Talanx’s H1 Group net income exceeds EUR 1 billion for the first time

“We are continuing to reap the rewards of our focused strategy. We are generating strong, profitable growth both in our organic business and at our acquisitions”, said Torsten Leue, Chairman of the Board of Management of Talanx AG. “Despite the higher large losses seen in Q2, we have a cushion for the hurricane season in the third quarter, which experts are forecasting will be unusually intense. As a result, we are highly confident of clearly exceeding our Group net income target for 2024 of more than EUR 1.7 billion, and will review our forecast after the third quarter.”

The insurance service result rose by 43 percent to EUR 2.3 (1.6) billion, benefiting from the fact that large loss payments were within the pro rata budget for the period. Large loss payments for the first half of the year amounted to EUR 750 (820) million. Man-made large losses were EUR 202 (245) million, while large loss payments for natural disasters totalled EUR 547 (575) million. The largest single loss sustained by the Group (EUR 174 million) was the floods caused by torrential rains in southern Germany in early summer. Other large losses related to the floods in Brazil (EUR 101 million) and the unrest in New Caledonia (EUR 82 million). The negative impact expected from the collapse of the bridge in Baltimore in the first quarter is comfortably covered by the remaining large loss budget. The combined ratio improved to 91.2 (93.7) percent. This includes the pro rata large loss budget for the period of EUR 1.1 billion, which was utilised in full.

The net insurance financial and investment result before currency effects remained stable at EUR 784 (760) million. Operating profit (EBIT) climbed 28 percent to EUR 2.5 (2.0) billion. H1 Group net income rose 32 percent to EUR 1,090 (827) million. The Solvency 2 ratio as at 30 June 2024 was 218 percent (31 March 2024: 217 percent).

Industrial Lines Division: strong, profitable growth

Industrial Lines generated clear growth in both revenue and earnings. Insurance revenue rose 14 percent year-on-year in the first half of the year to EUR 4.8 (4.2) billion; the figure after adjustment for currency effects was also 14 percent. The main drivers for this encouraging trend were the growth in new business and inflation-related price adjustments in the property, liability and specialty insurance business. The insurance service result jumped 47 percent to EUR 429 (292) million on the back of an improved loss ratio for frequency losses. Large loss payments amounted to EUR 128 (134) million, undershooting the pro rata budget for the period, which was recognised in full, by a clear EUR 86 million. The combined ratio improved to 91.1 (93.1) percent. The net insurance financial and investment result before currency effects rose to EUR 68 (49) million due to higher investment volumes and an increase in current interest income. Operating profit climbed to EUR 305 (190) million, while the division’s contribution to Group net income rose to EUR 223 (151) million.

Retail International Division: clear growth in revenue and net income

The Retail International Division also saw clear growth in revenue and net income. Insurance revenue rose 49 percent year-on-year in the first half of the year to EUR 4.6 (3.1) billion; the figure after adjustment for currency effects was 58 percent. This encouraging trend was due both to organic growth (19 percent after adjustment for currency effects) and to the inclusion for the first time of the companies in Latin America that were acquired from Liberty. In line with this, insurance revenue in Latin America doubled to EUR 2.3 (1.1) billion, meaning that the region is now responsible for 50 percent of the division’s revenue. The other 50 percent is generated in Europe, where insurance revenue was up 15 percent after six months at EUR 2.3 (2.0) billion. This encouraging development was primarily due to motor vehicle, homeowners and life insurance in Poland.

The division’s insurance service result doubled to EUR 385 (185) million. The improved combined ratio of 92.4 (95.4) percent resulted in particular from the acquisition of the former Liberty companies and to operational improvements in the motor vehicle business at HDI Seguros in Chile. The net insurance financial and investment result before currency effects rose to EUR 200 (157) million. The main drivers for this growth were the inclusion of the former Liberty companies, increased volumes and higher interest rates in Türkiye. Operating profit rose to EUR 424 (249) million despite the integration costs for the new companies in Latin America, while the division’s contribution to Group net income climbed to EUR 224 (141) million.

Based on this encouraging development, Retail International has lifted the forecast for its return on equity for full-year 2024 to more than 10 percent (previously more than 8.5 percent).

