Talanx faces €148m hit from Ukraine war, strong pricing tames loss

Talanx can hold the line on its 2022 earnings targets, thanks to strong commercial pricing even as exposure to the Russian-Ukrainian war lops as much as 12% off of the likely bottom line.

“Russia exposures will weigh on 2022 earnings,” analysts at the Berenberg investment house said in a note to institutional investors.

Thanks chiefly to pricing “well above” loss cost inflation in commercial lines, the €148 million hit to net profit coming from the war will only be a €78 million reduction in 2022 forecast net profits, Berenberg claimed.

That puts Talanx still in the net profit target range it established of €1.05-1.15 billion.

From the war and sanctions impact, Talanx may have gross losses on planes trapped in Russia at nearly $600 million, of which €50-100 million might stay on the Talanx P&L net of reinsurance, Berenberg believes.

The timely sale of the Russian unit CIV Life, although closed just days ahead of the Russian invasion of Ukraine, will nonetheless bring a pre-tax deconsolidation loss of an estimated €63 million.

Talanx will also suffer impairments to its €136 million in investment exposure to Russia and Ukraine.

Elsewhere on the 2022 forecasts: Net earned premiums should rise to €4.0 billion from €3.4 billion in 2021 and the combined ratio for industrial lines should come down to 97.5% from 98.7%.

When speaking to markets March 14, Talanx officials had claimed a “low direct exposure” to Russia and Ukraine. The group had €94 million in gross written premium in 2021 and had a €136 million investment balance as of February 21, 2022.

“We expect the bigger impact to come indirectly to us,” CFO Jan Wicke (pictured) said at the time.

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