Talanx lifts Group net income from EUR 448 million to EUR 742 million
Δευτέρα, 11 Νοεμβρίου 2019 18:22- Gross written premiums up 11.9 percent to EUR 30.3 (27.1) billion
- Industrial Lines improves combined ratio by 10.3 percentage points by the end of September – Q3 figure is 99.8 (128.9) percent
- EBIT climbs by 26.7 percent to EUR 1.9 (1.5) billion thanks to progress in all divisions
- Group net income up 52 percent to EUR 742 (488) million
- Talanx confirms outlook for 2019 Group net income of “more than EUR 900 million”
- Outlook for 2020: Group net income to range between “more than EUR 900 million” and EUR 950 million
The Talanx Group remains on course to meet its targets, recording double-digit growth in premiums and net income in the first nine months of the financial year. Premium income for the Group as a whole rose by 11.9 percent to EUR 30.3 (27.1) billion, or by 10.6 percent after adjustment for exchange rate effects. All divisions were involved in this growth. Nine-month operating profit (EBIT) climbed by a strong double-digit figure, rising 26.7 percent year-on-year to EUR 1.9 (1.5) billion, while Group net income jumped by 52 percent to EUR 742 (488) million. All divisions including Industrial Lines contributed to this performance. The combined ratio in the Industrial Lines Division improved by 10.3 percentage points to a good 101 percent – and in the third quarter dipped below the 100 percent mark again for the first time, at 99.8 percent. This shows that the division’s “20/20/20” programme is bearing fruit. The outlook for 2019 Group net income of "more than EUR 900 million" remains unchanged. For financial year 2020, Talanx is expecting Group net income to range between “more than EUR 900 million” and EUR 950 million.
“We are very pleased with our net income for the first nine months of EUR 742 million – a year-on-year increase of 52 percent. Encouragingly, the clear improvement in net income at our Industrial Lines Division also contributed to this. We are ahead of the pro rata target for our ‘20/20/20’ programme in this division. Both our operating profit and the equity ratio rose substantially. We are confident of reaching our target for Group net income this year of ‘more than EUR 900 million’. In line with our medium-term goal of increasing our earnings per share by an average of at least 5 percent per year, based on our original earnings forecast of EUR 850 million in 2018, we are aiming for Group net income in 2020 in the range of between ‘more than EUR 900 million’ and EUR 950 million”, said Torsten Leue, Chairman of Talanx AG’s Board of Management.
Large losses (including natural disasters) at Group level totalled EUR 782 (648) million after nine months, below the pro rata large loss budget of EUR 900 million overall. Losses of EUR 236 (283) million were attributable to primary insurance, very close to the figure that had been budgeted for this. Reinsurance accounted for large losses of EUR 546 (365) million, below the budget. The combined ratio for the Group as a whole remained almost unchanged at 98.5 (98.6) percent. The underwriting result for Property/Casualty Insurance was EUR 196 (162) million.
Net investment income improved, due in particular to a one-time special factor – the realisation of gains related to restructuring Hannover Re’s shareholding in Viridium – in the second quarter of 2019. It rose year-on-year to EUR 3.2 (2.9) billion. The net return on investment was almost unchanged, at 3.4 (3.3) percent. The return on equity increased significantly, to 10.4 (7.5) percent. The Group’s Solvency II ratio was a comfortable 196 (Q2 2019: 203) percent as at 30 September 2019.
Third quarter: Strong rise in operating profit and Group net income
Gross written premiums rose by 13.6 percent in the third quarter to EUR 9.5 (8.3) billion. Adjusted for exchange rate effects, the increase was a double-digit 11.6 percent. The combined ratio was down year-on-year, at 100.4 (102.1) percent. In line with this, the underwriting result for the Property/Casualty Insurance segment was EUR –30 (–110) million. Net investment income improved to EUR 1.2 (0.9) billion, while operating profit jumped to EUR 619 (259) million. Group net income amounted to EUR 265 (52) million.
Industrial Lines: Successful restructuring of fire insurance
The Industrial Lines Division lifted its premium income by 30 percent to EUR 4.9 (3.8) billion. Adjusted for exchange rate effects, growth amounted to 28.1 (8.9) percent. Retention fell to 50.8 (57.8) percent. The main driver for the increase in premiums and the decrease in retention was the acquisition of the shares of HDI Global Specialty.
At EUR –30 (–224) million, the underwriting result improved considerably year-on-year. Whereas the prior-year quarter was impacted by an extraordinary cluster of large losses, the figure for the current quarter was within budget. In addition, the “20/20/20” programme is having a positive effect. The goal of lifting profitability by at least 20 percent was already exceeded – improvements in terms and conditions of a good 24 percent had been firmly agreed with customers as of 1 October 2019. Both the large loss ratio and the frequency loss ratio for fire insurance improved, thanks to the systematic restructuring measures there. The total loss ratio in Fire was 81.0 (90.6) percent for the first nine months, while the combined ratio for the Industrial Lines Division amounted to 101.4 (111.7) percent.
Net investment income rose by 17.8 percent to EUR 215 (183) million as a result of positive one-off effects. Operating profit for the division amounted to EUR 133 (–32) million due to the measures taken to increase profitability and due to lower large losses. The contribution made to Group net income was EUR 84 (–36) million.
Third quarter: Combined ratio of less than 100 percent
The first-time inclusion of HDI Global Specialty in the third quarter lifted gross written premiums by 63.2 percent to EUR 1,401 (858) million. Adjusted for exchange rate effects, growth amounted to 60.1 percent. The combined ratio fell to 99.8 (128.9) percent. The underwriting result improved to EUR 2 (–196) million, while net investment income saw a rise to EUR 82 (59) million. Operating profit for the third quarter was EUR 65 (–110) million and the contribution to Group net income was EUR 43 (–89) million. We are expecting the full-year combined ratio to be approximately 101 percent. This is, on the one hand, close to our original target while on the other it underlines the need to continue our restructuring efforts.