Industrial lines help keep Talanx on course despite significant large losses

Talanx remains on track to meets its full-year net income target despite heavy large losses of more than €1.5bn at the nine-month stage, with its industrial lines business delivering improved performance. The numbers for industrial lines, which includes HDI Global and HDI Global Specialty, were up across the board in the first nine months of this year, compared with the Covid-19-hit 2020. Industrial lines net income increased more than 800% to €101m, from €10m, and operating profit was up more than 400% to €151m, from €28m. The nine-month underwriting result of €35m, from a loss of €107m a year earlier, was achieved despite high claims from nat cats and manmade losses. The industrial division recorded gross losses of €328m, following the heavy rains caused by low-pressure system Bernd in western Europe. In addition, Winter Storm Uri and Hurricane Ida in the US cost €250m and €111m respectively. The nine-month combined ratio stood at 98.6%, from 104.8% at the same stage last year. Talanx said the combined ratio remains on track to hit its medium 95% target for the full year, despite the large nat cat losses. Industrial lines saw gross written premiums rise by 12% during the nine months to €5.8bn, driven by growth in specialty and third-party liability business. Industrial lines net investment income was up to €220m, from €171m at the same stage last year. Third-quarter numbers were an improvement too. The industrial business saw operating profit increase to €54m from €10m a year earlier. Net income rose to €32m from €3m in Q3. The unit’s combined ratio improved to 99.1% for the three months, compared to 105% in the same period last year. The underwriting result climbed to €8m from a loss of €40m, despite overrunning the pro rata large-loss budget due to natural disasters and manmade losses. Third-quarter gross written premium increased by 20% to €1.6bn, with net investment income up to €79m from €65m. The improving contribution from industrial lines saw Talanx Group achieve a nine-month operating profit of €1.8bn, up 43% on last year. Group net income was up 40% to €723m and is almost at pre-pandemic levels. The company said it is on track to hit its annual net income target of €900m-€950m. This is despite more than €1.5bn of large losses in the nine months, which was similar to the prior-year period. While the effects of Covid-19 fell in 2021, the company suffered €1.1bn of nat cat losses, with flooding from Bernd costing more than €1bn gross and €321m net. Large manmade losses were €394m. Large losses in the reinsurance division totalled €1.1bn, while the figure for primary insurance was €391m. Talanx said the impact of the coronavirus pandemic declined gradually during the reporting period, with only life and health still seeing a “continuing high impact”. Covid-19 pushed down group net income by €81m in the first nine months, but only €9m was attributable to the third quarter. Meanwhile, group-level gross written premiums were up 10% at the nine-month stage to €35bn. “We have successfully weathered the coronavirus pandemic together. Our nine-month results put us almost back at the high level seen in 2019. We can achieve our targets for 2021 despite the substantial rise in large losses from natural disasters, especially in Q3,” said Torsten Leue, chairman of Talanx. “This clearly shows that our strategy and our modernisation programmes for the divisions are bearing fruit and have resulted in profitable growth. Our reserving policy has enhanced our resilience. We want to continue this journey so as to successfully meet future challenges as well. Our goal for 2022 is for group net income to top the €1bn mark for the first time,” he added.

Industrial lines help keep Talanx on course despite significant large losses

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