structuring of our business. And you see here, Retail, Corporate/Affinity and Bancassurance, these are not buzzwords only on the slide deck; this is really reflected in the new organizational structure. I will come to later onwards. So we will have, in the future, clear responsibility and accountability along these customer-centric business models. And when I speak about end-to-end responsibility, for instance, I have in my team someone responsible for retail, and he's responsible from product over process to distribution. Same applies for Corporate/Affinity and for Bancassurance. When it comes to retail, definitely, the road map in the upcoming year is to further simplify our product portfolio. Simplification, harmonization is key in the field of retail. We already reduced a number of products throughout the entire region over the previous 3 years from more than 1,000 down to 460, and we would like to reduce this further by factor of 10, meaning that we really have a harmonized product portfolio in our retail book throughout the entire region, which will enable us to leverage also the skill sets we have in place and which will also enable us in order to deploy the proper IT solutions. What else is important in retail, that we really focus on specific customer segments. I would just like to name one customer segment we pointed out in our new strategy. This is the customer segment of micro SMEs. Micro SMEs represent more than 95% of the SME structure throughout Central and Eastern Europe, a huge untapped area where the insurance penetration covered into our service is only on a 30% level. In Corporate/Affinity, it's clear as an add-on to the existing P&C solutions with really state-of-the-art risk engineering. We also would like to provide employee benefits programs. Here, we successfully launched in the previous 1, 2 years, especially in the field of health, group health contracts for the employees of our corporate clients. This is one of the key cornerstones in achieving a further importance also in the field of health insurance throughout the region. And moreover, we also attached Affinity to this segment because together we would like to leverage on the existing client base of our corporate clients and turning the game also into a revenue stream -- into an additional revenue stream for our corporate clients. In bancassurance, definitely, we would like to leverage on the existing bank partnerships with RBI, Addiko and mBank. Just to give you a flavor, we are represented in 15 countries, almost 2,200 branches with more than 17 million active customers. So also here in bancassurance, we would like to leverage on that. It goes without saying that we are also of the very strong opinion that the branch business will decline over time. Definitely, this will be counterbalanced and even overbalanced by a further digital distance offering. This is something we are heavily investing. And it's mentioned also on the process on the left-hand side. We call it digital sales platform. This will be a platform -- a fully digitalized cloud-based platform where we will provide to our bank partners digital distance offering 24/7 and not only in the field of PPI but also -- and this is also something in bancassurance we would like to diversify also from the distribution and from the product mix. So you will find there as well accident products, you'll find simply health products with cash benefits behind, you will find travel insurance and so on and so forth. So this is really a very comprehensive approach in that respect. When it comes to the digitalization of the processes, I can state, and we are very proud of that, that thanks to the target operating model we implemented already in the recent years, we nowadays have a policy [ through ] rate in retail in Central, Eastern Europe of roughly 40%. We would like to increase this up to 70%. That this is possible is already shown in some of our markets. For instance, in Czech Republic, we are currently at the level of 80% already by today. The enhancement of our Corporate Business Navigator IT platform. Just a few remarks on that, the Corporate Business Navigate is more or less the backbone of our corporate business, a business we incorporated in the year 2011, 2012. It was a kind of greenfield within UNIQA International because, the time before, we were only in retail. Nowadays, this book accounts for almost 30% of our overall book and in this Corporate Business Navigator, we have the entire business throughout 15 countries stored. We can control the entire offering. Just to give you a flavor, in the first 9 months of this year, we have 90,000 offers managed through this database. There is a very highly sophisticated and very balanced underwriting policy in place where it's a balance between the headquarter and the local entities. Moreover, in the IT, we would like to build the international data platform where we would like to leverage what Kurt successfully rolled out over the recent years, namely, SAP in all 15 countries. So we have a very sound and solid database and very structured and uniform database regarding the financial data. We also would like to turn to performance management. And here, data hub will be of utmost importance because we will collect unstructured data from 15 countries, and we will structure it according to the customer-centric business models I named before and make it available to every single country. Regarding corporate culture and organizational structure, just one remark, one hard fact that you see that these are not only buzzwords. We already streamlined and aligned our organizational structure according to the customer-centric business models I mentioned before, namely Retail, Corporate/Affinity and Bancassurance. We had a complete refurbishment of our Board composition throughout 15 countries. 41% of our top executives will find themselves in a new role from January 1, 2021 onwards. And to give another hard fact, we replaced or we changed 50% of our general managers throughout the region either because we rotated or we had new entries from AXA or even from the market. Regarding new business models, I think Andreas already mentioned, we developed CHERRISK within our international community, something which goes definitely beyond insurance, a complete ecosystem. Here, nothing to add. We have very ambitious plans, and we think that this can be a game changer, and we are very well prepared also if some digital attack -- even attack [ to ] ourself in our existing markets. So also here, CHERRISK is definitely a great weapon we already have in place and we developed over the previous years. In regarding the financial that we -- the financials, I come to the final slide, you will see here the contribution within UNIQA 3.0. We would like to add to the group growth. We would like to add another EUR 1.4 billion to the group's top line. Roughly EUR 800 million is here by AXA. The rest is by organic growth. So you see also here very strong, strong contribution. The assumption behind this is that we have a CAGR across the customer segments I named before, Retail, Corporate/Affinity and Bancassurance, of roughly 5% to 6%. This is something we should manage in the upcoming years. Furthermore, with our strong efforts of getting also new skill set in pricing capabilities and so on and so forth, further enhancement of our non-motor book, we would like to bring down the combined ratio by another 5 percentage points in the upcoming years. And you see that, finally, this results in a strong earnings growth in Central, Eastern Europe, and we would like to more than triple our existing results, providing this earnings growth you see here [ from ] '19, percentage 240% to 260% to the entire group. Thanks. This was a rough journey through our CEE book, and I would like to hand over to Kurt.

