Talanx starts 2024 with robust Q1 results
Talanx starts 2024 with robust Q1 results | Insurance Business Australia
Insurance News
Talanx starts 2024 with robust Q1 results
Double-digit increase outlined for its group net income
Insurance News
By
Kenneth Araullo
Following the reveal of its preliminary results a few weeks ago, the Talanx Group has now reported a solid start to 2024, with first-quarter insurance revenue up 9% year-on-year, reaching €11.7 billion, compared to €10.7 billion in the same period last year. The Group’s net income also increased by 35% to €572 million from €423 million.
Primary insurance was a significant contributor to this growth, generating a 23% increase in revenue and raising its share of group net income to 47% from 43%. The first quarter saw a strong insurance service result and a favourable claims experience. The return on equity rose to 21.2%, up from 18.9%, exceeding the strategic target of over 10%.
The insurance service result increased by 22% to €1.072 billion from €880 million, driven by a low loss frequency. Total claims paid for large losses in the first quarter were €76 million, down from €419 million.
Man-made large losses accounted for €28 million of this total. Large losses from natural disasters were €48 million, significantly lower than the previous year’s €354 million, with the largest single loss being the Japan earthquake at €25 million. The combined ratio improved to 90.9% from 93.5%.
The net insurance financial and investment result before currency effects rose 19% to €395 million from €330 million. Operating profit (EBIT) increased by 17% to €1.2 billion from €1.0 billion, and group net income aligned with this increase, reaching €572 million from €423 million. The Solvency II ratio as of 31 March 2024 was 217%.
Over the past year, the Group explained that it has strengthened its robustness and enhanced balance sheet resilience. This resilience, measured by the best estimate for the net provisions for losses in the property/casualty area before taxes and minority interests, amounted to €3.7 billion at the end of 2023. Primary Insurance accounted for approximately €1.5 billion of this figure, and Reinsurance contributed €2.1 billion, representing a year-on-year increase of €1.1 billion, or 40%.
Talanx results across segments
The industrial lines division saw clear growth in revenue and earnings in the first quarter of 2024. Insurance revenue in this division rose by 13% to €2.3 billion, primarily due to inflation-related price adjustments and new business in property, liability, and specialty insurance. The insurance service result increased by 37% to €192 million from €141 million, benefiting from improved loss ratios for natural disasters and frequency losses.
Large losses in this division were lower at €17 million compared to €34 million in the previous year. The combined ratio improved to 91.8% from 93.2%. The net insurance financial and investment result before currency effects rose to €47 million from €21 million. Operating profit (EBIT) increased to €140 million from €86 million, and the division’s contribution to Group net income rose to €104 million from €69 million.
The retail international division also achieved strong, profitable growth, increasing its insurance revenue by 45% in the first quarter (51% adjusted for currency effects) to €2.2 billion from €1.5 billion. Both property/casualty and life insurance businesses at major companies contributed to this trend.
Property/casualty insurance revenue grew by 44%, largely due to growth in Brazil and Poland, while life insurance revenue climbed 47%. The first-time inclusion of Liberty Mutual’s activities in Brazil contributed to this growth. The acquisition of Liberty Mutual’s retail customer and SME business in Chile, Colombia, and Ecuador was completed in March 2024, with integration proceeding as planned.
The division’s insurance service result rose to €208 million from €119 million, driven by improvements in Brazil, Chile, and Türkiye. The combined ratio fell to 91.2% from 93.4%. The net insurance financial and investment result before currency effects increased to €92 million from €72 million. Operating profit grew to €216 million from €137 million, and the division’s contribution to Group net income rose to €120 million from €75 million.
In the property/casualty insurance segment, insurance revenue rose by 5% to €440 million from €421 million. All lines contributed to this growth. Ongoing claims inflation in the motor vehicles area impacted the insurance service result, which was €9 million, down from €21 million. The combined ratio rose to 97.9% from 95.1%. The net insurance financial and investment result before currency effects remained stable at €17 million, while operating profit (EBIT) was €16 million.
The life insurance segment saw a 9% increase in insurance revenue to €421 million from €386 million, partly due to a below-average prior-year quarter. The insurance service result rose by 28% to €71 million from €56 million, while the net insurance financial and investment result before currency effects was €8 million. Operating profit rose to €58 million from €36 million.
The Talanx Group is maintaining its 2024 goal of achieving group net income of more than €1.7 billion, with increased confidence in exceeding this target. The group also confirms its 2024 return on equity target of over 15%.
Torsten Leue, Chairman of Talanx AG’s Board of Management, stated that the strong start to 2024 underscores the sustainable and profitable path the company is on with its decentralised strategy and diversified business model.
Despite the strong group net income, the company reiterates its full-year forecast, citing potential large loss events and ongoing investment shifts as factors that may impact net income throughout the year.
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