Hannover Re’s parent company, The Talanx Group, has revealed that its strategy for 2019 and beyond is to include the bundling of intragroup reinsurance at the holding company level, as well as the development of integrated and innovative reinsurance solutions.
The Group said that acting as an intragroup reinsurer will increase its earnings potential and help it to reach its new targets of a return on equity (RoE) of at least 800 basis points above the risk-free interest rates and a 5% increase on earnings per share (EPS) by 2022.
Talanx plans to bundle the non-life treaty reinsurance requirements for primary insurance at the holding company in order to take advantage of diversification effects throughout the Group, resulting in a higher retention and an increase in investment income.
Fully implemented, Talanx expects this arrangement to have a combined positive effect on annual profit of around €50 million.
Additionally, the new 2019 strategy will focus on the continued systematic digitalisation of The Talanx Group and the enhancement of its customised reinsurance offerings through an expanded range of integrated and innovative solutions.
Talanx also said that it plans to focus on reinforcing its existing reinsurance strengths, particularly with regard to competitiveness and profitability, which will be supported in part by portfolio management measures in businesses with U.S mortality risks.
“Over the past five years, the Talanx Group has posted considerably stronger growth than its competitors and has almost always generated attractive returns with comparatively low volatility. We are building on this success,” said Torsten Leue, Chairman of the Board of Management, at Talanx’s Capital Markets Day in Frankfurt this week.
“We are continuing to boost profitability in the divisions and are launching growth initiatives in the commercial sector and in specialty business, as well as continuing our successful international growth. All in all, we will thereby significantly increase our earning capacity,” he continued.
Talanx’s 2019 strategy will also see the excess capital of the Group’s subsidiaries transferred to the holding company in order to allow for larger investments in profitable and high-growth areas, and to further secure its dividend continuity in future.
One of the strategy’s key tasks will be the acceleration of the Group’s digital transformation, which will involve the development of the Talanx system environment and advanced data analysis, including artificial intelligence and the integration of digital ecosystems.
The Group added that mergers and acquisitions (M&A) activity will remain an important element of its growth strategy, and said that it will continue to explore potential acquisitions of non-life companies if such a deal can improve its RoE or result in an increase in EPS.