Thank you, Wolfgang. Ladies and gentlemen, a warm welcome from my side, and I would like to guide you through the financials of UNIQA 3.0 within the next 30 minutes. The frame that we set with UNIQA 3.0, you have heard from Wolfgang and from Andreas. The translation into the financials is threefold. First of all, we have the situation that 2020 is a transition year. Despite the fact that this year, from an operative basis, is a very solid one, we used this year also to invest now to safeguard earnings in the future. I'll come to that in a minute. The second frame that we said was ongoing solid capital position for UNIQA. Despite the market is even in this low-yield environment, we will also improve our capital position in the future, make an active capital management but stay on a very conservative managed capital situation. We learned from the history on the one hand, and we also want in this solid capital position in the future safeguard a little bit for uncertainties. It's about the Solvency II review that is ahead of us, uncertainties about the market, and this is part of the solid capital position. The third frame. Lastly, one thing that did not work out that well under UNIQA 2.0 was on our return on equity position. A growing ROE is a missing puzzle stone in a successful financial story of UNIQA, within having a good payment of dividends, the payout ratio that I will explain then later onwards, a solid and strong ROE despite the situation that we have to reduce our leverage position and a solid ROE despite the situation that we have an uncertainty also maybe on the market, what COVID-19 is concerned. The transitional year, 2020. I'll start on the left side of this slide. 2018, we started setting up UNIQA 3.0. 2020 now is the starting point. One thing that is not shown here but I want to address to you is, between 2020 and between 2025, we have the year '23 where IFRS 9 and 17 is starting. That means we focus in the next 2 years on the improvements that you see here. Then as the industry itself and also UNIQA, we have to recalculate our plans into IFRS 9 and 17 and then have also to value what does this mean for the new accounting regime. The 2020 topics, I think they have been addressed in our conference calls and in our communication in the last weeks. So it's about the topic of the goodwill. It's about the topic of additional costs according to the strategy about the AXA integration and the additional reserve that we have to set for COVID-19 effect in the year 2020. All in all, this means that, again, to stress this, the operative business is, in 2020, solid and good. But anyhow, we expect that what we stated in the beginning of the year that the result of 2020 will be around close to 0 -- between EUR 0 and EUR 50 million in that case. But on the other hand, we are with this very well positioned for the future. So we mitigated all the COVID-19 stuff that we had in Austria in business interruption, for example, or in the transport business. We launched a cost program, and we can also put the provision under IFRS and also in local GAAP for the relief of around 600 people. We can also increase revenues in the future, and you will see that in my last slide that UNIQA is then coming to a EUR 7 billion revenue company again. So this has been comparable to the times, including Germany and Italy, that we have. And we have investments for new and innovative business opportunities. That means we do not only rely on the existing business model, we also go one step ahead and invest in the future and also in new business models. The transitional year also will have an impact on the combined ratio. But the combined ratio of the year 2020, I would now leave alone. I would, in that case, start in 2010 where the company started with a combined ratio of 105 percentage points. We will end up in 2019 -- we have ended up in 2019 by 96%. The operative combined ratio of 2020 will be in the same level around Q3. But the thing is that this is not enough. This is not enough for the future. And therefore we want to come down 94% and 93% by the end of UNIQA 3.0 in the year 2025. How to do this? On the one hand, it is the case that our underwriting result in the P&C business is, to our extension, a solid one. So it's not the case that we want to further improve here in a significant amount. What we have to improve is the cost side on the combined ratio that drives then to 94 or 93 percentage points on combined ratio. The second thing is portfolio cleaning. Wolfgang Kindl talked about it. We have the same story in Austria. We have 2 complex products. That means 2 complex processes. That means 2 high costs in that case. By bundling these processes, also a relief of process costs and therefore improvement on the combined ratio. So all in all, an ambitious target, yes. But in this statement, to allow me here, the P&C business is one of the cornerstones, one of the earnings drivers in the future to achieve the financial targets of UNIQA 3.0. Solvency II. We have a lot talked about Solvency II in the past, and it's also a question of how does it develop in the future. We have, of course, according to the acquisition of AXA and according to the situation of the transitional year 2020, a situation where we will fall down of around more -- a little bit more than 170% Solvency II ratio by the end of 2020. Still, this is not the target, to stay on that level. The target is to grow in the next years. And so far, we can state, with this program, we will come up by at least 2022, again, to 200% Solvency II ratio and more. The big but in that case, we have many positive effects that are to be considered under Solvency II: A, the cost savings have also improvement on the combined ratio, especially in the long-lasting business like health. EUR 10 million cost savings are of around 8% to 10% Solvency II improvement. Further, we plan an uplift by an implementation of a full internal model. The group is now sized with EUR 7 billion revenues where we can argue also to build a full internal model on a group basis, which we expect to be ready by the year-end 2023, so, in that case, also use this as a further uplift. Thirdly, as stated in the beginning, we need and we have a conservative balance sheet management: asset management on the one hand, underwriting business on the other side and also to build some buffers for the Solvency II review that is ahead of us and where we personally -- and I personally expect that there will be a hit on the insurance industry. I can't tell you how much, but to be prepared for that is certainly one key element in our Solvency II management. To show the split by module, it's nothing new. But to remind you, when we start on the right-hand side, the market risk at UNIQA was in the year 2012 and also in the year 2013 of around 75 percentage points. So we reduced significantly, by 15%, the market risk by, a, also reducing the capital requirement and improvement of the Solvency II ratio itself. We did it by different asset allocation. We did it by derisking. And also, what helped us is the implementation of a partial internal market risk model for the group. This, for us, is important because this brings down also our hurdle rate in terms of cost of equity and, therefore, also in the later stage then on the return on equity. The tiering of UNIQA, I will refer to that later onwards. The Tier 2 element is more or less on a topic -- on a level where we can't improve. So therefore, one element in the UNIQA 3.0 financial strategy is deleveraging also here to have room for the future if the company needs additional capital. Staying at the market risk and leading then the story to the life business, of course, significant pillars in the market risk is the interest risk on the one hand side and the credit risk on the other side. This has to do with our asset allocation, especially in the personal lines, life and health. And therefore we are