Re/insurer Talanx lifts earnings goals by 25%, sees 10% ROE across units

German re/insurer  Talanx Group, the parent company of reinsurer  Hannover Re and insurance group  HDI, can add 25% to net income over the coming three years to end 2025 with a bottom line of €1.6 billion, management has claimed.

Dividends will rise hand in hand, up 25% for the 2022 profit allocation then another 25% over the new three-year strategy horizon.

Calling his firm’s outperformance via 2019-2022 targets a “clear show of strength,” Talanx CEO Torsten Leue claimed his firm is ready “additional, highly ambitious goals.”

“The key factors underpinning these ambitious plans are ongoing organic and non-organic growth, underwriting excellence, a focus on profitable business in the divisions and a decentralised corporate culture,” Leue said.

Primary insurance will rise as a part of the whole to contribute 50% of net income by 2025 to match the contribution of reinsurance. Primary insurance had been a mere 31% in 2018 ahead of a rise to an estimated 40% at end-2022.

Industrial lines will likely slow its growth path, but continue its march to meet the group's ROE target of over 10%.

"The division will continue its global scale-up, focusing on underwriting excellence, the continued expansion of its specialty business and the expansion of services for captives," management said. Growth to date has tilted towards specialty over commercial, international over the home market.

Gross written premium in industrial lines should rise to above the €10 billion mark to end-2025 from an estimated €8.7 billion in 2022, a roughly 4.8% CAGR path, below the heady €4 billion increase from 2018 which included an acquisition. Segment ROE will rise from regions above 8% in 2022 to points over 10% in 2025 as the combined ratio falls to 95%, management believes.

In retail divisions, German retail will focus on life and increase its segment EBIT earnings by roughly 50% from the estimated €200 million due in 2022 to a figure in excess of €300 million in 2025, pushing the ROE from the estimated 6.5%+ to regions above the 10% mark. Management speaks to a "focused approach in Life & P/C" and a leading bancassurance position.

International will focus on attaining top-five status on its key markets across P&C on portfolio diversification, having secured the top-five status for automotive across markets as of 2021. Double-digit ROE, the universal target for 2025, is already within striking distance at above 9% in 2022, estimates say.

Human resources made a special entry on the large corporate goals, with an implicit suggestion that the job market is tough for employers. Talanx vows a “new human resources strategy that focuses on attracting specialists and on leveraging the opportunities offered by diversity and new work is to flank these strategic Group goals.”

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