Talanx shifts growth into primary lines to offset go-slow at Hannover Re
Germany-based re/insurance group Talanx continued to take its top line growth from primary lines, not its reinsurance exposure via Hannover Re, including 13% growth in industrial lines and a heady 29% in global retail.
“Primary insurance made a strong contribution to this performance,” the chairman of Talanx AG’s management board Torsten Leue (pictured) said of Q1 results. “This clearly shows that the optimisation programmes in the primary insurance segments are having a lasting effect.”
First quarter insurance revenue in the industrial lines division rose 13% to €2.1 billion, with management crediting liability, fire and engineering insurance. Specialty lines added nearly 11% growth in the mix to €681 million.
But that 13% growth rate left Talanx’ industrial lines set for a slowdown through the rest of 2023, with management ticking a box for ‘on track’ for a full-year growth target in the upper single digits.
The new IFRS17 quarterly underwriting profit measure, the insurance service result, more than doubled to €141 million with management citing lower total large losses and an improved frequency loss ratio.
Large loss of €34 million was down by nearly 2/3 from the prior period, led by the €15 million hit delivered by the Turkey earthquake.
The mix of revenue growth and that decline in losses took a full three percentage points from the division's combined ratio to 93.2%. Here again, management should feel plenty of comfort vis-à-vis the full year goal for a result below 96%.
“This success demonstrates the effectiveness of the optimisation programmes implemented in the period since 2019,” management said.
Primary retail insurance, excluding the German home market, delivered 29% FX-adjusted top line growth to €1./5 billion, largely driven by business in Türkiye and Latin America. That smashes guidance for full-year growth in the low double digits.
The combined ratio for the property insurance companies fell to 93.4%. This was mainly the result of improvements in the Latin America region, and particularly Brazil. Management claimed that a “balanced reinsurance structure” had kept losses from the earthquake in Turkey and forest fires in Chile held to a “mere” €11 million.
Adding in lingering retail operations, the hefty portion of Hannover Re earnings and its own group investment result, Talanx claimed a Q1 net profit of €423 million, up 31% from the prior year period. Some 42.7% of the bottom line could be attributed to primary insurance.
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