investing, in that case, in government bonds, in corporate bonds with high spreads and with high interest sensitivities. On the other hand, don't forget and look on the diversification effect. The diversification effect and market risk is of around 40% of the whole business, which is not that bad, which is driven by a good proportion of the rating profile, a good proportion of the country risk that we have. We're also investing in those countries where we are in. So therefore we have also good diversification on that level. And 40% is a level that we want to keep to bring down the market risk on that level. Equity risk in UNIQA are driven by our investments and participation. You have to note that we are not hold -- not having some equities [ and ] stock picking. We have the [ fund concept ] where the equity risk at UNIQA is visible. Leading this to the situation of the sensitivities, no big changes in that what we communicated in the past. So that means, out of that, what we -- what I explained, we have a relatively high volatility on the interest rate sensitivities by 50 basis points up and down, close to 30 percentage points. This is fine for us because it's manageable for us. What jumps into the eyes, maybe looking on the credit spread, 50 basis points on the corporate, minus 7; and credit spreads on the government bonds by 50 basis points, minus 17. This is a volume driver. This has nothing to do with the portfolio itself. This has nothing to do with the rating classification. This is a pure volume driver, and I will show this to you in a minute. The life business itself, and how do we manage the life business under UNIQA 3.0? First of all, in this slide, it's visible that, between the year 2013 and 2022, we will reduce our actual reserves by more than EUR 3 billion purely by runoff, purely by not renewing the business in the existing form. And this brings us also down on our average guaranteed interest rate from 2.6% in 2013 or 2.3% now in 2019 to 2.1% in 2022 and furthermore then going down to EUR 5.7 billion and 1.7% in the year 2030 in a 10-years period. For us important is that, in that case, 30% of the back book will expire, will be run off. This helps us also to freeing up capital, which means 5% of the total capital is then freed up by this runoff. And we have also the reduction of the guarantees, which is important. If you look then in the future on our investment result, which, of course, according to the existing situation on the market, according to the situation that the assets under management are also declining, out of this, the basis effect is that, automatically, the investment result shrinks. But on the other hand, it is, in that case, only shrinking so that we can earn this average guaranteed interest rates in the life book, and this is, for us, important, important because, with a, this information here; b, again, with the cost savings. And also, by reducing the costs on the life side, we are in the position that our life portfolio in Austria does not hurt us in the future more than it is at the moment. Of course, I can state that, with the existing life book, we cannot earn, in the future, money. But on the other hand, we do not burn too much money in that case. Focus is new business, capital-light guarantees products, unit-linked, index-linked products and with this mixup and also find a good basis for covering our fixed costs. In that case, we also stick to that what we achieved over the last 10 years: the duration gap. A 0.5-years duration gap is, to our opinion, to our risk appetite, the amount or the level that we want to keep. A, we do not want to close it down to 0 because then we are really more or less locked in. Opening up means that interest rates, spread risk and UFR are highly sensitive to the business. And therefore, we defined a 0.5-year duration gap as the optimum for the existing life book in Austria. Our portfolio itself and our diversified investment strategy. On the left-hand side, the assets under management by book value, on the right-hand side by market value, not that much difference. Important for us is to communicate that we stick to the level of a high portion of fixed income, followed then by credit balances, property and equity positions as stated here. EUR 16 billion on volume for fixed income is, for us, a key element for, a, to repeat it, to duration gap; b, for the sensitivities and also in the health business, as this is done similar to life in Austria, to earn the average guaranteed interest rate. Let's look now at a breakdown of these volumes. The EUR 16.1 million, they are structured by around EUR 10 million government bonds, EUR 5 million on corporates and a small amount on other fixed income. Much more important for us is the rating distribution. The majority is investment grade. And of course, we're also investing in noninvestment grade. As stated some minutes before, that is, for us, very important also to invest in those countries where we are in. It is not possible to distribute in the Ukraine or in Russia a life product if you are not investing in Russian or in Ukrainian bonds. Of course, this is a different rating. Of course, it's a different risk profile. On the other hand, this helps us in diversification. This helps us also a little bit in the investment yield, and we can also, on the market, sustainably sell these products. So in that case, we do not have a significant change in the future. It will look like also in 2020 -- '22 regarding the composition of the bonds. Corporate bonds. A breakdown -- a question is, are our corporate bonds -- or is our portfolio sensitive on COVID-19-impacted business? No, this is not the case. So as stated in the footnote, EUR 70 million, 7-0 million, out of EUR 5.4 billion is related to airline industry or to travel industry, so a neglectable amount, so that even if in 2021 or even '22, some burdens in this industry come along, UNIQA is not significantly impacted by this portfolio. Of course, diversification, and I talked about this, is very key for us. And therefore, you see here also a wide spread between financials, which is the key element, but also, consumer and communication is part of the corporate bond portfolio. The investment yield. We defined UNIQA 3.0, the financial story, in a low-yield environment, which we are 100% sure will continue more than 5 years. So therefore, it's also reflected in our calculation on the investment yield. The year 2019 with an investment yield 2.9 percentage point, we do not expect to come back within the next 5 years. This has to do with the portfolio itself. I showed you that, to a large extent, we have investment, fixed income investment and corporate investments. And as yields and yield curves are negatively and close to 0, this has also an impact on the current income portfolio. On the other hand, the 2.4% and the 2.3% are, for us, key. If you remember the slide I showed you on the life book and on the average guaranteed interest rate, with this investment yield, we are each year above the average investment yield and guarantee that we have to pay to the customers. And as long as this is the basis without extraordinary efforts and this is planned without extraordinary efforts and special effects, accordingly, and with the cost program and with the runoff and with the in-force management, we can stabilize the portfolio in Austria and also stabilize the life impact in our solvency and also in the earnings. Of course, what we are doing, and this brings me then to the new strategy in the asset allocation, is that we are investing in more illiquid assets than we did it in the past, illiquid assets, including real estate, and also here to generate illiquidity premium for the future. Before now we come into the situation and description of this illiquid asset portfolio, of course, this is only possible because we're investing this in the personal lines business. In that case, also