Talanx reports "best half year result" in group history
Talanx reports “best half year result” in group history | Insurance Business New Zealand
Insurance News
Talanx reports “best half year result” in group history
Company confident of exceeding its group net income target
Insurance News
By
Kenneth Araullo
European insurance group Talanx has announced its financials for the first half of 2023, revealing a group net income of €827 million, an uptick of 21% and is the best half year result for the group in its history.
Insurance revenue, on the other hand, also rose YoY to €20.9 (previously 19.2) billion, while operating profit jumped by more than 30% to €2 billion (previously $1.5 billion). Return on equity (RoE) was at 18.4% during the financial period and is expected to be well above the strategic target of 10% for the year overall. Additionally, all Talanx’s primary insurance divisions generated returns on equity of more than 10% for the first time.
The primary insurance line took 44% of the earnings figure, while reinsurance allotted 56%. Talanx outlined inflation-related price increases, lower large loss payments, and interest accretion and discounting effects as primary factors which affected the H1 results.
Industrial lines, retail Germany drive growth
Insurance revenue for the industrial lines division lifted by a clear 10% to €4.2 billion in the financial period, adjustable to 11% following currency effects. The line’s strong performance was attributed to growth in the property and liability business, as well as an increase in the specialty risks business, the latter of which generated a revenue of €1.4 billion.
Underwriting results for the line also rose to €292 million (previously €226 million) following lower frequency losses, lower large loss payments, and higher interest rates. Large loss payments, meanwhile, fell to €134 million. Its combined ratio improved by 1% to post 93.1%, below the group’s strategic target of 95%. In total, the division’s operating profit rose to €190 million, and its contribution to the group net income climbed 22% to €151 million.
Meanwhile, bancassurance was the main driver for the retail Germany division’s results in H1, with insurance revenue at €1.722 billion. Underwriting results amounted to €179 million, while operating profit increased to €150 million. In total, the line accounted for €88 million of the group’s net income.
The property and casualty division also recorded a growth of 8% in its insurance revenue, equivalent to €861 million in H1. The lift was attributed to corporate customers, motor vehicle and retail businesses, and unemployment insurance in the bancassurance area. Its underwriting result came in at €34 million, slightly lower than the previous half year which sat at €46 million; Talanx attributed this to higher claims frequency levels in the motor vehicle insurance sector and higher average losses because of inflation. That said, the sector did have a lower large loss payment figure of €17 million and a combined ratio of 96.1%.
Life insurance declined to €861 million in H1 2023 following a €912 million result in the previous period. Underwriting results for the line also fell to €145 million. However, carried by an improved net insurance financial and investment result of €30 million in gains, the division’s operating profit rose to €111 million from €110 million in the last period.
International division and reinsurance also bolster the results
Talanx’s retail international division posted good revenue and net income growth in H1, driven by the success of its Brazilian unit which has returned to profitability for the long term. In total, the international division saw a 24% YoY increase in its insurance revenue to €3.1 billion; with constant currency rates, the growth would have been 29%.
Insurance revenue in Europe also posted an uptick of 24% (32% adjusted for currency effects), mainly driven by the rise in average premiums in Turkey and to motor vehicle, homeowners, and life insurance in Poland. The Latin American division, meanwhile, saw a 26% rise in insurance revenue to €1.1 billion.
Underwriting results for the whole international division increased to €185 million from the €110 million in the previous period, while the combined ratio for property insurance companies improved by 1% to 95.4%.
On the other hand, the group’s reinsurance division rose by 4% to €12.3 billion, 6% after currency adjustments. Insurance service result surged to €1.079 billion from the €694 million last half year. Operating profit also saw double-digit growth of 21% to €1.4 billion, and the division in total contributed €484 to the group’s net income.
Overall, Talanx confirmed its medium-term targets published last December, and has stated its confidence in exceeding both its target of €42 billion for insurance revenue and €1.4 billion for the group net income. RoE will also be above 10%, as already outlined in the insurer’s first quarter results.
“Our Talanx Group has generated extremely successful results for the first half of the year. We have seen strong growth in insurance revenue and the highest six months group net income in the group’s history,” Talanx AG board of management chairman Torsten Leue said. “We are therefore optimistic that we will be able to exceed our revenue and group net income targets for 2023 even though the hurricane season is not over yet. We have also got off to a strong start in our new strategy cycle for the period up to 2025 – a strong signal that our divisions are continuing their successful work and that our group is extremely resilient, despite global economic challenges.”
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