UNIQA Insurance Group AG ($UQA)

Ladies and gentlemen, we warmly welcome you to the Conference Call for the Full Year 2025 Preliminary Results of the UNIQA Insurance Group AG. Please note that this call is being recorded. I am pleased to welcome UNIQA's CEO, Andreas Brandstetter; and CFRO, Kurt Svoboda, who will guide us through the presentation shortly. After the presentation, we will move on to a Q&A session. [Operator Instructions] And with that, I'm handing over to you, Mr. Brandstetter.

Thank you very much, and good afternoon from sunny Vienna. Very happy that you are so bold to spend the afternoon of Friday the 13th voluntarily with us. I appreciate this. This is just a brief confirmation of what we promised to you at Capital Markets Day in London in November of last year, as far as, first, the outlook for the year 2025 was concerned, and second, as far as our general guidance for the rest of UNIQA 3.0 growing impact, meaning for the years 2026 till 2028, is concerned. Starting with an overview on Slide 4, very briefly, I want to remind you what we told to you and what we showed in London, meaning the broad diversification of our group. On the right part of the slide, you see basically how distribution between our 2 regional markets look like. So still like 56% of our portfolio of our premium are coming from Austria, whereas international business, meaning CEE business, is gaining even more momentum, currently being responsible for 40% of the overall gross written premium. If, then, we shift to the right of the slide, you see how our 3 product groups are distributed. More than 60%, as you know, coming from the P&C business, currently having a very strong combined ratio of 91.7%, and then followed both by life and health insurance, both of them accounting for roughly 20%. Why I have to stress this? Because in the meantime, if you have a deep dive, a deeper look, you see that distribution on the portfolio in life and P&C business, the distribution between international business and Austrian business is almost 50-50. And if you have in mind that the profitability in those 2 product groups, both in life and in P&C business, is very strong in the CEE area. This means that you can expect a very strong profit level and profit contribution especially coming from CEE in the next years. This was my first comment as far as this is concerned. Let's move to growth. On the left part of this slide, you see that we're growing by more than 8% in the year 2025 to EUR 8.3 billion. This growth is -- and that's a trend which we saw already in the last years, coming with something like 5% from the Austrian business, a very secure, stable market. And then much more because by our CEE business where we have been growing by 10%, predominantly by Poland of 13%, with more than 6 million of our clients already coming and living in Poland, followed by Hungary 12%. And then once again, Ukraine, unbelievable, about 14%. So this means Austria 5%, CEE 10%, and these are -- this is a kind of pattern which we saw in the last couple of years and which we expect also to be relevant for the next years as the catch-up potential in Eastern Europe, as you know, still is very strong. If you then move further down on this slide, you see a combined ratio which I mentioned, 91.7% after reinsurance. Yes, it's true. All of us know that this year 2025 basically had no, or I'd say much less negative impact on claims side coming from NatCat as in the last years. That's one thing, but not forgetting that our underwriting discipline, our pricing capabilities, which we demonstrated to you in London in November, really improved a lot, and this means that we expect also in upcoming years constant combined ratios net, which are below 93%. Admin cost ratio also decreased due to this very strong growth down to 15.3%, which shows that we have our costs, the admin costs, clearly under control. Admin costs as well as the commission which we pay. Well, all those facts together lead, and this you see on the right bottom of the slide, lead to a profit before tax, which are clearly above for 2024, EUR 516 million, is even above the upper part of the range, which we indicated to last year. Our indication was a range of EUR 490 million to EUR 510 million, and that is EUR 516 million. We are slightly above the upper end of this range. The consolidated profit, and Kurt will come back to it in a second, was climbing up to EUR 425 million, which is an increase of 22% and based on a very positive tax rate of 18%. All this, and Kurt will elaborate, leads to a very strong increase of dividend. At least it's our proposal to the AGM taking place in June of more than 20%. 20% up to EUR 0.72 per share. If you move to Slide #5, just adding to what I did not mention yet. So also you can expect from us, and Kurt will take this maybe later also, an increased participation of the external reinsurance business if it's about growth and profitability. Technical result, it's mentioned here, increased by almost 27% to north of EUR 700 million, which is super positive. Financial result basically remained nearly unchanged compared to the year 2024, supported strongly by a higher ordinary income. And if you then look more further down, you see a new investment yield which improved up to 4.5%, and also the average investment yield improved to 3.2%. The total amount which we invested newly was a little bit less than EUR 2 billion in the year 2025. Let me end by a last comment as far as the diversification of our portfolio is concerned. Talked before about diversification as far as the premium, as far as the growth is concerned, as far as our 3 product groups are concerned. And I think this should give you the impression that this is a very well-balanced group. And I would like to add also, as far as profitability is concerned, that we are not based basically on 1 or 2 pillars, but in the interim nearly on 3 pillars. If you look on the profit before tax, you will see that, in Austria we are earning, and this is an operative figure, meaning excluding dividends coming from the international business that we earned last year, something like EUR 236 million. In Eastern Europe, EUR 246 million, so basically the same amount of profit before tax, and then followed by UNIQA Re, or by reinsurance in general. It's a very strong contribution of EUR 142 million profit-wise. I want to stop here and hand over to Kurt to provide you much more details on our P&L and balance sheet.