to use the long duration, especially in the health business, stabilize the ALM position in the life book by 0.5-year duration gap. And therefore, for us, it is possible to invest in these illiquid assets, not giving up the cash flow management, especially in the life book. So what does this mean, investing in illiquid assets? The starting point is 2019, where we have, so far, about EUR 1.1 billion on so-called illiquid assets. We want to boost this up, up to 2025, to close to EUR 3 billion. That means an additional EUR 1.8 billion, including real estate, including [ dry debts ], including infrastructure, also referring to the ESG levels. So this is the part that we are investing and takes also into consideration the investment yield that I presented to you before. On the other hand, by doing this, there stays a so-called residual reinvestment, which is, in 2022, around EUR 1 billion, EUR 0.8 billion; or in the year 2025, it's about EUR 2.4 billion. And these residual investments for the time being are allocated to government bonds rated in AA and in A-rated bonds. What does residual reinvestment mean? That means we look at our portfolio, the mathematical reserves. We reduce from this mathematical reserve the runoffs that we have according to the expiring of the policies. We reduce in a second step also the investments that we need, the money that we need by investing in property. So in that case, EUR 500 million is calculated to reinvest also in property. Then we reduce in the next level the thing that -- the amount that we need to reduce our sensitivity, especially in the health book and in the life book. And what then stays is a residual amount, and this is, in the year 2025, around EUR 2.4 billion, which is flexible for us in handling and then reinvesting. And for the time being, we reinvest this in AA- and A-rated government bonds. If times come differently, we can also reallocate this in other asset classes. But this shows to you that, in that case, we are flexible. In that case, this helps us a little bit in also using opportunities and also to consider the long-lasting book in life and in health. Moving to the ROE and how the ROE's considered and is structured. The growth in the future comes from the P&C side. Not only the growth comes from the P&C side, also the big earnings have to come from the P&C side. 93% combined ratio in '25 is the key element for the earnings in the future, for also the liquidity in the future and the basis also for dividend payment. Followed by the health business, a strong CAGR of 4%, of course, driven by Austria but slowly also increasing in the international business, so the second contributor in the earnings is the health business. And thirdly, and this is also in parallel not only what the growth is concerned, 1% growth in the life business is driven by the international business. This is clear. Also, the profit comes in the life business only from the international business. In Austria, we have, as I told you, the clear target to stabilize the portfolio, invest in new products like index-linked, unit-linked or capital-light products. This has to come over the years, but the key element is stabilize the existing portfolio; by that, also, then having enough profitability and liquidity to fund the ROE. Second pillar to drive the ROE is the cost management, of course, a 2% reduction on the cost ratio between 2019, which is the basis. Andreas showed the slide where we have the waterfall, what we invest and then what UNIQA is saving on EUR 125 million over time. This is then reflected in the acquisition and other OpEx costs. And the key element and the key message is to achieve a reduction by 4% between 2019 and 2025. 10% acquisition and other OpEx ratio costs is something that the company has to achieve to be a market player in Europe that is acceptable what the cost side is concerned. And also, I explained to you several minutes ago that it is key element to stabilize the life book. It is a key element to bring the combined ratio down to 93%, not only by underwriting efforts, more than by processes, by economies of scale and by head count reduction. So this is the key element also to improve the ROE in the future. The ROE level of around roughly 8% in 2022 and then 9% and more in 2025, how to come and how to explain this ROE. First of all, we always have to check if the ROE is in line with the cost of equity or the cost of capital the company has. As an Austrian insurance company within the existing environment, we have around 9.5%, 9.6% cost of capital. And this is at least what we have to earn also on the return on equity side. And this is for us the target, and how to achieve this target, I tried to explain to you some minutes ago: again, by cost savings; by discipline on the underwriting, P&C first, health second; and stabilize the life book. And of course, reflecting that what we've continuously stated, the AXA integration and the AXA acquisition also is a key driver not only in the earnings, also on the return on equity achievement. Before I close, one topic that I mentioned in the beginning, it's about the leverage ratio of UNIQA with the acquisition of AXA. Of course, the company came into a position where the leverage or the debt leverage ratio is on the upper level, and therefore, also a key element in our financial story is to reduce this leverage ratio in the next years. How? A, the first expiring Tier 2 is in the year 2023. You see it here by EUR 350 million; the next one in the year '25, by EUR 200 million. You see also here the interest rate that we pay on an annual amount. So the reduction also on the interest rate is another contributor, not only on earnings, also on the return on equity. By looking on the solvency ratio, and that what I explained on the solvency ratio, it is, for us, possible to reduce these Tier 2 elements also in the year 2023 and '25 by not replacing them, having the situation, as it is now, under control, not knowing what is coming in '23 or '25, having in mind that we are finishing our internal model and having in mind that, also, the dividend payment in the year '22 and following has to do, therefore, there is a clear and strict liquidity management under UNIQA 3.0 in place in UNIQA. That means we want to have at most dividend from our internal companies in the future. The best would be 100%. But on the other hand, a payout ratio, which is guiding us for the external dividends and, therefore, collecting money and liquidity internally to then refinance the Tier 2 in '23 and later onwards in the year '25 and to reduce our leverage ratio of a level of lower than 35% in those years, a, because of a debt leverage ratio of more than 40% is not acceptable for us on a long basis. And on the other hand, coming back to the statement before, if there are -- come, again, some stress times, that the company has, again, a headroom for Tier 2 instruments to counterbalance. Finally, UNIQA 3.0, the financial targets, I do not want to go to each number now. Just to highlight, in the operating business, key element, again, is the reduction of the costs by 2 percentage points from 2019 in comparison to 2025. On the capital basis, it's, for us, the key element to improve our return on equity of a level of more than 9% in the year '25, in that case, also to cover the cost of capital and the cost of equity for the company and for its shareholders. And on the financials, on a stable payout ratio between 50% and 60% in the years also to be able to reduce the leverage ratio of a level by lower than 35 percentage points. Ladies and gentlemen, this was the section of financials and risk management under UNIQA 3.0. Thank you for listening so far. We will now make a break of 10 minutes so that the analysts and investors who are calling, questions -- have the possibility to raise their questions, and we continue with the Q&A sessions in 10 minutes. Thank you. [Break]

