Transcription
Bank of America Merrill LynchConferenceHerbert K. Haas, CEO / Torsten Leue, CEO Talanx InternationalLondon, 26 September 2017
Founded as a lead insurer by German corporatesGroup structureHistoryLarge German corporates, e.g.PrivatepolicyholdersV.a.G.Free 9.0%RetailGermany(P/C and Life)RetailInternationalReinsurance(P/C andLife/Health)1903Foundation as ‘Haftpflichtverband der deutschen Eisen- undStahlindustrie‘in Frankfurt1919Relocation to Hannover1953Companies of all industry sectors are ableto contract insurance with HDI V.a.G.1966Foundation of Hannover Rückversicherungs-AG1991Diversification into life insurance1994IPO of Hannover Rückversicherungs-AG1998Renaming of HDI Beteiligungs AG to Talanx AG2001Start transfer of business from HDI V.a.G. to individual Talanxsubsidiaries2006Acquisition of Gerling insurance group by Talanx AG2012IPO of Talanx AG2014Listing at Warsaw Stock Exchange1 Including employee shares and stake of Meiji Yasuda (below 5%)Strong roots: originally founded by German corporate clients; HDI V.a.G still key shareholder2Bank of America Merrill Lynch Conference, London, 26 September 2017
Four divisions with a strong portfolio of brandsIndustrialLinesRetail GermanyRetailInternationalIntegrated international insurance group following a multi-brand approach3Bank of America Merrill Lynch Conference, London, 26 September 2017ReinsuranceFinancialServices
International footprint and focussed growth strategyInternational presenceInternational strategy by divisionsIndustrialLines Local presence by own risk carriers, branches andpartners create efficient network in 130 countries Key target growth regions: Latin America, SoutheastAsia/India, Arabian Peninsula Target regions: CEE (incl. Turkey) and Latin AmericaRetailInternational # 2 motor insurer in Poland2# 5 motor insurer in Brazil2# 3 motor insurer in Chile2# 7 motor insurer in Mexico2Presence in countries1 Total GWP: 31.1bn (2016) 2016 GWP: 50% in Primary Insurance (2015: 49%), 50% inReinsurance (2015: 51%) Group wide presence in 150 countries 20,039 employees (FTE) in 2016Reinsurance Global presence focussing on Western Europe, Northand South America as well as Asia 5.000 customers in 150 countries1 By branches, agencies, risk carriers, representative offices2 Source: local regulatory authorities, Talanx AGGlobal network in Industrial Lines and Reinsurance – leading position in retail target markets4Bank of America Merrill Lynch Conference, London, 26 September 2017
Among the leading European insurance groupsTop 10 German insurersTop 10 European insurersGerman insurers by global GWP (2016, bn)European insurers by global GWP (2016, bn)Allianz116.2Munich Re48.9Talanx31.1R V14.8Allianz116.2AXA94.2Generali70.5Munich Re48.91Debeka9.8Vk BayernSignal Iduna6.95.643.7Swiss Re32.3CNP31.8Gothaer4.4Aviva31.2W&W4.0Talanx31.11 Gross earned premiumSource: Company publicationsListed insurersThird-largest German insurance group with leading position in Europe547.8Zurich7.8HUKPrudentialBank of America Merrill Lynch Conference, London, 26 September 2017
Regional and segmental split of GWP and EBITGWP by regions 2016 (consolidated Group level)Germany14%28%8%GWP by segments 201619%18%8%15%United KingdomCentral and Eastern Europeincluding Turkey (CEE)15%Industrial Lines18%Retail Germany P/C6%20%Retail InternationalRest of Europe20%North AmericaNon-Life ReinsuranceLife/ Health Reinsurance21%Latin AmericaRetail Germany LifeRoWGWP by regions 2016 (Primary Insurance)EBIT by segments 20161,22%1%Germany11%4%51%17%Rest of Europe14%North AmericaLatin America1%RoW1 Adjusted for the 50.2% stake in Hannover Re2 Calculation excludes Retail Germany P/C, which reported a negative EBIT of 2mWell-diversified sources of premium and EBIT generation611%United KingdomCentral and Eastern Europeincluding Turkey (CEE)Bank of America Merrill Lynch Conference, London, 26 September 2017Industrial Lines20%Retail Germany Life6%Retail InternationalNon-Life Reinsurance47%15%Life/ Health ReinsuranceCorporate Operations andConsolidation
