Ascent into the premier league in CEE
Acquisition of AXA subsidiaries in Poland, the Czech Republic and Slovakia
Around 5 million customers, 2,100 employees and €800 million in premiums – these are the key figures from those companies in the French AXA Group in Poland, the Czech Republic and Slovakia, which UNIQA acquired in 2020, thereby making it one of the leading insurance groups in CEE. The object of purchase was insurance companies in the life and non-life sectors as well as securities companies, pension funds and service companies of the AXA Group in these three countries. UNIQA has therefore managed to invest available capital in profitable cash-generating business.
A perfect strategic fit
The AXA companies fit brilliantly into UNIQA’s long-term growth strategy. They complement the Group’s existing business with their focus on profitable retail business, a balanced product mix and a solid sales network perfectly. With this acquisition, the UNIQA Group is strengthening its position in the highly competitive CEE growth markets on a sustainable basis and moves from number seven to number five in the region as a whole. The companies acquired by AXA enjoyed first-class management and hold an excellent position in the market. The UNIQA Group is gaining private and corporate customers with this transaction in three growth markets in which it has already been very profitable. The product mix at the companies is well balanced with 35 per cent life business and 65 per cent property business.
A 20-year record of success in CEE
UNIQA has almost 30 years of experience in CEE. The first steps in the region involved investments in the Czech Republic and Slovakia in the early 1990s, followed by further acquisitions in Croatia, Poland and Hungary at the turn of the millennium. With the launch of the UNIQA 2.0 long-term strategic programme introduced in 2011 and completed in 2020, the company defined the countries of Central and Eastern Europe as its second core market alongside Austria. The Group operates under the UNIQA brand in all countries except Russia.
Before the acquisition, UNIQA was number ten in the Polish market with 1.5 million customers, number six in the Czech Republic with 800,000 customers and number four in Slovakia with 500,000 customers. AXA in turn brought in 3.2 million customers in Poland, 800,000 in the Czech Republic and 750,000 in Slovakia, making UNIQA number five in terms of premiums in Poland and the Czech Republic and further consolidating its fourth place in Slovakia.
Region with major potential
This transaction means that the Group has invested in three growth markets in Eastern Europe with a population of more than 50 million people and with economies that have expanded much more quickly than Austria’s in recent years. With average growth rates of 3 per cent over the last ten years, the growth rate for GDP in these countries is significantly higher than that of Austria, which was approximately 1.6 per cent. This transaction means that UNIQA has invested in sustainable and lasting growth, as the economic dynamism in the CEE region is expected to continue in the long term and to remain significantly above that of Austria and western Europe.
Unique opportunity, rapid closing
With an acquisition price of around €1 billion, this was both the largest company acquisition in the history of UNIQA Insurance Group AG (UNIQA) and the largest acquisition in the Austrian insurance industry in Central and Eastern Europe to date. The transaction, which was agreed with AXA at the beginning of February 2020, was formally closed on 15 October once all required approvals had been granted. The transaction was therefore completed rapidly within eight months, despite the challenging situation and extensive travel restrictions as a result of Covid-19. The European Commission had already approved the take over in July, with the regulatory approvals provided in the countries concerned following this.
Rapid integration and use of synergies
Integration of the acquired companies began immediately after the closing on 15 October, and these should be largely completed by the end of 2022 under the current plan. UNIQA expects significant profit contributions from the new companies as early as 2021, and these should increase further as the integration progresses. With a current premium volume of just under €850 million, the contribution of the AXA companies including synergies is expected to grow to around one quarter of the total earnings before tax by 2025.
The main objective of integrating the acquired companies into the UNIQA Group is to exploit synergies and economies of scale, which should bring positive effects of up to €45 million annually overall from 2023. However, this requires substantial investments that will continue until 2022. The above savings represent 15 to 20 per cent of the current cost base of both the existing and new subsidiaries and also include a headcount reduction involving between 600 and 700 full-time employees. Specific measures include the consolidation of numerous roles, the introduction of UNIQA’s new Target Operating Model, accelerated digitalisation and automation, the consolidation of systems and projects and the harmonisation of IT platforms. Alongside this, the expanded UNIQA Group in CEE will benefit from the complementary expansion of its product range and the use of the knowledge and expertise available in the AXA companies.