Retail Germany: revenue growth at both segments

The Retail Germany Division lifted its insurance revenue by a moderate 4 percent to EUR 1.8 (1.7) billion in the first half of the year. The insurance service result was EUR 145 (179) million due to higher large loss payments, while the net insurance financial and investment result before currency effects was EUR 36 (70) million. On the back of this, operating profit was EUR 144 (150) million and the division’s contribution to Group net income was EUR 82 (88) million.

Property/Casualty Insurance segment: all lines contribute to premium growth

Insurance revenue in the Property/Casualty Insurance segment rose by a slight 4 percent in the first half of the year to EUR 896 (861) million. All lines contributed to revenue growth. The insurance service result declined to EUR 3 (34) million due to higher motor vehicle loss payments and the floods caused by torrential rains in southern Germany – at EUR 22 million, the latter were the highest single large loss payment in the segment. As a result, the combined ratio rose to 99.7 (96.1) percent. The net insurance financial and investment result before currency effects was EUR 31 (40) million due to higher expenses associated with interest accretion on the loss reserves, while operating profit (EBIT) was EUR 16 (39) million.

Life Insurance segment: higher revenue and operating profit

Insurance revenue in the Life Insurance segment was up 4 percent to EUR 898 (861) million, primarily as a result of profitable new retirement provision business and of unemployment insurance in the bancassurance area. The insurance service result was stable at EUR 142 (145) million, while the net insurance financial and investment result before currency effects was EUR 6 (30) million. Operating profit benefited from higher interest income on bank deposits and positive exchange rate effects on investments, rising 15 percent to EUR 128 (111) million.

Reinsurance: double-digit rise in division’s contribution to Group net income

Insurance revenue in the Reinsurance Division rose by 5 percent in the first half of 2024 (6 percent adjusted for currency effects) to EUR 12.9 (12.3) billion on the back of positive revenue development in the Property/Casualty Reinsurance segment. The insurance service result jumped 31 percent to EUR 1.4 (1.1) billion, while the net insurance financial and investment result before currency effects was stable at EUR 528 (524) million. Operating profit rose 23 percent to EUR 1.7 (1.4) billion. In line with this, the division’s contribution to Group net income was 21 percent higher, at EUR 585 (484) million.

Insurance revenue in the Property/Casualty Reinsurance segment was up 9 percent after six months (10 percent adjusted for currency effects), at EUR 9.1 (8.4) billion. Consequently, the insurance service result jumped by 61 percent to EUR 963 (598) million. Large loss payments in the first half of the year amounted to EUR 567 (607) million, within the pro rata budget for the period of EUR 801 million. The largest single loss sustained by the segment was the floods caused by torrential rains in southern Germany (EUR 120 million). Other large losses were caused by the unrest in New Caledonia, an overseas French territory (EUR 82 million), the floods following strong rainstorms in Dubai and other parts of the United Arab Emirates (EUR 82 million), and the floods that followed heavy rains in Brazil (EUR 47 million). The largest single loss in the first quarter – the collapse of the bridge in Baltimore – still cannot yet be quantified in concrete terms, but will be comfortably within the large loss budget. The combined ratio improved to 87.8 (91.7) percent, below the expected figure for the full year of less than 89 percent. The net insurance financial and investment result before currency effects rose by 11 percent to EUR 396 (357) million, while operating profit (EBIT) climbed 39 percent to EUR 1,173 (841) million.

Insurance revenue in the Life/Health Reinsurance segment was down slightly at the end of the first half of the year, as had been expected, and amounted to EUR 3.8 (3.9) billion. At EUR 448 (481) million, the insurance service result is on course to hit the full-year target of more than EUR 850 million. It was buoyed by continued strong demand in the financial solutions business. The net insurance financial and investment result before currency effects was EUR 131 (167) million, resulting in operating profit (EBIT) of EUR 497 (521) million.

Outlook: targets confirmed while confidence has increased

The Talanx Group is confirming its target Group net income of more than EUR 1.7 billion for 2024 and remains highly confident of clearly exceeding this figure. It is also confirming its target return on equity of more than 15 percent.

The Talanx Group will review its forecast for the year after the hurricane season in the third quarter. It will present new medium-term targets at its Capital Markets Day on 11 December 2024.

As usual, the targets for financial year 2024 are subject to the proviso that no turbulence occurs on the currency and capital markets, and that large losses remain in line with expectations. The current geopolitical and macroeconomic situation is an additional source of uncertainty.

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