B2B competence as a key differentiatorStrategic focus on B2B and B2B2C Core focus on corporate clients with relationshipsoften for decades Blue-chip client base in Europe Capability and capacity to lead internationalprogramsIndustrial LinesRetail Germany Market leader in Bancassurance Market leader in employee affinity business 35% of segment GWP generatedby BancassuranceRetail International Distribution focus on banks, brokers andindependent agentsReinsuranceExcellence in distribution s Typically non-German business generated viabrokersUnique strategy with clear focus onB2B business modelsEmployeeaffinitybusiness1 Samples of clients/partnersSuperior service of corporate relationships lies at heart of our value proposition7Bank of America Merrill Lynch Conference, London, 26 September 2017Industrial/Reinsurance
Key Pillars of our risk management8123Asset risk is limited toless than 50% of ourSCR (solvency capitalrequire-ment)Generating positiveannual earnings witha probability of 90%Sufficient capital towithstand at least anaggre-gated 3,000year shockBank of America Merrill Lynch Conference, London, 26 September 2017
1Focus on insurance riskRisk components of Talanx Group 13%4%17%Counterparty default riskOperational riskUnderwriting risk lifeComments Total market risk stands at 47% of solvency capital requirements,which is comfortably below the 50% limit Self-set limit of 50% reflects the dedication to primarily focus oninsurance risk Non-Life is the dominating insurance risk category, comprisingpremium and reserve risk, NatCat and counterparty default risk29%Non-life risk Equities 2% of investments under own management Over 75% of fixed-income portfolio invested in “A“ or higher-ratedbonds – broadly stable over recent quarters47%Market risk1 Figures show risk categorisation, in terms of solvency capital requirements, of the Talanx Group in the economic view (based on Basic Own Funds) as of FY2016Market risk sensitivity (limited to less than 50% of solvency capital requirement)is deliberately low9Bank of America Merrill Lynch Conference, London, 26 September 2017
2Diversification of business model leads to earnings resilienceTalanx Group net income 9072# of lossmakingcompetitors3Talanx Group andpredecessors net income1Talanx Group net income1 ( 010201120122013201420152016--731222---1 Net income of Talanx after minorities, after tax based on restated figures as shown in annual reports (2005–2015 according to IFRS)2 Adjusted on the basis of IAS 83 Top 20 European peers, each year measured by GWP; on group level; IFRS standardsSource: Bloomberg, annual reportsRobust cycle resilience due to diversification of segments10732Bank of America Merrill Lynch Conference, London, 26 September 2017 Net profit–Net loss
3TERM 6M 2017 results – Capitalisation perspectivesEconomicView(BOF CAR)276%Limit 200 %(FY 2016: 264%) Basic Own Funds (including hybrids and surplus funds as well as noncontrolling interests) Risk calculated with the full internal model with haircut operational risk modeledwith standard formula HDI solo-fundsSolvency IIRatio1197%(FY 2016: 186%)Targetcorridor150%-200% Eligible Own Funds, i.e. Basic Own Funds (including hybrids and surplusfunds as well as non-controlling interests) with haircut on Talanx‘s minorityholdings Operational risk modeled with standard formula, („partial internal model“) For the Solvency II perspective, the HDI V.a.G. as ultimate parent is theaddressee of the regulatory framework for the Group1Group Solvency II Ratios including transitional (i.e. Regulatory View): 6M 2017: 243%, FY2016: 236%Note: In the entire presentation, calculations of Solvency II Capital Ratios are based on a 99.5% confidence level, including volatility adjustments yet without the effect of applicable transitionals – if not explicitlystated differentlyCapital ratios improved despite a continuing low level of interest rates11Bank of America Merrill Lynch Conference, London, 26 September 2017
Industrial Lines – International programmes as competitive edgeTalanx Primary Insurer:37 countries12NetworkpartnerBank of America Merrill Lynch Conference, London, 26 September 2017Individual solutionpossibleNetworkhubs