Thank you, Andreas, and welcome, ladies and gentlemen, to the topics of the preliminary 2025 results deep dive. Start on Page #6 on the key financial indicators. I think I would like to focus on 2 topics. The first one is that we had a return on equity increase of 14.3%, reflecting the good development on technical results and on the earnings. Andreas already mentioned the proposal to the AGM of EUR 0.72 per share. We are quite satisfied with the composition of the dividend streams, meaning that half of the dividend comes from Austria, half of the dividend streams comes from international, accompanied by a good portion from the UNIQA Re business internally and externally in Switzerland. So a quite well-balanced funding of a dividend of EUR 0.72 per share. The regulatory capital position is increasing from 265% to 275% by the end of the year. Knowing that some of you are questioning why this is lower than the -- after the third quarter 2025, 2 effects that I can report out here. The first one is we use the end of the year always of looking to assumptions and on economic assumptions. In that case, we saw that especially in the health business with inflation and with further spendings, we see an increase of the best estimates of EUR 260 million. So this is one thing of assumption changes being very cautious on that level. And the second effect was that our participation of STRABAG was super performing in the fourth quarter. And with the market risk in that respect on the SCR level, we have here also an increase in that. But this is for us still a strong position. And besides that, what you don't see in the slide here is that we also had an economic position and operating capital generation of EUR 590 million achieved in 2025, meaning that half of the dividend with this is covered. The rest is for internal funding. So in other words, also the economic growth 2025 was quite in line with that what we expected. Moving on to Page #7. It's about the development of the group's life and health contractual service margin. What is new in our disclosure is that we show a so-called operative contractual service margin, meaning without any assumption changes economic-wise and also on topic of model changes. This gives us a better reflection and also for you on the development of the core business. And with this, we see 2 elements. The first one is that the new business generation was with EUR 260 million, well above 2024. I will come in a minute on the split of life and health. Health is 80.9%, we are good on track with the target 2028, which lies at 90% CSM sustainability ratio. Top line on the next page was already mentioned by Andreas in detail, the 8.2%. Additionally to that, what you heard already on markets, on the growth, you can say that especially on the life business, we have a huge growth in the international business by 7.5% and -- sorry, 9.5%. And in Austria, around 1.3%. So a very dominant position in the international business. On the other hand, the health market in Austria and UNIQA in that case is a leading position with 6.2% is in line with that what we saw also during the year and this is also a sustainable growth for 2026 to be expected. On the admin cost ratio on Page #9, we see a stable trend and also a good path to achieve the target 2028 by lower than 15%. Despite that, with investments in the IT, our transformation and the UNIQA insurance platform, still some first investments in artificial intelligence, and with this keep the level of the admin cost ratio by 15.3% in both segments, Austria and international, on a good path and track record. If you look on Page 10 on the P&C result, I think we have to mention 2 things. The first one is that we had, on the one hand, a quite good development on the basic claim. So the gross attritional claims by 62.9% is quite good. If you go one step deeper, we can see the basic claims and everything around below 500,000 new claims. So UNIQA is reporting below 60%, which is also the driver of the high profitability in that respect. We had, as already mentioned, negligible NatCat impact by 0.2%. And the reinsurance result of UNIQA to also state this is, on the one hand, driven by the internal business, correct. But also in the second year, we achieved EUR 250 million external business in Zurich, leading to a profit of EUR 20 million, which is also part of the P&C earnings before tax. Life, Page #11, as I mentioned before, driven by the international growth and also profitability, also here technical result with 29% better than 2024. Health, additionally to that what I said before, we can say that especially in Q4 of the year in Austria there was a quite high sales activity. So the trend on demand on health insurance and on health services is ongoing. With this, we have also the new business margin in line with that what is expected, and health is a big contributor to the UNIQA results 2025, but also for the upcoming years. This is visible, especially on Page #13 (sic) [ Page #12 ], where we have to split between the business margins on the different product lines and the present value. So if you look again on the health business on the right-hand side, so EUR 133 million on new business value in relation to EUR 106 million in the year 2025 (sic) [ 2024 ]. This is what I was talking about, that in combination with the good development on the sales side driving the profitability of this business, knowing that not everything goes directly to the P&L because of the contractual service margin principle. The 2 core markets, Austria and international on Page #14. I think just to stress that in both markets we had good technical result on the P&C side, combined ratios gross-wise. It's also good to see that especially in Austria we have good development on the cost ratio. So that means not everything on the improvement is driven by the claims ratio. And we have also the situation that the basic claims in both segments are improving. Investment portfolio on Page #15 and 16. Page 15 is important that our expected credit loss model works quite confident, stable position over the year 2025, despite the interest rate on this government bond, 10 years, have increased by more than 30 basis points. So insofar, we achieved and this is then visible on the next slide, higher net investment income. But anyhow, according to the IFRS standards, only, or a part of it, EUR 209 million is reflected in the P&L as a net financial result. So far, some details on the results 2025. Before we come to Q&A, outlook for the year 2026. We see that UNIQA is ahead of plan and UNIQA 3.0 growing impact is also working in a way that we announced in the Capital Markets Day in London in November last year. So with this, we say, with the disclaimer of, of course, capital markets and natural catastrophes in a wider sense, that the target EBT range is between EUR 540 million and EUR 570 million for the year 2026, with a dividend policy unchanged between 50% and 60% as a payout ratio with a progressive increase of the dividends per share. And the proposal to the AGM was already stated by Andreas. With this, I say so far thank you for your attention. And now we open for your questions.

