Talanx profits dip as large losses exceed 2020 budget after nine months

Talanx Group, the parent company of Hannover Re and HDI, improved its combined ratio and gross written premiums despite COVID-19 claims expenses topping €1 billion, but its large losses in the first nine months of 2020 have exceeded the full year budget. However, its chairman Torsten Leue remains confident on seeing profitable growth going forward.

In the third quarter of 2020, the German insurer's gross written premiums rose by 4.7 percent to €9.9 billion, combined ratio improved to 99.7 percent from 100.4 percent in Q3 2019, but its net profit dropped to €194 million from €265 million in the prior year period.

Talanx reported that its gross written premiums rose by 5.2 percent to €31.9 billion in the first nine months of 2020. However, the group net profit declined to €520 million from €742 million in the same period of 2019. Its combined ratio also jumped to 100.7 percent from 98.5 percent in the prior year period.

In total, losses from the pandemic in the first nine months of the year amounted to €1.06 billion, primarily related to business interruption, event cancellations and credit insurance. The group noted other negative effects relate to investments (€170 million) and provisions for future premium decreases (€104 million). Conversely, the coronavirus led to improvements of €156 million at individual lines due to lower losses and other effects.

Additionally, large losses came in twice as high as in the prior-year period, mainly attributable to reinsurance and to primary insurance. Large losses of €1.6 billion exceeded both the nine-month and the full-year budget of the insurer.

Talanx said that HDI Global Specialty SE was the main growth driver in industrial lines, where the gross written premiums rose by 6.9 percent to €5.2 billion.

For the full financial year 2020, Talanx Group expects to generate a net income of more than €600 million, and between €800 to 900 million in the financial year 2021.

Talanx's chairman Leue stressed that the group remains in "very robust shape" despite the negative impact of the pandemic. He said: “The coronavirus pandemic is and remains a challenge. Luckily we are seeing profitable growth and are in robust shape. Group net income is impressive given the pandemic and the high level of losses seen in the hurricane season."