Talanx chair says 'not seen a crisis like this since World War II' as COVID-19 hits earnings
The parent company of Hannover Re and HDI, Talanx Group, suffered large losses in primary insurance and reinsurance segments and investment earnings due to the COVID-19 crisis, but managed to generate a profit in the first quarter of the year. Chairman Torsten Leue said that "we haven’t seen a crisis like this since the Second World War".
The German insurer's group net income was €223 million, compared with €235 in the first quarter of 2019.
Gross written premiums were up 6.4 percent to €12.5 billion, compared with €11.7 billion a year ago.
The combined ratio for property/casualty primary insurance and property/casualty reinsurance was 99.8 percent, versus 96.8 percent in Q1 2019.
The company reported coronavirus-related large losses of €313 million and impact on earnings from investments of €60 million absorbed in the accounts. All divisions were impacted by the consequences of the pandemic and the lockdown.
The COVID-19 crisis impacted both the Talanx Group’s underwriting and its investments as large losses in primary insurance and reinsurance rose from €137 million in the same period of the previous year to €435 million, substantially in excess of the €278 million pro rata large loss budget for the period.
Reinsurance activities accounted for the largest part with approximately €220 million, primary insurance being responsible for the remainder.
In addition, Talanx’s net investment income declined year-on-year as a result of the coronavirus pandemic’s impact on the capital markets - at €903 million, it was down 8.6 percent from €988 million in Q1 2019.
Furthermore, the group has withdrawn its 2020 outlook citing "too many uncertainties" caused by coronavirus.
“The coronavirus pandemic has stretched people and enterprises in many countries of the world to their limits. We haven’t seen a crisis like this since the Second World War," said Torsten Leue, chairman of Talanx AG’s board of management. "As a major European insurance group, Talanx has also been impacted by this crisis, both in its underwriting activities and in its investments."
Leue added: “We entered this crisis in a position of strength. Now we are focusing on maintaining this strength and resilience so as to be able to continue supporting our policyholders, business partners and employees and the people in the countries in which we do business, and to go on providing insurance, both now and in the future. This is in line with our Talanx Purpose: ‘Together we take care of the unexpected and foster entrepreneurship’.”