[Operator Instructions] We come to Mr. Unger.

Firstly, I'd like to ask you on the outlook for 2026. You have growth in the range of 5% to 10% on EBT level for 2026. Is that mainly -- is the key driver here revenue growth for '26? Or what are the other key drivers that you see? And where do you see the -- expect the combined ratio to go? Technical result overall, financial result, the key components would be very helpful. And then secondly, on the combined ratio in Q4 alone, from Q3 to Q4, the combined ratio went up a bit. If you could break down what were the factors that played a role here in Q4. And then lastly, if you could talk about if you see any impact from the conflict in the Middle East on UNIQA Group direct or indirect.

Thanks for the question. So starting with question number one, the outlook, we see as a combination of a stable ongoing good growth, that's correct. Still we see that especially in the CEE markets, we don't expect any more of this huge growth in Poland for the time being. So this market is on the one hand with huge potential, but that huge growth that we saw especially in Q1 and Q2 2025, we don't expect anymore. But we have other markets like Hungary, like Czech Republic, we saw also Ukraine and Austria still ongoing, where we see a basis for our -- and this is now the second driver. With the existing profitability and high growth, we are quite confident to achieve this level between EUR 540 million and EUR 570 million in all business lines. Your second question is very valid, the combined ratio Q3 and Q4. Generally, if you look on the results Q2, Q3 and Q4, so this has to do with several effects. The first one is the insurance industry, and especially we as UNIQA, we have always a peak on cost loadings in the fourth quarter. The second thing is that we saw in Q4 that the result and the development is quite stable. And also looking ahead around what's going on in the world, I think from a balance sheet management, we also took some actions to keep the company stable in the upcoming years for balance sheet measurements. And the third thing is that in Q4, we have always the least increase in premiums because of the regionality and the seasonality, especially in the international business. So these 3 factors are driving the Q4 development. Impact, Middle East, thank you. We can report out that we have no primary impact. So neither we have bonds or any other assets in the region of Saudi Arabia, Israel, Iran and in the wider area. We have also low risks that we actively are covering on the reinsurance side, also in our external part, so that we can say primary effects we do not have. Secondary effects we cannot exclude. That means a longer ongoing war will have impact on inflation, will have impact on energy prices and then maybe also on the potential growth in the one or other country in Europe, also on capital markets, we see at the moment also the stock markets in Europe, interesting-wise, not in the U.S., going down. So this is nothing in our hand. So secondary effects we cannot exclude, but with this, we have so far, also Q1, no visible effects to report.