Industrial Lines – An impressive long-standing client franchiseOverview of selected key customers by customer segmentGerman mid-market (SMEs)German corporates (multinationals)Well-established relationships with main players in targeted segments13Bank of America Merrill Lynch Conference, London, 26 September 2017International corporates (multinationals)
Industrial Lines – Three initiatives to optimise performanceStrategic 3-element-programme141“Balanced Book” – raising profitability inour domestic market2Generating profitable growth in foreign markets3Establishing best-in-class efficiency and processesBank of America Merrill Lynch Conference, London, 26 September 2017
Industrial Lines – Profitabilisation measures in GermanyMotor3MarinePropertyPortfolios underreview (GWP)2015/16 Results from negotiations (gross)and portfolio improvementEffects on premiumCapacity 1,370m150- 8.4%- 21.7% 1,350mPremium to capacity ratio 25%1,2 71.8mNegotiated72Effects on premiumCapacity 325m25121 362mNegotiated 121mEffects on premium-10.1%Effect on losses4 -14%and portfolio improvementNegotiated 150mEffects on premium- 2.0%CapacityNegotiated 350mCapacity 24.5m2 Including effect of additional specific reinsurance measures4 Expected, in terms of loss volume-15.0%Premium to capacity ratio 44%1Successfully completed in 2016Expected improvement inloss ratio by FY2016 3%pts5Bank of America Merrill Lynch Conference, London, 26 September 2017- 19.0%Effects on premium 23.2%-5.3%-26.9%2016/17Results from negotiations (gross)Premium to capacity ratio 20.7%1,2Premium to capacity ratio 30%11 For portfolio under review3 German business only5 Assuming constant claims statistic; FY2015 loss ratio: 84.4% (gross)15 303.7mNegotiated300Portfolios underreview (GWP)Premium negotiated
Retail Germany - Divisional breakdownRetail GermanyBancassuranceLife Strategic focus on credit risk protection andannuities business Talanx cooperates through banc-assuranceagreements with two of the three pillars of theGerman banking market (private and publicsectors) Non-bancassurance Life business distributedthrough various external channels as well asown branches and tied agents Focus on corporate pension business,disability insurance and “new classic”products (e.g. TwoTrust brand)Share in 2016 divisional GWPShare in 2016 divisional GWPP&C Distribution through various externalchannels as well as own branches, brokersand tied agents Offers full product spectrum of P&Cinsurance productsShare in 2016 divisional GWP21% 2.9bn46% 2.1bn(thereof 3.0%ptsNon-Life)33%Multi-brand, multi-channel and high-penetration approach to customers16Bank of America Merrill Lynch Conference, London, 26 September 2017 1.3bn
Retail Germany - Key Messages from Capital Markets Day 2016Retail Germany stands for 21% of Talanx’s GWP and 47% of its assets under own management. It adds Life exposure to theTalanx Group which is overall strongly geared to P/C businessRetail Germany has a strong and highly committed management team with an excellent professional track-record in handlingchallenges and in turning businesses aroundManagement initiatives and the central strategic programme KuRS focus on optimising the position in Bancassurance and onturning HDI around. Based on a customer-centric, sustainable and stable business model, we target for a material improvementof the risk-return profile for shareholdersKuRS combines three substantial strategic pillars: a new Life strategy, a new P/C strategy and investments in Digitalisation/IT incombination with ongoing cost managementKuRS is the by far largest initiative with 330m of investments and a targeted cost cutting of 240m. Targeted strategicinvestments comprise overall 420m. This includes 90m for Voyager4life targeting at a joint IT Life platformAll interim goals have been met. In 2017, the KuRS programme savings are likely to first-time exceed costs on EBIT levelRetail Germany targets for a sustainable EBIT contribution of at least 240m from 2021 onwards17Bank of America Merrill Lynch Conference, London, 26 September 2017
