Uniqa Insurance : Green Bond Report 2023

1. UNIQA at a glance

Key figures

The UNIQA Group is one of the leading insurance companies in its core markets of Austria and Central and Eastern Europe (CEE). Some 21,200 employees and exclusive sales partners serve more than 16 million customers across 18 countries. With a market share of about 21 per cent, UNIQA is the second-largest insurance company in Austria. It is further represented in 15 markets across the CEE region.

The Group provides a comprehensive range of products in property and casualty insurance, life insurance, and health insurance to its customers. In the first nine months of 2023 UNIQA achieved profitable growth and

Green Bond Report 2023

stable results, generating earnings before taxes of 305 mil. EUR. Insurance revenue grew by 9.3 per cent by the end of September 2023 year on-year. Increases were recorded in all business lines: property and casualty insurance grew by 11 per cent, health insurance by 6 per cent and life insurance by 4 per cent. The combined ratio increased slightly to 92.0 per cent (1 - 9/2022: 89.6 per cent) due to higher weather related and Nat Cat claims. The overall cost ratio also increased slightly to 31.4 per cent (1 - 9/2022: 29.9 per cent).

In 2020 UNIQA presented "UNIQA 3.0 - Seeding the Future", a far-reaching strategic programme formulated in response to the megatrends of a.o., economic power shifts, demographic and social changes, innovation & digitalization, and sustainability require- ments. To support it in its mission to help its customers achieve a longer, better and safer life, UNIQA also formulated five Guiding Principles: customer first, simplicity, responsibility, integrity and community.

Key operational elements of the programme were condensed in a set of financial initiatives and business objectives, to be realized by 2025. These are very specific and ambitious: premium growth of approx. 3 per cent p.a., combined ratio in property/casualty insurance of approx. 93 per cent, total cost ratio of approx. 25 per cent, return on equity exceeding 9 per cent, solvency ratio exceeding 170 per cent, and customer satisfaction of at least 4.5 stars out of 5.

GUIDING Principles

Our values

3

Integrity

We keep our promises.

Community

We collaborate beyond

conventional boundaries.

Sustainability approach and ESG integration

The UNIQA sustainability strategy, published in 2020, pursues a holistic approach and ties its economic ambitions to a clear commitment to the environment and society. The strategy rests on five key pillars:

1. An investment policy established in accordance with ESG criteria
2. A product policy aligned with ESG criteria and featuring sustainable additional benefits
3. Exemplary sustainable operational management
4. Transparent reporting and ongoing independent ratings
5. Committed stakeholder management ensuring greater social and environmental responsibility

ESG integration

Sustainability measures become transformative only if they are implemented in a transparent and understandable way. UNIQA does this through strong

governance and clear responsibilities, well-founded stakeholder engagement, comprehensive reporting and external ratings.

Group ESG Committee

The Group ESG Committee (ESGCO), set up in 2021, is the central body deciding on sustainability matters at a Management Board level. It comprises members of the Management Board of UNIQA Insurance Group AG and the heads of the Corporate Business, Sustainability and Ethics and Public Affairs departments. The committee was implemented to steer ESG integration in the core business, as well as to continuously monitor stakeholder awareness of environmental and social impacts arising from engagement and business activity.

Sustainability management

The Sustainability, Ethics and Public Affairs (SEPA) team is responsible for UNIQA Group's sustainability agendas and reports to the Head of HR, Brand and Sustainability, who also acts as the Chair of the ESG Committee. SEPA supports all operational units in integrating and pursuing UNIQA's sustainability strategy within relevant business processes. The team is also responsible for sustainability governance, reporting, rating enquiries and monitoring regulatory changes.

UNIQA Green Bond 2021

With more than 1 billion EUR in sustainable investments and the objective of being climate-neutral by 2040, UNIQA is one of the pioneers in the Austri- an insurance industry. After its first green bond for climate-friendly projects placed in 2020, UNIQA issued a second green bond in December 2021, which was also very well received by investors. The 2021 bond has a nominal amount of 375 million EUR, maturity of 20 years and is rated BBB by Standard & Poor's, with an annual coupon of 2.375 per cent. This bond financed the partial repurchase of two outstanding subordinated bonds with a total nominal amount of 375 mil. EUR, with coupons of 6.875 and 6.000 per cent. UNIQA is the only insurance company in Austria to be a partner of the "Net-Zero Asset Owner Alliance" and is committed to detailed reporting on its progress in sustainable investing.

In May 2022, UNIQA also joined the Austrian Green Finance Alliance as one of nine founding members.

In November 2022, UNIQA became a member of the Climate Action 100+ initiative. This initiative focuses its efforts on the world's 166 highest-emitting companies that are critical to achieving climate neutral- ity. This accession complements UNIQA's existing memberships and its objectives in the area of sus- tainability.

375 Mio. EUR

Issued in

December 2021

"The performance of our first green bond demonstrates the strong demand from investors for sustainable investment products as an addition to their portfolios. We see a clear and encouraging trend: sustainability and climate protection have become key factors in investment decisions.

The considerable interest in our second green bond only supports this view and demonstrates the high level of trust investors place in UNIQA, as well as their willingness to join us on our path towards more sustainable investing."

Kurt Svoboda,

CFRO at UNIQA Insurance Group AG

ISIN:

XS2418392143

In accordance with the UNIQA Green Bond Framework issued in 2020, an amount equivalent to 272 mil. EUR of the net proceeds was exclusively employed to refinance investments in sustainable assets. UNIQA ensures that the eligible assets comply with official national and international environmental and social standards and local laws and regulations on a best effort basis. The remaining share of proceeds has been intermittently allocated to green bonds UNIQA has invested in, before it can be allocated to qualifying projects.