And we move on to the next participant, Mr. Marcan.

I have one on the combined ratio and 2 on solvency. On the combined ratio, if I look at just the 2H number for your prior year development reserve release, it seems that you had some reserve strengthening. Could you just talk a bit about, was it any particular lines of business? Was it overall? And just a bit more detail on that. Second one on solvency, a very quick one. Can you just give the breakdown of the own funds and SCR that comprise the 275%? And then finally, again on solvency, just what happened in 4Q? It seems to be down 8 points. Can you just talk about the moving parts in the last quarter of the year?

August, so starting with your first question, combined ratio releases and runoffs, that's correct. We had 2024 higher runoffs than we had in 2025. This has to do with Boris on the one hand and closing some Boris claims is still in 2024, which was not the case for 2025. Second is that we had in 2025 some line of businesses, especially in Austria, and where we did the last step on restructuring. You remember maybe that we explained on the Capital Markets Day the restructuring phase on transport, on accident and on liability in Austria, and this was done in 2025 in the last quarter. Impact-wise, in total, we talk here about EUR 20 million to EUR 25 million for all of the business lines. And with this, we have then the normal run-off portfolio and also run-off impact that led us to the situation that was 91%, roughly, the combined ratio net basis is in line with this what we expected. On the of Solvency II, I heard just your first questions, but I try to again to give you an update on that. What we did in Q4 was on the one hand we updated our noneconomic assumptions on the own funds, and this brought us to a higher best estimate on EUR 260 million and with this less own funds. Secondly is that STRABAG was performing extremely good in 2025. And as our STRABAG shares valued on the Solvency II equity position, we had to have more market risk for that. So those 2 elements brought us to a situation where the increase in relation to 2024 was a little bit less than we expected. And if you compare it to the third quarter 2025, we had, in that case, lost 8 percentage points out of these 2 elements.

So that was the answer to your question, Mr. Marcan, do you have any follow-up questions?

Yes. Just on the solvency one, I ask quickly, do you have the numbers on what the full year own funds and full year SCR are?

Yes, of course, August, you can write, own funds UNIQA by the end of the year, EUR 7,308 million and the SCR EUR 2,657 million.

We move on to the next participant, Mr. Rok Stibric. So then we move to the next participant, and this is Mr. Antoine Bouchetoux.

A first question on the life new business because you delivered quite a strong NBV number in Q4 in health, but also in life, which is quite a significant upturn from previous quarters. And I think actually the life NBV increased by almost 30% in Q4, mainly from savings and protection. And I was wondering if you could give us some indication on what were the drivers behind this performance. And maybe could you provide also an update on the planned product launches that you referred to previously. So that's the first question on the life new business. Then, coming back on P&C, you flagged a tough comparison base looking into 2026. You mentioned Poland. I think also maybe reinsurance was quite strong in the first quarter last year. So I was wondering if you could give us an indication on the outcome of the January renewals in both primary insurance and reinsurance and the implications in terms of premiums and profitability, specifically in the first half of the year because, yes, the growth slowed down a little bit in Q4 in P&C. And then finally, a quick question on the tax rate, which was particularly low in Q4. So I was wondering if -- that's probably a one-off, I guess, but maybe there was an element that you would flag that could change the long-term outlook for the tax rate.

