Profit at Hannover Re parent Talanx jumps in 2016; large losses below expectations

Hannover-based Talanx, which operates in insurance and reinsurance, grew its net profit by 23.6 percent to €907 million in 2016, helped by lower than expected large losses.

A large loss burden that remained below expectations and the level of the previous year as well as fiscal one-off effects contributed to the positive performance, the company said in a statement.

The net burden of large losses across the group was €883 million below the €922 million registered in 2015 and below the large loss budget of €1.13 billion, driven by the primary insurance business.

Large losses worth €257 million were attributed to primary insurance compared to €349 million in 2015; reinsurance was burdened with €627 million after €573 million in 2015.

The largest losses were the wild fires in Canada. The combined ratio of Talanx improved by 0.3 percentage points to 95.7 percent in 2016.

"We achieved the very good Group net income in a market environment that remained challenging for all divisions'" said Herbert Haas, chairman of the board of management of Talanx.

"The period of low interest rates is continuing and geopolitical challenges such as Brexit are adding to the conditions in the underwriting market. It is all the more pleasing that all divisions exceeded their expected result too and thus contributed to the best Group net income yet in the company's history," Haas noted.

"Our aim of generating more than 50 percent of premiums in primary insurance abroad by 2018 was almost achieved in 2016, at 49 (2015: 47) percent. The trend shows that the internationalisation and diversification strategy being pursued is having sustainable success."

Talanx group wants insurance and reinsurance to contribute equally to its earnings before interest and taxes (EBIT) by 2021. In 2016, primary insurance generated more than 40 (2015: 33) percent of EBIT after minority interests.

Premium income was €31.1 billion in 2016 compared to €31.8 billion in the previous year.

Management is proposing a dividend increase to €1.35 for 2016 compared to €1.30 per share in the previous year.

Talanx targets a net income in 2017 of around €800 million.

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