Retail Germany – Market positionMarket position Germany Life (2016)in bn1.2.3.4.GWP1Market position Germany P/C (2016)Market share in in ka3.54.17.VK Bayern2.43.48.9.AXAVK Bayern3.32.93.83.48.9.LVMProvinzial NW2.21.83.22.6thereof er1.72.5W&W1.72.414.15.Talanx1.52,2SV Konzern1.52.1thereof HDI1.31.910.Alte Leipziger11.12.Nürnberger2.32.7Provinzial NW2.32.613.W&W2.12.4thereof HDI1.92.414. Sparkassen Vers.15. Volkswohl-Bund1.82.11.41.6Ranking as of August 20173.6thereof BA 0.21 Own underwriting businessBank of America Merrill Lynch Conference, London, 26 September 20175.23.3Retail Germany with a TOP-5 position in Life and among TOP-15 in German Non-Life18Market share in %Allianz4.80.2
Retail Germany – KuRS programme: Investment and cost reduction targetsEstimated project costs and savingsCommentsin m 222 240Strategic target:Gross reductioncost base by 240m 180 Targeted strategic investments forKuRS are expected to be 330m The related cost saving target is 240m p.a. 155 140 240m 128m, orsligthly morethan 50%, ofcost savingsachieved untilend-201612873Cost reduction17429-89-11220152016 -60 -20 -40 -5 -3 330mInvestmentTargeted strategic investmentscomprise overall 420m,including already communicated 90m for Voyager4lifeCost reductions2017E2018E2019E2020E2021E Both numbers refer to Life and P/Cbusiness in sum Target is to implement all initiatives infull by the end of 2020 with the fullcost benefit to be reached in 2021Roughly 200m ofinvestmentsbooked untilend-2016Cost reductions planned (2015/2016)Investment & personnel redundancies1 Cost reduction before inflationStrategic investments target at restructuring HDI (catching up with market) and optimising BA (strengthening excellentmarket positions)19Dr. Kalliwoda Capital Markets Conference, Madrid/Barcelona, 28/29 September 2017
Retail Germany – KuRS programme: Strategic approach P/CP/C Growth within target segment corporate business in 2016:Selectivegrowth New business in total grew about 44% y/y therof exclusive distribution (incl. direct sales) 26% thereof third-party distribution 77% 50k new motor policies via direct sales in 2016Modernisation IT &processes Implementation of a new inventory management system in Motor withinone year By the help of the new system, a straight-through processing rate of morethan 80% in the motor year-end business has been achieved The migration of Motor legacy systems is planned until the beginningof 2019 Succesful implementation of a claims app with more than 13k settleddamages within one year (the app has been installed in April 2016)DigitalisationStrong base for the ongoing turnaround20Bank of America Merrill Lynch Conference, London, 26 September 2017 HDI – together with cooperation partners – offers innovative telematicsservices via the app “TankTaler“; nearly 3k customers have alreadyregistered
Retail Germany – KuRS programme: Strategic approach LifeLifeNewbusiness Strong growth in biometric products1 of more than 11% in 2016 ( 200m2) Successful launch of new capital-efficient products in all carriers Strategy-conform reduction of single-premium business by around 12.5%compared to 2015 for the Retail Germany Life carriersSolvency II Approval of the internal model for all four German Life carriersDigitalisation Digitalisation of bAV services (pension scheme business) has beenfurther boosted, with 62k active contracts until May 2017 Service apps have been introduced for all bancassurance companies untilthe end of 2016 (e.g. SmartCapture@BA)1 includes the following products: term life insurance, funeral expense insurance, disabilitiy insurance, nursing care insurance, credit life insurance2 in terms of total premiums paidKey measures taken to allow for a successful performance in the low-interest environment21Bank of America Merrill Lynch Conference, London, 26 September 2017
Retail Germany – Asset Management Strategy: Comparison of average runningyields versus average guarantee ratesHDI .5%2.5%2.0%2.0% The implicit marketexpectation for 20-yearAAA euro governmentbonds plus 50 bps is takenas the assumedreinvestment yield for2017 - 2021 in the twodiagrams - e.g. 1.33% for20171.5%1.5%1.0%1.0%0.5%0.5%0.0%0.0%avg. running yieldsavg. guarantee rates (incl. ZZR) The fixed-incomereinvestment yield in 2016was higher at 1.34% forBancassurance and at1.50% for HDI Lifereinvestment yield (fixed income)All numbers refer to German GAAP (HGB)Based on these assumptions, the average running yields will be sufficient to finance the guarantees for policyholders22Bank of America Merrill Lynch Conference, London, 26 September 2017
