Talanx lifts group net income to €742 million
European insurance group 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 €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 €1.9 (1.5) billion, while group net income jumped by 52 percent to €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 101 percent – and in the third quarter dipped below the 100 percent mark again for the first time, at 99.8 percent.
Talanx said this shows that the division’s 20/20/20 programme is bearing fruit. The 20/20/20 programme is an initiative that aims to achieve a reduction of the combined ratio in fire insurance, which accounts for roughly 20 percent of HDI Global SE's total portfolio, of at least 20 percentage points by 2020.
The outlook for 2019 group net income of "more than €900 million" remains unchanged. For financial year 2020, Talanx is expecting group net income to range between “more than €900 million” and €950 million.
Torsten Leue, chairman of Talanx AG’s board of management, said: “We are very pleased with our net income for the first nine months of €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 €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 €850 million in 2018, we are aiming for group net income in 2020 in the range of between ‘more than €900 million’ and €950 million.”
Large losses (including natural disasters) at group level totalled €782 (648) million after nine months, below the pro rata large loss budget of €900 million overall. Losses of €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 €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 €196 (162) million.
Net investment income improved, due in particular to 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 €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 196 (Q2 2019: 203) percent as at 30 September 2019.
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