Ladies and gentlemen, thank you once again for joining us in our Capital Markets Presentation on UNIQA 3.0, and we are now very happy to hand over to our operator, and then we will start our session.

[Operator Instructions] And the first question comes from the line of Oliver Simkovic from Raiffeisen Bank International.

Can you hear me?

We can hear you loud and clear. Great. Yes. Thank you.

Perfect. I have 3 questions to start with. The first one is regarding your digital strategy and online sales channels, especially -- I mean, what proportion of our policies were sold digitally in 2019, if you have that information? Also, how business has changed in 2020. And how fast do you expect this number to increase going forward? The second question is regarding top line growth and your assumptions, especially related CEE. Is this rather pricing-driven growth or volume-driven? And also, do you see any hardening in P&C pricing in your geographic regions? And then my last question is a follow-up on your cost reductions in Austria of EUR 85 million. Could you give us some more specific information about what exactly this is? Can we expect that this is the reduction of the IT investments that you will do in the prior years? So this will materialize more towards the end of this -- of the forecast horizon? Or -- yes. Could you just elaborate a little bit on this, please?

Thank you, Mr. Simkovic. The first question will answered by me, the second one by Wolfgang Kindl and your last one about cost by Kurt Svoboda. So about digital sales, the funny thing is that in the last couple of years, I would say, within the last decade, the percentage of digital alternative sales at UNIQA did not increase. And it did not substantially increase on the whole Austrian market. So basically, it's around 1%. So around 1% of our portfolio is sold via digital or alternative sales channels. We do not believe and we do not think that this is going to remain, so you find us highly -- are cautious and, I would say, optimistic that we can change and the whole portfolio will change in both ways. What means both ways? First, in the existing UNIQA, meaning both in Austria plus [ and ] CE, we will see a trend that's very easy to sell standardized products such as travel, such as household, will be [ some accident ], will be sold more and more online. This is the one thing. Do we expect the kind of tremendous, I would say, disruptive innovation and journey that, let's say, next year, we will jump from 1% up to 10, and then to 20% all -- at all. But for sure, when the journey of U3 will be ended in 2025, we will be clearly north of 1%. How much, frankly spoken, I do not dare to say because if you would have asked me the same question 2002, when [ I first took over my first Management Board ] of UNIQA, also there, we have been at 1%, right? So I'm quite cautious, but I just know it will be clearly more than 1%. This is about the, I would call it, classical UNIQA, so more or less the company, which is taking care about closing our performance gap. If it's about opportunity gap, and this is where Cherrisk comes into the game, as I tried to explain, something like 2 hours before. This is a different game. This is a digital attacker, which you want to more or less test on the Western European market, which is not our home market, where we do not cannibalize ourselves. And here, we want to say how far we've come with this completely digitized, low-cost carrier. Here, of course, we will make an evaluation, as I mentioned before, at the year-end of 2021, how successful we are. As Wolfgang mentioned, we have currently around 200,000 people in the ecosystem of Cherrisk in Hungary. 200,000 which, I think, is not that bad for a company which did not exist 2 years ago. But let's make some more concrete analysis by the year-end of [ 2021 ], right? So this is about -- more or less, to answer your first question about digital sales. If this is okay for you, I would like to hand over to Wolfgang and to talk about the top line, especially in Eastern Europe.

Maybe 1 follow-up here, the 4 countries that you're considering for the expansion of Cherrisk, would those be also markets that you're not that active in yet? Or would it also be markets where you currently are already present?

So most probably, it would be other markets in Western Europe. Not in Eastern Europe, most probably.

Thank you. So regarding your question, how we would like to achieve the top line growth. I mentioned and I highlighted that we are counting on a CAGR of roughly 5% to 6% per annum in all the respective areas, retail, corporate and bancassurance. First of all, how we see the market trends, as I stated in my presentation, we see the markets coming back from the year 2022 onwards. Also with a growth rate in the range of 4% to 5%. Definitely what we have embedded in our strategy that we would like to outgrow the markets in the nonmotor business. So here, definitely, we will put a clear focus. I named, for instance, in retail also that we want to focus, for instance, on micro SMEs in the future is so far untapped area with a potential. If you only focus on 5 segments out of this, and I do not want to go too much in detail, these are 1.2 million micro SMEs throughout the region. So we have still a lot of untapped potential. If we approach this in a structured way across the countries, we see huge potential. Furthermore, in the retail, we would like to increase the productivity of our sales force by roughly 30%. 30% increase means if you take the KPI, number of contracts per annum, we would like to go from roughly 450 contracts per annum. On average, we currently have up to 600. So this is the second layer. Regarding the motor business, so far, we were very cautious in that respect. Taking into account the pricing capabilities we see on the AXA side and what we have seen also there from a combined ratio, which is, on average, in 5 percentage points better than our motor combined ratio. We might even be more offensive in the motor business. Nevertheless, as you stated, we see starting price competition again. We do not see it as fierce as it was in the year 2014 or '15 where the markets were shrinking and where everybody was in the motor segment, very price competitive. But this is the situation in the retail sector. In the corporate sector, I mentioned it before, we would like to stabilize our portfolio. Currently, this accounts for roughly 30% of our overall portfolio. Also, in alignment and in agreement with goods from a risk management perspective, we think that this is a healthy proportion. More or less what we would like to explain also within this field is the area of employee benefits. For instance, we are currently the clear #1 in health insurance on the Ukraine and insurance market. And this is only due to the fact that we provide, within our corporate book, this group health insurance policies. And when it comes to banking, of course, we count a lot on the implementation of digital distance offering, also on an increased productivity within the existing sales force, also by enhancing our product portfolio going beyond a pure PPI game as some of our competitors are doing throughout the region. So also here, we are counting on a diverse portfolio. So we have a lot of actions in place in order to achieve this 5% healthy growth on average, namely a profitable growth as we have shown in the past.