Retail Germany – Targets from Capital Markets Day 2016Targets Retail GermanyGross premium growth (p.a.)LifeP/C 0% 0% 3%Cost cutting initiatives to be implemented by end of 2020 240mCombined ratio 20211 95%Life new business: share of traditional life products by 2021 (new business premium) 25%P/C: Growth in Property & Liability to SMEs and self-employed professionals by 20212 25%EBIT contribution (targeted sustainably from 2021) 240m1 Talanx definition: incl. net interest income on funds withheld and contract deposits2 Compared to base year 2014Talanx targets for a combined ratio of 96% until 2019 in Primary InsuranceTargets are subject to no large losses exceeding budget (cat),no turbulences on capital markets (capital), and no material currency fluctuations (currency)23Bank of America Merrill Lynch Conference, London, 26 September 2017
Retail International – Core Markets: 6M 2017 overview%BrazilGWP growth (local currency) 1.3%Combined ratio101.6%EBIT ( )12.5mMotor: 8.8%Non-Life: 4.6%-0.4%pts-24.7%PolandMotor: 14.8%Non-Life: 12.8%GWP growth (local currency)o/w Lifeo/w Non-LifeMexicoGWP growth (local currency)Combined ratioEBIT ( )Motor: 4.9%Non-Life: 2.2% 37.9%94.8% 0.9%pts 23.4% 9.7% 29.5%Combined ratio296.2% 0.4%ptsEBIT ( )56.0m 8.9%5.6m 14.2% 8.3%o/w Lifeo/w Non-Life4.9m50.4m-7.2%TurkeyChile1GWP growth (local currency) 7.1%Combined ratio90.7%EBIT ( )11.3mMotor: 17.5%Non-Life: 10.1%-0.1%pts 0.8%GWP growth (local currency) 28.2%Combined ratio101.9%EBIT ( )2.8m1 Includes all entities of HDI Chile Group operating in the Chilean market; Magallanes integrated in February 20152 Combined ratio for Warta onlyNote: Market shares based on regional supervisory authorities or insurance associations (Polish KNF, Turkish TSB, Brazilian Siscorp, Mexican AMIS, Chilean AACH)Most of our core markets in Retail International with business growth24 market share 2016 in %Bank of America Merrill Lynch Conference, London, 26 September 2017Motor: 2.7%Non-Life: 2.5%-0.6%pts-5.3%
Retail International – Cycle management: Strategic initiatives in Core MarketsBrazil Behavioral economics to improve claims& service process HDI Digital & Recycle to optimise profitability Increase usage ratio of “Bate Prontos”CombinedRatio in %: Innovation in pricing („Big Data“)102.12016Poland(Warta)2017E Data driven claims handling 360 sales managementMexico Channel consolidationCombinedRatio in %:96.120162017ECombinedRatio in %: P&C diversification Pricing intelligence & Behavioraleconomics95.320162017ETurkeyChile Increase direct online salesCombinedRatio in %: Focus on customer service Increase sales through mid-sized brokers88.72016 Focus on non-motor, pro-active riskselection in motor own damage Cost management in claims handling Offer “best in class” IT processesStrategic initiatives as key drivers of combined ratio improvement – supported by transfer of best practicesBank of America Merrill Lynch Conference, London, 26 September 2017102.520162017E1 Magallanes integrated in February 201525CombinedRatio in %:2017E
Challenges & Opportunities – DigitalisationPursuing and implementing a stringent innovation and digitalisation strategyHDI.deElinvarWhite-label platformfor the digitalisation ofprivate wealthmanagementRedesign and launchof new online productsand servicesWARTA DigitalExtensive dataanalysis for acustomer-specificapproachStartupbootcamp /Plug and PlayPartnerships to identifythe globally most promisingtechnologies in the insuranceindustryClaims appThe app “HDI hilft” for thetransmission of claimsinformation and to track theprocessing statusTelematics“HDI TankTaler“ – the newtelematics product – attractingcustomers by variousextra benefitsIn-house expertise – partner of leading global accelerators – group-internal know-how transfer26Bank of America Merrill Lynch Conference, London, 26 September 2017
