Profits at Hannover Re parent Talanx jump, chairman Leue optimistic on growth

German re/insurer Talanx Group, the parent company of  Hannover Re and HDI, says it is well on track to achieve "greater growth and stronger profits" as it increased earnings in all divisions, with industrial lines recording an "impressive improvement" in the financial year 2019.

Chairman Torsten Leue stated that its '20/20/20' programme, which aimed to lift profitability in the area of fire insurance, has been successfully completed. Leue reaffirmed its 2020 forecast of group net income in the range of “more than €900 million” to €950 million.

Talanx's gross written premiums increase by 13 percent to €39.5 billion in 2019, compared with €34.9 billion a year ago.
It reported a group net income of €923 million – an increase of 31 percent from the previous year (€703 million).
Talanx said the profits were driven by increased earnings in all four divisions, with industrial lines improving by a particularly large amount. The reinsurance division hit its growth and earnings targets in 2019 despite large losses exceeding expectations.

However, the total large losses amounted to €1.3 billion due to events in non-life reinsurance. This figure was slightly higher than in the previous year (€1.2 billion) and in excess of the annual budget of €1.2 billion.
At 98.3 percent, the combined ratio was flat year-on-year due to higher large losses from the hurricanes on the Bahamas and in the USA, and the typhoons in Japan. The re/insurer said that large losses also pushed down the underwriting result by 11 percent to € –1.8 (–1.6) billion.

“We grew premiums by 13 percent and profits by 31 percent in 2019, generating record net income of €923 million. In other words, our ambitious Strategy 2022 initiative already bore its first fruit last year,” said Leue, chairman of Talanx AG’s board of management.

“Encouragingly, all four divisions contributed to the rise in profits. Retail Germany, Retail International, and Reinsurance all continued their strong performance, while Industrial Lines recorded an impressive improvement. The latter significantly exceeded its price adjustment target of 20 percent for fire insurance and is now clearly generating an operating profit again."

Leue added: "Our growth initiatives are having an effect. For example, HDI Global Specialty lifted its premium income by more than 30 percent to EUR 1.4 billion. The commercial business in the Retail Germany Division recorded growth of 8 percent. We also made substantial progress in modernising our IT in 2019 by retiring the BS2000 mainframe system."

He concluded: "We are convinced that we will position Talanx for even greater growth and stronger profits in the coming years by encouraging an entrepreneurial mindset and independent action among our employees.”