In addition to the Green Bond Framework, the asset selection complies with UNIQA Group's internal ESG guidelines:

• UNIQA Sustainability Strategy
• UNIQA Responsible Investing Policy

Green Bond allocation process

As described in UNIQA's Green Bond Framework, the ESG Committee is an integral part of the green bond governance. The ESG Committee is responsible for reviewing and validating the existing pool of eligible green assets, updating the Green Bond Framework, and monitoring the ongoing evolution of market practices in disclosure, reporting and harmonization.

Asset Selection & Evaluation

The selection and evaluation of eligible assets is performed in three steps:

• Initial analysis of eligibility - this is done as part of the ongoing investment decisions made by individu- al portfolio managers.
• Confirmation of eligibility - the identified assets are subject to additional analysis with respect to their conformity with Green Bond criteria.
• Allocation decision - the ESG committee takes a final decision on the selection of the assets desig- nated to the green bonds.

3. Impact Report

Impact Summary

UNIQA has engaged Morningstar Sustainalytics to calculate the estimated impact of the green bond issued by UNIQA in December 2021. Since issuance, 272 mil. EUR have been allocated in the categories of Renewable Energy, Pollution Prevention and Control, Sustainable Water and Wastewater Management, and Clean Transportation.

Green Bond Report 2023

The projects are located across various high-income OECD countries. For a representative year of the bond's term to maturity, Sustainalytics has calculated 254 kilotonnes of avoided GHG emissions in CO2e.

Scope of Work and

Limitations

UNIQA has engaged Sustainalytics to calculate the environmental impacts of the projects financed with proceeds from the 2021 Green Bond. For this work, Sustainalytics relied on the data provided by UNIQA on the amount allocated and the technical data on the projects financed. Sustainalytics' impact reporting is aligned with ICMA's June 2023 Harmonised Framework for Impact Reporting.2 The methodology and assumptions made for the impact calculation are outlined in the methodology chapter. As part of this engagement, Sustainalytics exchanged information with UNIQA's representatives to understand the sustainability impact of its projects. Through these exchanges, UNIQA's representatives have confirmed that:

1. They understand it is the sole responsibility of UNIQA to ensure that the information provided is complete, accurate and up to date;

Green Bond Report 2023

1. They have provided Sustainalytics with all relevant information;
2. Any provided material information has been duly disclosed in a timely manner.

Sustainalytics also reviewed relevant public documents and non-public information.

Impact Findings

For reporting, Sustainalytics follows the ICMA Harmonised Framework for Impact Reporting2, which synthesizes market expectations and outlines recommendations for impact reporting to create a standardized reporting structure and to enhance the understanding of the impact to all stakeholders, including investors. Table 1, 2 and 3 provide project level details. These metrics correspond to a representative year during the bond's term to maturity and are based on the share of project financing.

Technology Type

Allocated Amount

Financed

Generation

Financed Capacity

Financed Emissions

Avoided

Technology Type

Allocated

Amount

Financed

Waste Treated

Financed Electricity

Generation

Financed

Project Emissions

Financed Emissions

Avoided

Project Type

Allocated Passenger-km

Amount Travelled

Tonne-km Travelled

Financed GHG

Emissions

Financed GHG

Emissions Avoided

Data Sources and Assumptions

• For the projects included under Pollution Pre- vention and Control, the emission factors of the projects were provided by UNIQA where possi- ble. Where not available, an average emission factor for waste-to-energy was applied.10
• For projects where only the annual electricity gen- eration was provided, the amount of waste treated was estimated using the average calorific value of municipal solid waste.10
• The local waste mix and the local waste treatment practices were sourced from the IPCC.11
• The method used to estimate emissions from waste management practices was adopted from the Euro- pean Investment Bank.12
• The baseline emission factors for the countries where projects are located were sourced from IFI.13 To account for emissions from upstream activities, Sustainalytics applied an additional, indirect emis- sions factor.11

Clean Transportation

Clean transportation is assumed to displace a mix of existing and future transportation along the same travel distance. The GHG emissions avoided are calculated using: 

1. The emissions of the clean transportation projects based on the best available data from UNIQA. To the extent available, calculations are based on fuel consumption or passenger-kilometre data. In the absence of such information, estimates are made based on mode of transportation, fuel type and average passengers per vehicle.
2. The baseline emissions, which are the emissions associated with a basket of vehicles or modes of transport being replaced currently and in the fu- ture lifetime of the project.
3. Financed project-avoided emissions are calculated by using the share of project financing of the total project emissions avoided from the above calculations.

Green Bond Report 2023

Data Sources and Assumptions

• For projects included under Clean Transportation, UNIQA provided data on either the number of vehi- cles, number of passenger-kilometres travelled for passenger transport, number of tonne-kilometres travelled for freight transport, or fuel consumption for the included projects.
• In instances where passenger-kilometres or tonne-kilometres travelled data were missing, Sustainalytics estimated this information based on available project data. These estimations relied on local rail statistics specific to each project.
• For passenger transport, it is assumed that the projects displace the baseline, which is the average mode of transport used in the local context based on road statistics. This baseline includes a mix of passenger vehicles, buses, metros and taxis. For overseas transport, airplane and maritime trans- port are also included in the baseline.
• For freight transport, it is assumed that projects dis- place the baseline, which is a mix of modes used to transport freight in the local context based on road statistics, including freight trucks and rail, For over- seas transport, maritime transport is also included in the baseline.
• The emissions of the individual rail projects are based on the electricity consumption. Where possi- ble, Sustainalytics used emissions factors provided by UNIQA. In the absence of these, emissions were calculated using the national grid emission factors sourced from IFI. To account for emissions from upstream activities, such as electricity transmission losses and the extraction and refining of primary fuels, Sustainalytics applies an additional, indirect emissions factor to the emissions directly emitted by the project and baseline vehicles.