Outlook for Talanx Group1Gross written premium 4%Return on investment 3.0%Group net income 850EURmReturn on equityDividend payout ratio 9.0%35-45%target range1 The targets are based on a large loss budget of EUR 290m (2016: EUR 300m) in Primary Insurance, of which EUR 260m (2016: EUR 270m) in Industrial Lines. The large loss budget in Reinsurance stands atan unchanged EUR 825m27Bank of America Merrill Lynch Conference, London, 26 September 2017
Management ambition – Earnings balance Primary Insurance vs. ReinsuranceEBIT ambition by 20211EBIT 2016142% 50% 50%58%Primary InsuranceReinsurance1 Adjusted for the 50.2% stake in Hannover ReProfitability improvement in Primary Insurance to lead to a balanced EBIT split28Bank of America Merrill Lynch Conference, London, 26 September 2017Primary InsuranceReinsurance
Management ambition – Reducing the valuation discount on Primary InsuranceImplicit valuation Primary Insurance in bnKey measuresIndustrial LinesImplicit valuation PrimaryInsurance110 optimisation of domestic portfolios9P/E 2017EP/Book 20168 pushing profitable foreign growth8.0x0.5x process excellence7Retail International6 continuing focused profitable growth5Retail Germany2016 inmarket capPrimary Insurance of 1.0bn432 consequent de-risking of our Lifebusiness forceful profitabilisation of our P/Cbusiness1TalanxHannover Re (Talanx stake)Primary insurance (implicit value)1 In this analysis, Primary insurance also contains Corporate Operations and Consolidation.Calculated as of end-August 2017A comprehensive set of measures to raise the profitability in Primary Insurance29Bank of America Merrill Lynch Conference, London, 26 September 20120 specific focus on investments inDigitalisation/ITCorporate Operations / Holding further cost reductions strict capital discipline
Total shareholder return – More than four and half years since IPOPerformance of the Talanx share250%230% mTLXMarket cap31 Dec 2016210%14 Sept 20178,759190%170%Market capIPO./. 4,623Dividends 1,554150%130%110%90%2-Oct-12Value creation since IPO2-Oct-132-Oct-142-Oct-15Total shareholder return since IPO close to 18% p.a.30Bank of America Merrill Lynch Conference, London, 26 September 20172-Oct-165,690
Summary - Investment highlightsGlobal insurance group with leading market positions and strong German rootsLeading and successful B2B insurerValue creation through group-wide synergiesProfitability measures implemented in Industrial Lines and Retail GermanyDedication to focus on insurance rather than market risksCommitment to continuously fulfill a „AA“ capital requirement by Standard & Poor‘sDedication to pay out 35-45% of IFRS earnings to shareholders31Bank of America Merrill Lynch Conference, London, 26 September 2017
Mid-term target matrix & current statusSegmentsKey figuresGross premium growth1Return on equityGroupIndustrial LinesGroup net income growth 750 bps above riskfree2mid single-digit percentage growth rateDividend payout ratio35 - 45%Return on investment risk free (150 to 200) bps2Gross premium growth1Retention rate(0.3%)10.4% [ 8.4%]23.6%37.6%3.6% [ 2.4 – 2.9%]1.2%52.6%(4.5%)Gross premium growth1 10%10.2%Combined ratio3 96%98.1% 6%5.3%Gross premium growth63 - 5%(0.2%)Combined ratio3 96%93.7%EBIT margin4 10%17.2%Gross premium growth15 - 7%(4.3%)EBIT margin4 financing and longevity businessEBIT margin4 mortality and health business41.2%3.6% [ 2.6 – 3.1%]53.4%Retail InternationalAverage value of New Business (VNB) afterminorities59.5%(0.1%)(5.7%)Life & HealthReinsurance79.7% [ 8.6%]3 - 5% 0%EBIT margin4 2.2%60 - 65%Gross premium growth1P/C Reinsurance7323 - 5%2015/201682016Retail GermanyPrimary Insurance1Strategic targets (2015 - 2019) EUR 110mEUR 448m 2%9.4% 6%3.4% 8.4% 4.5% -4.1%17.2% 2.5% EUR 361m10.2% 3.5%Organic growth only; currency-neutral; 2 Risk-free rate is defined as the 5-year rolling average of the 10-year German government bond yield; 3 Talanx definition: incl. net interest income on funds withheld andcontract deposits; 4 EBIT/net premium earned, 5 Reflects Hannover Re target of at least EUR 220m; 6 Average throughout the cycle; currency-neutral; 7 Targets reflect Hannover Re‘s targets for 2015-2017strategy cycle; 8 Growth rates calculated as 2014 – 2016 CAGR; otherwise arithmetic mean; Note: growth targets are based on 2014 results. Growth rates, CoR and EBIT margins are average annual targetsBank of America Merrill Lynch Conference, London, 26 September 2017
