Talanx vows to tackle challenges in industrial and retail business

It seems that investors were distinctly unhappy with the German insurance and reinsurance conglomerate, despite the fact that it reported profits of €769m for 2014, up from €732m in 2013. But to those studying the figures in detail it soon became clear that the profit was mainly produced by Hannover Re, its reinsurance subsidiary, and its foreign business. Core entities in industrial and retail lines appear to be struggling. Chief executive Herbert Haas was cautious about the prognosis for 2015. "More than €700m," he said of the profit outlook and thus raised the possibility of a drop in numbers.hideMr Haas added that after this year, net profits would rise by 3% to 5% every year until 2019. Turnover is set to rise in 2015 by 1-3%, he said. The company says it is committed to tackling the problems that have led to below par underwriting results in industrial business and challenges in the retail and commercial insurance sector. HDI-Gerling Industrie, a subsidiary of Talanx, is planning to turn around its results with the help of an 'earnings improvement scheme', in particular in fire and fleet motor insurance, according to Christian Hinsch, head of the group's industrial segment and vice chairman of the board. The industrial insurer reported an underwriting loss of €61m in 2014, higher than the €42m loss in 2013. Premium income rose from €3.84bn to €4.03bn. Higher investment returns and the fact that special negative one-off factors that hit 2013’s result did not re-occur last year saved the result. The segment produced an operating profit of €182m compared with €129m in 2013. However, Mr Hinsch is not at all happy with these results. The problem was not costs but rather the effect of man-made losses, he said. In particular, domestic losses had a negative influence on the results. HDI Gerling Industrie is trying to bring its underwriting book back into the black. "What is crucial is that we are not going to adopt a radical blanket approach," Mr Hinsch said. "We plan to start with the worst risks, not just looking at prices but also terms and conditions," he added. But Mr Hinsch said that the company would not make any drastic withdrawals from sectors.” "Our approach will not be to say the timber industry or the recycling industries are useless," he said. "If they have good fire protection, we can continue to insure them." But Mr Hinsch added that the company would be prepared to give up business where it cannot achieve agreement over prices and conditions. Talanx reported premium income in its German private customer business of €6.9bn, a fall of one per cent. Of this, almost 75% comes from life insurance. Management board member Jan Wicke, who left Wüstenrot & Württembergische in 2014 to replace Heinz-Peter Roß at Talanx, commented on the difficult competitive conditions the company is currently experiencing. The company's IT systems, especially in non-life, are not state-of-the-art, he added. "In motor, 4% of our business is handled automatically, some of our competitors have 80%," he said. Talanx intends to invest heavily in this area in the future, said Mr Wicke. CEO Herbert Haas conceded that Talanx had been left behind when it came to digitalisation. "We focused mainly on industrial business when we were integrating Gerling," he said. "We were so preoccupied with this that we neglected our private customer business," added Mr Haas. Overall, the group reported an operating loss of €115m from its Talanx Deutschland segment compared with €161m the previous year. The loss after tax was €84m in 2014. Torsten Lau, head of Talanx Retail International, reported good results especially in Poland and Brazil. However, the group withdrew from Bulgaria and Ukraine because of poor business prospects in these countries. Talanx also presented customers and staff with a piece of news that will spark heated discussion in the German market. The name Gerling, for 111 years a trademark in industrial insurance, is to go. In future, HDI-Gerling Industrie AG will be called HDI Global SE. The latter change stems from a new legal form. Instead of a German joint-stock company, it will be a European company Societas Europaea. The company will operate globally under the brand HDI, which stands for Haftpflichtverband der Deutschen Industrie (Liability Association of German Industry). The 'Global' in the name-similar to Allianz's Allianz Global Corporate & Specialty-is set to tell the world that this is no longer a German company, but an insurer with truly world-wide activity.

Talanx vows to tackle challenges in industrial and retail business

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