Talanx ‘growing profitably’ despite ‘highest level of large losses’ in group's history
Talanx Group reported it is “growing profitably” in its 2020 annual results despite adverse market conditions caused by the pandemic and the ensuing economic crisis.
This is despite “the highest level of large losses in the company’s history”, according to Torsten Leue, chairman of the German re/insurer’s board of management.
The group, which is the parent company of Hannover Re and HDI, reported gross written premiums (GWP) of €41.1 billion in 2020 up 4.1 percent from €39.5 billion in 2019.
Net premiums earned were up 3.4 percent to €34.2 billion in 2020 from €33.1 billion in 2019.
Net income (after financing costs and taxes) had fallen to €1.2 billion in 2020 down 28.4 percent from €1.7 billion in 2019. Talanx group’s net income (after non-controlling interests) also dropped to €673 million, down 27 percent from €923 million in 2019.
The group’s combined ratio for property/casualty primary insurance and property/casualty reinsurance had deteriorated to 100.9 percent in 2020, from 98.3 percent in 2019. And the underwriting result was €–2.8 billion in 2020, a change from €–1.8 in 2019 as a result of pandemic-related expenses of more than €1 billion.
Total large losses for the group amounted to €2.1 billion up from €1.3 billion in 2019, which the group said was “a very significant rise compared to the previous year and significantly in excess of the annual budget of €1.3 billion”. A total of €1.6 billion of the total loss was attributed to reinsurance, up from €1 billion in 2019. Primary insurance accounted for the remaining €554 million losses, up from €363 million in 2019.
Natural catastrophes accounted for €658 million of the losses, down from €773 million in 2019, while the coronavirus pandemic hit property and casualty insurance with €1.2 billion of losses.
Talanx said: “Losses from natural disasters were down year-on-year due to the extremely moderate level of large losses seen in the fourth quarter. The largest losses from natural catastrophes were in the USA and were caused by Hurricane Laura (€145 million), Hailstorm Derecho (€111 million) and Tornado Nashville (€55 million).
In its results statement, Talanx Group described the 2020 results as robust despite coronavirus claims expenses of €1.5 billion, with an operating profit (EBIT) of €1.7 billion down from €2.4 billion in 2019.
The statement said the group’s net income of €673 million was “in line with the forecast of ‘clearly above €600 million’ provided in November”. The company added that without coronavirus claims expenses, Talanx would have “exceeded last year’s record net income figure”.
“The Talanx Group’s good performance in this crisis-hit year is also attributable to successful operational improvements in its industrial lines and retail Germany divisions. In industrial lines, profitability enhancements to underwriting activities are clearly having an effect. In the retail Germany division, the 2021 target for operating profit set by the KuRS modernisation programme already moved within reach in 2020 if one discounts coronavirus effects,” the statement said.
“Talanx is confirming its forecast for 2021 group net income of between €800 million and €900 million. The board of management and supervisory board are proposing a stable dividend of €1.50 per share to the general meeting.”
Board chairman Leue said: “Robust and resilient – the Talanx Group has successfully held its ground during the ongoing coronavirus pandemic. "We are growing profitably despite the global economic downturn in 2020. Given the adverse conditions caused by this deep crisis – which led to the highest level of large losses in the company’s history – our very solid growth and group net income are impressive demonstrations of our resilience. The same applies to our dividend payment.
“As regards 2021, we are putting our trust in the variety of vaccines with which the pandemic can be overcome. We are confident about the current financial year and are expecting group net income to rise to between €800 million and €900 million. In addition, we are confirming our medium-term group targets for the period up to 2022.”
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