The group's operating profit (EBIT) increased as well, by 19.6% year-on-year, reaching EUR 2.4 billion.
Talanx Group FY2019 figures, y-o-y changes
- Gross written premiums: EUR 39,494 million (+13.2%), of which:
- P&C insurance: EUR 11,837 million (+18.3%)
- Primary insurance: EUR 6,573 million (+5.9%)
- P&C reinsurance: EUR 13,411 million (+15.4%)
- L&H reinsurance: EUR 7,673 million (+8.8%)
- Germany: 22%
- United Kingdom: 8%
- CEE + Turkey: 8%
- Rest of Europe: 16%
- USA: 20%
- Rest of North America: 3%
- Latin America: 8%
- Asia + Australia: 14%
- Africa: 2%
- Net earned premiums: EUR 33,054 million (+11.8%)
- Net investment income: EUR 4,323 million (+14.8%)
- Combined ratio: 98.3% (+0.1 pp.), of which:
- P&C insurance: 98.3% (-2.3 pp.)
- P&C reinsurance: 98.2% (+1.6 pp.)
- Return on equity: 9.8% (+1.8 pp.)
- Operating profit (EBIT): EUR 2,430 million (+19.6%)
- Group net income: EUR 923 million (+31.3%)
Gross written premiums for the Group totalled EUR 39.5 billion, up 13.2% compared to 2018. Talanx recorded growths on all lines of business at group level, the P&C insurance and reinsurance lines recording double digit increases. By regions, Germany (22% of total GWP) and USA (20%) were the biggest markets for Talanx in terms of premium income.
Total large losses amounted to EUR 1.3 billion, due to events in non-life reinsurance. This figure was slightly higher than in the previous year and in excess of the annual budget of EUR 1.2 billion. A total of EUR 363 million (FY2018: EUR 394 million) of this amount was attributable to primary insurance, while reinsurance accounted for the remaining EUR 956 million (FY2018: EUR 850 million). Whilst the first half of the year saw extremely moderate large losses from natural disasters, the second half was well above expectations.
At 98.3% (FY2018: 98.2%), the combined ratio was flat year-on-year due to higher large losses from the hurricanes on the Bahamas and in the USA, and the typhoons in Japan. Large losses also pushed down the underwriting result by 11% to EUR -1.8 billion (FY2018: EUR -1.6 billion).
Net investment income grew by a clear 15% to EUR 4.3 billion (FY2018: EUR 3.8 billion). Extraordinary net investment income increased from EUR 392 million to EUR 898 million. The rise was primarily due to a one-time effect in the Life/Health Reinsurance Segment resulting from the restructuring of the shareholdings in the Viridium Group, along with the year-on-year rise in the realisation of hidden reserves to finance the renewed increase in the Zinszusatzreserve (ZZR - additional interest reserve) in the Retail German Division. As a result, the net return on investment rose slightly to 3.5% (FY2018: 3.3%). Talanx intends to maintain its investment strategy of limiting market risk in 2020. It will continue its conservative investment policy while steadily expanding its infrastructure investments.
The Retail International Division continued its dynamic and profitable growth in 2019. Activities in Poland, Italy and Mexico played a particularly large role here. The division supplemented its business by acquiring Ergo Sigorta in Turkey. In addition, the motor insurance joint venture with Banco Santander in Brazil commenced operations. By contrast, the sale of HDI Seguros in Peru streamlined the Latin America portfolio.
Gross written premiums in Retail International saw double-digit growth in 2019, rising 10 percent to EUR 6.1 billion (FY2018: EUR 5.6 billion). Adjusted for currency effects, the increase was 12%. Overall growth in Europe was double-digit at 13% (15% after adjustment for currency effects), while in Latin America the figure was 3% (6% adjusted).
The combined ratio rose to 95.5% (FY2018: 94.3%) as a result of higher acquisition costs caused by structural portfolio changes and reporting adjustments designed to ensure uniformity. The loss ratio was stable year-on-year. The underwriting result decreased to EUR 33 million (FY2018: EUR 91 million), primarily because life insurance customers participated in the higher net investment income.
Full-year operating profit rose 6% to EUR 283 million (FY2018: EUR 268 million). The division's contribution to Group net income rose to EUR 164 million (FY2018: EUR 161 million).
TorstenLeue, Chairman of Talanx AG's Board of Management, commented:
"Our ambitious Strategy 2022 initiative already bore its first fruit last year. Encouragingly, all four divisions contributed to the rise in profits. Retail Germany, Retail International, and Reinsurance all continued their strong performance, while Industrial Lines recorded an impressive improvement. The latter significantly exceeded its price adjustment target of 20 percent for fire insurance and is now clearly generating an operating profit again. Our growth initiatives are having an effect. For example, HDI Global Specialty lifted its premium income by more than 30 percent to EUR 1.4 billion. The commercial business in the Retail Germany Division recorded growth of 8 percent. We also made substantial progress in modernising our IT in 2019 by retiring the BS2000 mainframe system. We are convinced that we will position Talanx for even greater growth and stronger profits in the coming years by encouraging an entrepreneurial mindset and independent action among our employees. This is expressed in our new Talanx Purpose: 'Together we take care of the unexpected and foster entrepreneurship'."
Germany-based Talanx Group has a worldwide presence, operating in multiple insurance markets, including Poland, Czech Republic, Slovakia, Hungary, Greece, Turkey and Russia, through companies like HDI, Warta and TU Europa.
More financial information about Talanx Group can be found at https://www.talanx.com/investor-relations.