Talanx expects record profit of €1.6bn in 2023

Germany’s Talanx expects to report record profit of €1.58bn for 2023, exceeding its original forecast of €1.4bn after earnings grew across all divisions, rates increased and large loss payments fell within budget.

Ahead of its annual results presentation next month, Talanx, which houses industrial lines insurer HDI Global and reinsurer Hannover Re, said insurance revenue was up 9% in 2023 to €43.2bn.

It has set a target of 8% growth in net income next year to €1.7bn.

Talanx said its 2024 net income target means the group looks set to exceed its 2025 target of €1.6bn one year earlier than planned.

Analyst Berenberg forecasts net profit growth of about 53% from Talanx’s industrial lines business, led by the HDI brand, last year, contributing an estimated €475m to the group and €9bn to revenue, up 10%.

Hannover Re, which is 50.2% owned by Talanx, said its preliminary net income for 2023 is €1.8bn, beating its target of €1.7bn. It has set a net income target of at least €2.1bn for 2024, based on further improvements in terms and conditions and “sustained attractive prices”. Hannover Re said its preliminary operating result was up 30% last year to €1.97bn, with property and casualty reinsurance contributing €1.1bn.

The reinsurer said 1 January 2024 renewals recorded price increases of 2.3% for property and casualty reinsurance, helping to grow its premiums by 7% to €10.2bn.

Rate increases for non-proportional reinsurance were higher at 4.4% in 2023, Hannover Re said, helping to grow its book by almost 11%, with premiums of €3.18bn. Proportional reinsurance recorded rate increases of 1.3% with premiums from the line up 5% to €7.03bn.

“We are satisfied with the outcome of the renewals. Against the backdrop of the loss experience in 2023, continuing high levels of inflation and geopolitical uncertainties, we were able to secure further necessary rate improvements in many lines and regions,” said Jean-Jacques Henchoz, CEO of Hannover Re. “Building on the previous year’s sustained improvement in the quality of our book of business, we are thus well placed to tackle future challenges.”

Sven Althoff, member of Hannover Re’s executive board responsible for property and casualty reinsurance, said demand for reinsurance remained strong. “This enabled us to generate further profitable growth in our diversified portfolio, especially on the non-proportional side. At the same time, attractive growth opportunities opened up in structured reinsurance and in the area of insurance-linked securities. All in all, we further improved the quality of our book of business,” he said.

Hannover Re expects property and casualty reinsurance to record a combined ratio of under 89% in 2024.

The reinsurer said it adjusted its risk profile last year following heavy losses in Europe, Middle East and Africa in 2022, enforcing stronger rate increases for loss-impacted nat cat business, including in Germany and Italy.

Ahead of final results, Hannover Re said it increased premiums from credit, surety and political risks by almost 11%, and aviation & marine by almost 12% last year. The reinsurer scaled back its cyber business in response to more intense market competition.