Talanx Group, the parent company of Hannover Re, has released its results for Q3 2022, reporting that gross premiums rose 18.5%, with group net income up 8.6%.
The firm said that it was fully on track to meet its annual targets. It added that its growth in premiums and group net income in the first three quarters of the year offset its high losses arising from natural disasters and the reserves booked for potential losses from Russia’s invasion of Ukraine.
Torsten Leue, chairman of Talanx’s board of management, said in a statement: “We have delivered a strong performance in the year to date, despite the challenges posed by the high large losses from natural disasters. Among other things, this is due to our comparatively low exposure to Hurricane “Ian”. Our strategy, with its decentralised divisions and extensive diversification across different countries, lines and risks has clearly proven to be right once more.”
He added: “The third quarter in particular has demonstrated the solid state of our primary insurance operations. Moreover, the profitability enhancement measures in the Industrial Lines Division are having an extremely positive effect. All in all, we remain extremely optimistic that we shall meet our ambitious goals in 2022.”
The firm said that its primary insurance operations (consisting of the industrial lines, retail germany and retail international divisions) contributed significantly to the Group’s strong business performance. Gross written premiums for the primary insurance area rose by 11.0 percent to €16.7bn (€15bn). As a result, its share of premiums remained almost constant at 39% (6M 2022: 40%). Its nine-month contribution to Group net income rose to 44% (6M 2022: 43%), or €350m.
Talanx said that its combined ratio rose slightly year-on-year in the reporting period up to 30 September 2022, to 98.6% (97.6%), due to the reserves booked for Ukraine and losses from natural disasters. The Talanx Group has now booked reserves of €361m for potential claims expenses arising from Russia’s war of aggression against Ukraine. Total claims paid for losses from natural disasters in the first nine months were €1.4bn, with €350m being attributable to Hurricane Ian. Overall, large losses rose to almost € 1.9 billion. Industrial Lines recorded large losses of €316m, while €1,484m are related to reinsurance. The large loss budget for the first nine months of the year was €1.4bn.
The Talanx Group reaffirmed its outlook for 2022: Currency-adjusted growth is expected to rise to around 10 percent. Consequently, the Talanx Group expects to record gross written premiums in excess of €50bn for the first time in its history. The net return on investment should be approximately 2.5%, with a lower extraordinary result being forecast year-on-year. The Talanx Group is expecting Group net income in the range of €1,050m to €1,150m. This should correspond to a return on equity of more than 10%, thus clearly exceeding the strategic minimum goal of at least 800 basis points above the risk-free rate.
As usual, the outlook for financial year 2022 is subject to the proviso that no turbulence occurs on the currency and capital markets, and that large losses remain in line with expectations. Russia’s war in Ukraine, higher inflation and the resulting changes to central banks’ monetary policy are material sources of uncertainty for the current financial year.