Third question, Mr. Simkovic, is about the cost savings in Austria. And in that case, the material cost of EUR 85 million. So first of all, each department is contributing to this EUR 85 million. The most prominent topics are, for example, in the IT department, internalization. So that means step away from high consultancy expenses and do the things on our own. Second thing is to reduce our projects and to waive maybe the one -- or rather nice to haves and focus on those projects where, a, contributing to a customer experience that is, for us, key; and b, which is from a regulatory or legislative purpose necessary. Of course, it's always a room for improvement in terms of sponsorships, marketing and things like that. What we learned in COVID-19 phase is also something that we want to take with us in the next 2 years. That means office space reduction, less traveling, do more with video conferencing and in that case also, reduce the infrastructure costs in UNIQA headquarters on the one hand, but also in the regions. And last but not least, to use also the experience of our new collaboration forms that we have in COVID-19 learned. And by that, also reduce redundancy in different departments. So this is more or less the way how the EUR 85 million saved in these years up to 2022.

Did [ it ] answer your questions? Was this fine for you? Okay. Obviously. So let's go on, please.

The next question comes from the line of Michael Haid from Commerzbank.

Also 1 question on Cherrisk and 1 question on the CEE integration. So can you describe a little bit the business model of Cherrisk? I understand it is a Hungarian start-up? Why did you decide to expand first in Germany and not in Austria, which are -- it seems to me more natural. Is it because you face cannibalization effects in Austria, but Germany, essentially a greenfield operation. How much do you want to spend on marketing? And don't you think you face the risk here that an otherwise successful company fails because you are not known that much in Germany. It looks to me that this is not the fastest, [ if the most ], approach. So this is my question number one. And the second on Central and Eastern Europe. You mentioned that UNIQA is being a one-brand company. Can you elaborate a little bit how far you intend to integrate the company within Central and Eastern Europe to offer standardized product across companies, common back-office simplification, et cetera. I ask this because one of your competitors in CEE clearly follows an integration approach to set up one single operating entity for Central and Eastern Europe, another one follows more a multi-brand strategy. So where do you see yourself in that space?

Thank you, Mr. Haid. I take on the first part of your question and invite Wolfgang afterwards to give his, let's say, experiences as he is more or less the godfather of this Hungarian project, and this is now a very positive remark. So we started, as I mentioned, this in-house, corporate start-up 2 years ago with basically no means and just a little subsidiary. So everything, more or less, what they needed to grow, they've been found on their own. And as I mentioned, just very pure, simple travel insurance, accident, household, 200 customers in this ecosystem and completely digitalized just with a few people in the back office handling claims. So more or less, everything is optimized. So as you're absolutely right, this is a very promising model for UNIQA in which way ever. Yes, you're right, we decided not to start business in Austria because we do not want to cannibalize our own very strong existing sales team and our business portfolio. We, because of this, on purpose decided to enter a very rich, a very mature market just to test if the very positive experiences, which we recently made in the last couple of years in Hungary, if those experiences also are applicable in Eastern Europe, in Germany. And if the same positive assumptions, which we now took in Hungary, if they're also valid for Germany. What kind of possibilities do we have? As the question before was from Oliver, yes, it's possible that we're going to say, "Let's move afterwards to a similar, quite mature market in Western Europe by using the same brand." So by using Cherrisk, not UNIQA. So we definitely would not use the brand name UNIQA for Western Europe. Point number two, it's possible that on the long-term perspective, this becomes a kind of second brand, a digital brand for our group. It is possible. And maybe at the end of the day, it's also possible to use the second digital brand also for Eastern Europe. This is true. But currently, we will not, more or less, dilute our very strong approach, saying we got one strong brand. And I think this is a key distinguishing element to some of our competitors for Eastern Europe. This is UNIQA. We just have this one brand in Austria. We just have this brand in Eastern Europe, which now the one small exception of Cherrisk. And if you go to a -- it was a third geographical region. This is then Germany. Then they can test a new one without destroying too much of our brand value. This is the rationale behind us. Frankly spoken, we see absolutely no risk in the strategy because we just invest in 2021, EUR 15 million, 1-5, and as you assumed, and as Wolfgang will elaborate, this is predominantly, of course, marketing expenses. This is clear because you need it for building up the brand reputation and the recognition. And then let's see, by the year-end 2021, where do we stand, what kind of customer feedback do we get and if we can scale this business either in other markets or yes, maybe it's right, maybe going back to Eastern Europe. Well, Wolfgang maybe -- may invite you to add and to make a further comment on this topic.

