Capital management
The capital management of the Talanx Group is geared to an optimized risk-appropriate capital structure so as to strengthen the Group’s financial strength. This is achieved using two methods: firstly, we optimize the cost of capital by utilizing appropriate equity substitutes and financing tools. Secondly, we align our own equity resources such that they at least satisfy the requirements of Standard & Poor’s capital model for an “AA” rating. Equity above and beyond this requirement is constituted to boost our earnings potential to a level in excess of the return on reinvested funds, e.g. through improved provision of risk capacity and risk protection or through greater independence from the reinsurance and retrocession markets.
Capital resources are in principle allocated according to the criterion of equipping those areas that promise the highest risk-adjusted post-tax income in the medium term. In this context, we make allowance for the desired portfolio diversification and the required risk capital as well as general supervisory regulations. Allocation is made on the basis of the intrinsic value creation (IVC), derived from coordinated business plans.
In recent years Talanx AG has opened up to the capital market in order to be able to boost its financial strength even before an Initial Public Offering. The further logical step as part of this progressive capital market orientation is a going public: over the long term a maximum of 49.9 percent of the voting equity of Talanx AG is to be placed on the stock market. In order to maximize the strengthening of our asset base and the resulting strategic options, this stock market flotation will be implemented by way of a capital increase.
> Risk Management