- 6M 2017 -33Bank of America Merrill Lynch Conference, London, 26 September 2017
Key essentials:6M 2017 results significantly up triggering the increase in FY Outlook6M 2017 Group net income up 15% y/y to EUR 463m – all divisions contributing to this improvementThe Group‘s combined ratio largely stable at 97.0% (6M 2016: 96.8%). Large losses in Primary Insurance aswell as in Reinsurance below the previous year‘s level and within their respective large loss budgetsRetail Germany P/C business growth has picked up - combined ratio, also when adjusted for KuRS effects,further downShareholders’ equity stood at EUR 8,968, or EUR 35.48 per share at the end of Q2 2017. Strong RoE at10.3% (FY2016: 10.4%), driven by the double-digit RoEs in Reinsurance and in Industrial LinesGuidance up: the Group now expects a FY2017 Group net income of EUR 850m (up from EUR 800m).GWP growth expected 4% (up from 1%), RoE 9.0% (up from 8.0%)34Bank of America Merrill Lynch Conference, London, 26 September 2017
16M 2017 results – Key financialsGross written premiumNet underwriting result 7%6M17,553Q216,427 5%7,8017,432-362-5256MQ2n/mCombined ratio in %Retention rate in %87.486.989.76M89.0Q2 6M 2017 GWP markedly up 6.9% y/y (curr.-adj. GWP growth rate of 6.5%).Main growth contribution from Retail International and P/C Reinsurance. Q2 2017GWP up 5.0% (curr.-adj.: 5.3%) Retention rate slightly up – in line with strategic plan97.096.86M20172016Bank of America Merrill Lynch Conference, London, 26 September 201797.3Q2 Combined ratio largely stable in 6M 2017 y/y, slightly up in Q2 2017. The lattermainly due to the higher cost ratio in P/C ReinsuranceStrong top-line growth continued over 6M 2017 – combined ratio largely stable y/y3597.6 Net underwriting result deteriorated, mainly due to higher policyholderparticipation in German Life Large losses on Group level well within the pro-rata large loss budgetEURm, IFRSn/m-784-940
1Large losses1 in 6M 2017 (in EURm)NatCatStormsWildfireTotalNatCatTotallarge 7.485.1(Cyclone „Debbie“: 7.2Storm „Quirin: 20.5)(Cyclone „Debbie“: 46.4Tornadoes, USA: 11.0)(Cyclone „Debbie“: 53.6Tornadoes, USA: 11.0Storm „Quirin: Primary Insurance72.1 (142.4)Definition „large loss“: in excess of EUR 10m gross in either Primary Insurance or n-madeReinsurance41.6122.9 (352.7)Talanx GroupTalanxGroup195.0 (495.1)6M 2017 (6M 2016)Note: 6M 2017 Primary Insurance large losses (net) are split as follows: Industrial Lines: EUR 62.5m; Retail Germany: EUR 6.7m; Retail International: EUR 2.9m, Corporate Operations: EUR 0m; since FY2016 reporting onwards, the tableincludes large losses from Industrial Liability line, booked in the respective FY.36Bank of America Merrill Lynch Conference, London, 26 September 2017
1Large loss budget in 6M 2017Primary InsuranceReinsuranceTalanx GroupEUR 195.0m(EUR 495.1m)EUR 122.9m(EUR 352.7m)EUR 72.1m(EUR 142.4m)EUR 290mEUR 825mPro-rata large lossbudget: EUR 145mEUR 1,115mPro-rata large lossbudget: EUR 343mPro-rata large lossbudget: EUR 488mImpact on large loss ratio (incurred)Impact on large loss ratio (incurred)Impact on large loss ratio 7.1%pts)FY large loss budgetbudgeted4.3%ptsbudgeted7.9%ptsthereof used budget6M 2017 (6M 2016)Primary Insurance as well as Reinsurance well within their respective pro-rata large loss budgets37Bank of America Merrill Lynch Conference, London, 26 September 2017budgeted6.3%pts
1Combined RatiosTalanx-GroupIndustrial LinesRetail Germany P/CRetail InternationalReinsurance .8%6M84.8%82.2%Q295.4%95.
6 Bank of America Merrill Lynch Conference, London, 26 September 2017 GWP by regions 2016 (consolidated Group level) GWP by segments 20161 . annuities business Talanx cooperates through banc-assurance agreements with two of the three pillars of the German banking market (private and public .