Okay. Thanks, Andreas. Regarding your question of the marketing investments, let me briefly touch base what is behind the -- this Cherrisk fully digitalized insurance business model. It's based on the [ routes ] of insurances, basically on mutuals and on risk community. And it's not only insurance. And when we are talking about, we are going beyond insurance, we mean that we also have a huge impact of charity on this platform. With other words, all these 200,000 members of Cherrisk are daily in the position to gain a kind of currency on the platform, namely Cherrisk, which represents 100 Hungarian forint in order to dominate this, either to social welfare or, on the other hand, to reduce their premium income. Why I'm mentioning this? So from a marketing perspective, there's one big difference to all the other digital providers. Here, you have a concept, member gets member. So what we currently see is that opting out in order to be in one of the baskets of donation. Every single month, we have 3 baskets of donation. You have to both wait, you have to apply, so we are constantly interacting with our community. So this is already one big and strong argument for Cherrisk, why we consider that we can reduce the marketing cost to a certain extent. The second thing is, we would like to leverage also the know-how which is granted if you are accepted on one of the comparison platforms. And we just had certain pilots, just to -- testing the ground and already by today, we were approached by various bigger comparison platforms, inviting us to join them. So this is something -- how we would overcome this. And why Germany? Please take into account, it's really fully digitalized in. In order to start in Germany, we have to hire 3 additional people, 2 people in our headquarter in Budapest, where the Competence Center is located; in order to enhance our claims and service center, German-speaking staff and 1 market manager. So basically, you can enter with this business model in the kind of franchise, every single market at low entry costs. This is an additional background towards what Andreas mentioned. And just bear in mind that only the household market in Germany is of the size of the entire Hungarian insurance market. So taking this into account, it's obvious that we want to test it there. You're absolutely right, we have to take certain specifics into account, but I think our model is also really, really specific. And I invite you in to join our web page in order to get an insight on that. If you go to cherrisk.com, you see all these specifics I mentioned now. Regarding the one-brand strategy, definitely, we are behind this one-brand strategy. In general, you know that throughout the entire region, we follow this one-brand approach. I think it's of key importance in order to create a corporate culture, which goes beyond country borders and to go beyond country policies at the end of the day necessary in order to leverage scale and skills throughout the region. I think we did a lot in optimizing our country footprint throughout the regions. But now within UNIQA 3.0, definitely, we have to go beyond. And it goes clearly in the direction you indicated. What we are aiming for is, for instance, in retail, that we have a harmonized product portfolio. I mentioned it before, we want to reduce the existing 400 products we have in 15 countries on the market, down by factor 10. We want to harmonize this. It's clear that the parametrization stays in the country regarding pricing, [ in some ] -- and so on and so forth. But the modular, the basic approach is one approach. And for this, we will also build so-called [ UNI hubs ], which are nothing else than Competence Centers. It's also clear that you cannot guide such a thing from a headquarter level. The headquarter gives the strategic direction, but we want to develop this in the field for the field. And this is something which we elaborated for more than 18 months. We will put it in place from next year onwards. And the clear answer, we will go in this direction to harmonize in order to leverage, in order to have lean processes throughout the region and in order to create a USP, which is not a cheap price or a very specific tailored product, which is driving you crazy in -- on the process side. Now what we would like to achieve is the best service in place. And I give you one concrete example, which is, by the way, a spin-off of our Cherrisk ambition in Hungary, the household product in our traditional book in Hungary has in the general conditions stipulation that if we do not provide our services, meaning if we do not settle your claim within 3 days, yes, you get paid EUR 50, which is half of the premium of our Hungarian household product on average. So you see, we want to walk the talk, we want to increase our service level, but increasing the service levels throughout the region means standardization and harmonization under one brand.

There are currently no questions in the queue. [Operator Instructions] The next question comes from the line of Thomas Unger from Erste Group.

First question would be on the COVID-19 impact in the coming years. What do you assume for 2021 and '22? Will that still -- would the crisis now soon be a drag on premiums, claims in the coming years? What do you assume in your planning? What's the first normal year that you reckon? And then in terms of the geographic footprint, then you talked about the core markets, the 4 CE markets. What about the other markets for the East? Is there anything that you plan to change in the geographic footprint? Any units possible that you would plan or put -- dispose of? And then thirdly, on the combined ratio on the loss ratio side in P&C, how do you see NatCat events developing in the coming 5 years? Will the charges increase? What is assumed for the [ full ] of loss ratio until 2025?

Thank you, Mr. Unger, for your questions. I take on there first 2 and Kurt then your last one. Your first was addressing the impacts of COVID-19. You know that we have been quite cautious, maybe too cautious in April this year when we gave the guidance for the year 2020. So we have been calculating, as you know, various scenarios. And happy to say now that thanks, God, no one of those scenarios became true. So our current situation, as it was mentioned by Kurt a few minutes before, is much better. And we see a very positive, very solid, underlying operative development of our group. This is the good message. So having learned our lessons out from this, we tried to find a good mix for 2021 for all our markets. So in the budgets, which we discussed in our Board in the last couple of weeks, we try to find a good mix of being cautious, being on the careful side, but not too pessimistic. So as far as the gross premium side is concerned, we feel quite comfortable with our assumptions for last year. And the same goes with -- comes with the claims management and the cost side, of course, because the cost, basically, we can control at least to a large [ extension ]. As far as capital markets are concerned, and it was addressed by Kurt, of course, we see some uncertainties. But I think we have a quite good and solid corridor developed for ourselves. So if you ask me personally, I think, if there is now not something -- I don't know, especially negative happening in the next couple of months, and if most of all, what we always said, the vaccine against COVID-19 will be rolled out in course of the full year 2020 in all our markets, at least in a significant way, I think we see a lot of positive impact on our business. We are, of course, carefully monitoring if there is a kind of bankruptcy wave moving on our corporate book, we don't see any kind of, how you say negative influences until so far. We've been addressing it this morning in the Board meeting, when we looked in our current books. So currently, we see a very stable development. I'm very happy to tell you this. So you find me, I wouldn't say, super enthusiastic. But you find us and the whole management team quite optimistic as far as these budgets for 2021 is expected. And I think we will end up somewhere where the 2019 has been overall. So this is more or less our assumption, especially if the profit line is concerned. Your second question was touching our market presence, very clear answer. Currently, we have no further ideas to move further on to East or other markets than I mentioned before. So we have 2 core markets. [ Something obviously ] -- outside of Austria, our existing markets in Eastern Europe, we do not plan to expand our geographic health footprint there. Of course, we look for opportunities to increase our market position in the -- in organic way or on the midterm perspective, not now, of course, because after the AXA acquisition, we need some time to digest this, this volume, this EUR 800 million new premium, those 5 million new clients. But overall, we are ready for a profitable growth in the existing 15 markets in Eastern Europe. If it comes about our third segment, Western Europe until the year-end 2021 is [ onto ] Germany. And only as mentioned before, via our new digital sub-brand Cherrisk, where we want to go invest. And if the track record and if the learnings would be positive in course of the next 12 months, of course, then we will decide by the year-end 2021 if the expansion to new markets is reasonable or not. Did those 2 questions -- before I hand over to Kurt, have those 2 answers answered your questions?

