ROUNDUP: Despite war and catastrophes, Talanx is sticking to its profit target

HANNOVER (dpa-AFX) – Natural disasters, the Ukraine war and the pandemic weighed on the insurance group Talanx (HDI) in the first quarter. The bottom line was a profit of 256 million euros and thus almost eight percent less than a year earlier, as the company announced on Thursday in Hanover. Despite the uncertainties surrounding the Russian attack on Ukraine, the Management Board headed by Talanx CEO Torsten Leue is still aiming for record profits of between EUR 1.05 and 1.15 billion for the current year. However, the possible effects of the war could not yet be fully assessed.

On the stock exchange, the news only initially triggered a price jump of a good two percent. After that it went downhill. In the early afternoon, the stock was down more than percent at EUR 39.22, making it one of the weakest stocks in the MDAX, the index of medium-sized stocks. The Talanx share has lost around eight percent since the turn of the year.

In the first quarter, the Group set aside around EUR 150 million as a precaution against possible insurance claims as a result of the war. According to Chief Financial Officer Jan Wicke, the lion’s share of the sum is made up of the provisions of Hannover Re, the world’s third-largest reinsurer, in which Talanx holds a good half of the shares. The subsidiary had already published its quarterly figures on Wednesday.

While Hannover Re primarily took into account damage to infrastructure facilities, warehouses, ships and goods in its provisions, Talanx also set aside money for the consequences of the war in industrial insurance. This primarily affects political risks and credit insurance, Wicke said in a conference call with journalists. In addition, there are possible burdens on aviation insurance because Russian airlines have not returned hundreds of leased aircraft to their owners abroad since the beginning of the war.

The rating agencies Fitch and Moody’s recently assumed a possible loss of around ten billion US dollars (9.5 billion euros) for the insurance industry because of the aircraft. However, it is disputed to what extent the insurers have to take responsibility for this at all. Hannover Re’s chief financial officer, Clemens Jungsthfel, expects the matter to be ultimately decided by the courts – and not before 2024.

Meanwhile, the Talanx Group, including Hannover Re, expanded its business significantly in the first quarter. Premium income grew by 16.5 percent year-on-year to EUR 15.9 billion. Because of the provisions for the consequences of the war and high claims from natural catastrophes, however, a larger part of the revenue in property and casualty business went to claims, administration and sales: the combined claims/expenses ratio deteriorated from 96.1 to 98.3 percent and came closer to the critical 100 percent mark.

Natural disasters in particular cost the group dearly – above all the floods in Australia with around 235 million euros. “We’ve already seen that with ‘Bernd’ in Germany: Floods are very, very expensive,” said Wicke, referring to the devastating floods in July 2021. This time, several winter storms caused severe damage in Europe: Talanx recorded this throughout the Group a burden of 164 million euros. In addition to reinsurance, the losses also affected primary insurance.

The pandemic is not over for the insurer either. Deaths as a result of the corona pandemic in the USA, Latin America and South Africa burdened the reinsurance line with 123 million euros. However, according to the information, the burdens already decreased in the course of the quarter./stw/zb/he