Hannover Re’s parent company, the Talanx Group, has reported that its reinsurance operation has strongly contributed to Group net income in 2018, which increased by 10% to €488 million.
In fact, all divisions with the exception of Industrial Lines contributed to the Group’s net income improvement, year-on-year, and the firm highlighted reinsurance as a solid performer in the first-nine months of the year.
Following moderate large losses in the first-half of the year, its reinsurance segment reported claims within the scope of quarterly expectations in Q3, with the largest claims including the impacts of typhoons Jebi, Prapiroon, and Trami, as well as hurricane Florence. Group net income, states Talanx, improved to €365 million.
The P&C reinsurance segment recorded gross written premium (GWP) growth of 17.8% to €9.7 billion, which, after adjusting for currency effects is an increase of 24%. The combined ratio strengthened to 96.8%, which Talanx says is only just above the target of 96%.
In light of fewer large losses, the underwriting result also improved, to €230 million. However, this was somewhat offset by a decline in net investment income to €807 million.
The impact from large losses amounted to €648 million for Talanx in the nine-month period, which is below the pro-rata large loss budget for the period of €855 million. Primary insurance assumed €283 million of the losses, while reinsurance losses from the events totalled €365 million.
Group-wide, the combined ratio improved to 98.6% for the first-nine months of the year.
Torsten Leue, Chairman of the Board of Management at Talanx AG, commented: “Despite the unsatisfactory performance in the Industrial Lines Division, especially in the third quarter, we have nevertheless achieved a higher nine-month result compared to the previous year of EUR 488 million and we anticipate Group net income of around EUR 700 million for the year as a whole. A dividend payout at least equal to the level of the previous year is guaranteed. German and international retail business also continued to perform positively in the third quarter.
“We are ahead of schedule with our strategic programme “KuRS” which aims to boost profitability in our domestic market. International retail is and remains a driver of growth, despite being somewhat curbed by current exchange rate effects. Reinsurance is performing very positive as expected.
“In the Industrial Lines Division, our 20/20/20 programme is well on the way. The increase in premiums achieved so far will already affect the income in financial year 2019, so that we are expecting a balanced result in underwriting across the divisional lines.”
The firm states that in light of large losses in its Industrial Lines, which produced a combined ratio of almost 112%, and an unusually high accumulation of frequency losses, it adjusted its full-year 2018 net income expectation to around €700 million in mid-October.
For 2019, the firm is targeting Group-wide net income of around €900 million, which is 6% higher profit than initially planned for 2018.
