Despite heavy fourth quarter catastrophe losses, Hannover Re parent company The Talanx Group’s overall combined ratio for 2018 showed a 2.2% year-on-year improvement, reaching 98.2%.
The Group’s operating profit for Q418, which in particular saw a big hit from the Californian wildfires, slid -20.1% to €562 million.
Gross written premiums for the year rose 6% to €34.9 billion while operating profit climbed 13% to €2 billion.
Group net income was up 5% on the prior year at €703 million, meaning return on equity exceeded the minimum target at 8%.
This, however, is below Talanx’s previous 2018 outlook of around €850 million, due largely to a higher-than-expected €1.2 billion large loss hit.
“In 2018, we set our course for the future and made significant operating progress,” said Torsten Leue, Chairman of the Board of Management at Talanx AG.
Talanx says its overall result rose thanks to operating improvements in both Retail Germany and International and in Reinsurance, offsetting a decline in Industrial Lines.
“Both Retail Germany and Retail International as well as Reinsurance continued to perform strongly,” said Leue.
“We are continuing to make excellent headway with our “KuRS” and “20/20/20” profitability programmes, we are ahead of plan and confident that we will achieve our 2019 outlook.
Talanx’s primary insurance segment shouldered €492 million of the €1.2 billion hit from nat cats in 2018. The firm’s reinsurance segment took a €850 million hit, a figure down by €276 million.
The largest loss events in 2018 were California’s forest fires in November and December, which collectively incurred loss volumes of almost €200 million. Followed by typhoon Jebi in Japan and losses resulting from the heavy rainfall in Colombia.
In spite of considerable large losses Talanx’s reinsurance division achieved its growth and earnings targets in 2018.
Operating profit rose 19% to €1.6 billion following the previous year’s unusually high nat cat losses.
Despite the exceptional burden resulting from the US mortality business, this was boosted by good business quality in both Property and Casualty Reinsurance.
Net investment income adjusted for one-off effects also performed favourably in 2017. The reinsurance segment’s net income contribution to the Group rose to €540 million.
“We are convinced that Talanx will become an even more agile, growth-oriented and profitable company over the next few years,” added Leue.
“This is underpinned by our refined strategy that we outlined in October, which also sets out even more ambitious targets.”