Yes, yes, yes. Also, the -- to the existing markets that you're in right now, you remain fully committed? No exit of any countries planned?

Sorry. Can you please repeat the question? The acoustic and the noise was quite bad in the background.

Okay. I'm sorry. So the current markets that you're in, the 15 markets that you mentioned, you remain committed to those markets, and you will not exit any markets...

Yes. Okay. Thank you for the question, now I got it. Currently, we have no plans to leave one of our markets. Yes. Thank you. And the third question will be answered by Kurt Svoboda.

You asked about loss ratio development in the years up to the '25 and the impact of NatCat and maybe the charges and the prices on that. So the loss ratio development in our plans is a rather prudent one, so we stick to the level that we had in the recent years, out of the situation that, a, the underwriting at UNIQA is -- to our opinion, a solid position. So 63% to 64% on a net loss ratio is something that is, for us, fine and okay. Having in mind that we can state in our plans, we do not calculate with any positive runoff gains, even if we had them in the past. So this could be an uplift in the future. Secondly, we calculate with one NatCat event in the year to come. NatCat defined everything more than EUR 30 million, which is our net retention in that case. 2020, so far, still, we have not done the whole year, but this year, we had not such a NatCat event in our books to consider. Certainly, some smaller ones, regional ones like last week in Carinthia and in Eastern [ General ] with the snowfalls. But these are, we call it, normal claims events, but NatCat in that -- this case is considered charges. Mr. Unger, we see at the moment, the tendency that reinsurers are increasing the reinsurance prices, a, because of -- there is too much liquidity in the market; b, the pressure that they earn their cost of capital is rather high; and b (sic) [ c ], the exposure is something that at least the European reinsurers do not like that much because it's very volatile. So we expect an increase between 2% and 4% in the upcoming years, which is considered in our reinsurance prices that we have with our partners so far to your question.

The next question comes from the line of Michael Haid from Commerzbank.

First on digitalization. Again, you mentioned that with the AXA CEE acquisition you acquired also some skills regarding digitalization -- digitization of the business. Maybe it's a difficult question, but can you comment on the terms of digitalization, in what ways AXA CEE and your digitalization strategy differs and where it is -- to what extent it is complementary. Second, on the dividend upstream, can you share with us, if you live up to your plans and all operating entities would achieve the targeted profit levels, what would be a good level of dividend upstream to the holding? As far as I understand, you target the level of 100%. Can you provide the transition towards dividends, i.e., what are your holding costs, interest costs on that, et cetera? Any information on that would be very helpful.

Thank you. I will take your first question regarding the digitalization and where I see complementarities and where I see the synergies. So without any doubt, where AXA is quite advanced regarding digitalization is with respect to mBank. It's not a secret that mBank is also considered on the Polish banking industry market as a -- really a front-runner when it comes to digitalization. To my knowledge, up to 50% of the entire business in bank issuance is digitalized. Same applies for retail, for instance, they have digital sales in a percentage of roughly 30%. Where I see a lot of complementarities, as I mentioned before, in some of our mature markets in Central, Eastern Europe, thanks to the target operating model we implemented already in 3, 4, 5 years ago. We have really a policy through rate of already 80% when it comes to administer and to manage all our policies. So I think this goes a lot hand-in-hand as well in the field of bancassurance, where we are currently deploying together with the RBI, our digital sales platform. So here, we see a lot of complementarities, which will push further exactly into the direction you asked, regardless if you are now in the field of retail or in the field of bancassurance.

[ With that ], regarding dividend upstream, let me start with the following. So the holding company has interest payment burden year of around EUR 70 million on average. This, as long as we do not repay our [ Tier 2 ], which is so far planned for the year '23. Secondly, yes, I stated that it would be good the more that we can get from the business units, the better it is. I stated, 100% would be the best. Of course, we have to take care on regulatory and on legislative situations in the country and also on the solvency topic. But the calculation goes the following that with normal case, when the AXA integration is finished and all synergies can be taken that between EUR 80 million and EUR 100 million on upstream comes from the international business. Secondly, don't forget that we have an internal reinsurance company in Zurich, which is also contributing because we are gathering here the profitable business for [ tariffication effects ] and for capital management. And all of this company will contribute around EUR 30 million to EUR 40 million in the future by an upstream to the holding company. And thirdly, about UNIQA Austria, which is also about around EUR 100 million to EUR 150 million depending on the situation of the market. By that, and having in mind the 50% to 60% payout ratio and the level of the time before corona, we can, in that case, pay a dividend according to the times before. And on the other hand, as I stated, collect the money in the holding company by repaying then the debts in '23 and in '25.

And do you expect the SCR to remain fairly stable so it grows with the business, but then you have dividend -- you have capital relief?

We expect, Mr. Haid, that the SCR in the international business, very, very stable. We see that the underwriting risk is rather stable, even that the business is growing by that. The growth that we have at the moment, and this is also a part of the story in the future, is a very profitable one. And this profitable business also stabilizes in the underwriting result. Same for Austria. And if you take into consideration that we want to improve our combined ratio by additional 2.5 or 3 percentage points. This helps us also in stabilizing the SCR. The relief that comes is from the life business. Also to be frank here, from the life business, we don't expect any big liquidity or [ hidden ] streams in the future.

There are currently no questions. [Operator Instructions] There are no further questions in the queue, so I will hand the call back to Mr. Brandstetter for closing remarks.

Ladies and gentlemen, based on the pure cost-cutting program and increasing our profitability approach in Austria, one; and second, on a profitable growth in Eastern Europe, based on the AXA acquisition, we will be able to increase our earnings year-by-year, next couple of years within [ UNIQA 2.3 ]. And by this payer growing dividends year-by-year, starting with the business year 2021 onwards. So we hope that this presentation found your interest. We may thank you for your time. We may wish you and your family to stay healthy. All the best. Merry Christmas and a healthy and lucky New Year 2021. Thank you, and goodbye.