Thank you, Antoine. Starting with the first question, the driver for the good growth in the health business especially and also life in Q4. So we started by starting Q3, especially in Austria, on the health business, a growth initiative where we -- and I think this is also then part of your second question. So we launched new products, especially on the outpatient tariff, meaning that we have now 4 products in place and not only one. We have here different customer approaches from the light one or from a cheaper one up to a very expensive product. And with this, we get more customers and more the broader way of selling the products. And this was reflecting also growth in Q4. So this was one driver of the health business in Q4. The second driver was, of course, initiatives in the sales side, especially in the topic of advertisement. So this helped us also to boost the new business margin in relation with the volumes. The life business is something that we have a product in place where we will come out, I think, in Q2 this year. It will be a new product for the Austrian market, especially with a higher flexibility. And this gives us also the security that in both channels, retail and also on the bank side, we have higher productivity and portfolios in the life business. Not to forget that in the international business, we have the markets of Czech Republic and Slovakia where life business was booming and especially of short-term life business. This is also valid for Poland. And here, we have also for '26 huge potential that is a part of our plans. So these are your first 2 questions in terms of life, health and new products. P&C, you ask about the situation in Poland and the impact of 2026 and also the renewals on the reinsurance side internally and externally, I understood. So starting with Poland, yes, we did huge growth in Poland, especially in the first quarter, more than 20%, especially on the motor business. When you look in Poland in total, P&C, we achieved 13.4% growth. And which is much more important, Antoine, that we have also here a very positive insurance technical result achieved. So that means it's not only volume, it's also that this volume is profitable. This has to do with our flexible pricing. This has to do with our multichannel approach all different ways. We see Poland still as a growth market because the country itself has a huge potential and is also booming economic-wise. Do we see the same growth rates like last year? No, that's not the case, but profitability-wise, yes. Renewals, we came out with a new renewal by end of the year, which was a like-to-like basis around 6% premium increase for the internal insurance. And this was a little bit reflecting the good profitability on the P&C side, especially on the cat. We have been quite 7% increase and also quite fast [ in coverage ]. External-wise, we are not impacted by that because the business started quite young. And what we also have is that we have here different renewal phases. So the next renewal phases we are participating is the July one. And in that case also see new prices where we can benefit because of higher prices. But generally, reinsurance market is softening still and we see no big impact so far. Coming back to the question number one today, maybe secondary effects then over the year depending on the global situation. Tax rate, last question, 18%, that's correct. This has to do with loss carried forward that we could use by active deferred taxes covered. Is this sustainable over the last -- next years? I would say, not in that way, but a tax rate on an average of 20% is something that you can count and calculate.

[Operator Instructions] Mr. Stibric by phone.

So some things that I wanted to ask were just answered, but I would just like to go back to the life book in Austria. Perhaps you mentioned this, but I was having some issues with the connection. So was this increase in insurance revenues in Q4 solely driven by the release in CSM? Or was there any other factor? If that's something that you could elaborate on, please.

No, it was not a release factor, Rok, in Q4 that we had. It was a volume-driven topic coming from the international business. As said before, it was a mix between Czech Republic, Poland and also to forget Croatia.

Mr. Bouchetoux, you are able to speak now.

I've got a few. So first of all, maybe the -- on solvency, I was wondering if you could give us a quick update on the planned adoption of the full internal model. I think it was planned for 2026, but maybe an update on this question. Then a question on the health variances because there was a negative economic variance of circa EUR 200 million in Q4 and a positive noneconomic variance of about EUR 100 million in the quarter. So I was wondering if you could give us some precisions on those 2 points.

Good. So on the full internal model, I can report that 2026 was -- would be great, Antoine, but we are going for 2028 for the approval of the full internal model. We are at the moment with Austrian regulator discussing and in a good line of testing the model, talking about best estimates and also how to embed the operational risk. So far, we see no big topics and also no topics in terms of that it is postponed. And with this we see also that we are in line with this. Impact on the full model, so far, I cannot state the model is not stable enough. So update will follow. On the health side, you ask about the variations. The noneconomic variations have been the premium adjustments on the health side. This has to do with the product itself. It's about indexation, and indexation in the health business is an important part because of medicine inflation, and this has been the noneconomic variance that we talk about.

In the meantime, we have received no further questions. And therefore, we come to the end of today's earnings call. Thank you for your interest in the UNIQA Insurance Group AG, and a big thank you to Mr. Brandstetter and Mr. Svoboda for your presentation and the time to answer the questions. I wish you a successful day. And handing over to you, Mr. Brandstetter and Mr. Svoboda, for some final remarks.

Just adding, all of us wish you a great weekend. Stay safe and healthy. Bye-bye.