Talanx raises 2019 profit forecast as H1 benefits from €50m 'extraordinary income' despite large losses

German re/insurer Talanx Group, the parent company of Hannover Re and HDI, has raised its full-year 2019 profit forecast on the back of "strong business performance" and an " extraordinary income" in the first half of the year that also saw an improvement in the industrial lines division. However, its underwriting results further declined in the second quarter of 2019 due to Typhoon Jebi loss creep.

Overall, the group enjoyed profitable growth in the first half of 2019 and has already generated more than half of its target net income for the year. Gross written premiums saw double-digit growth year-on-year of 11.2 percent to €20.9 billion, compared with €18.8 billion in H1 2018. Talanx said all of its divisions recorded an increase.

The group net income rose by 9.4 percent to €477 million (€437 million in H1 2018), boosted in particular by the retail Germany and retail international divisions. The combined ratio at group level increased slightly to 97.5 percent from 96.7 percent in the prior-year period due to late claim notifications relating to last year.

In the second quarter of 2019, gross written premiums rose to €9.1 (€8.2) billion, an increase of 11.6 percent from Q2 2018. However, the underwriting result deteriorated to a loss of €350 million, compared with the loss of €318 million in Q2 2018. Talanx said the main reason for this was the late claim notification for Typhoon Jebi in the property/casualty reinsurance segment (€54 million), which passed across Japan in September 2018. The Q2 2019 combined ratio increased to 98.1 percent, up from 96.5 percent in the same quarter a year ago.

Germany’s third-largest insurer stated that it is raising its outlook for group net income in 2019 to more than €900 million, following "strong business performance" in the first half of the year. The company said that its life/health reinsurance segment received "extraordinary income" in the second quarter from the release of hidden reserves in connection with the reorganisation of the Viridium Group. As a result of the shareholding, Talanx's consolidated profit for the first half of the year benefited from this with approximately €50 million.

“We are pleased with the way our business has developed in the first half of 2019,” said Torsten Leue, chairman of the board of management of Talanx AG. “We are seeing growth in all our divisions. Our ‘20/20/20’ programme to restructure the industrial fire insurance business is having the desired effect and will be reflected in a steady improvement of our results going forward.

"In addition to the Retail Germany and Retail International divisions, our Reinsurance operations also continued their successful development. I am confident that we will reach our new target for Group net income in full-year 2019 of more than €900 million.”

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