Excluding the effects of the coronavirus, group net income would in fact have been up by 26.4% year-on-year, at EUR 603 million.
Talanx Group 1H2020 preliminary figures, y-o-y changes
- Gross written premiums: EUR 22,006 million (+5.5%), of which:
- 16% Germany (-2.3 pp.)
- 9% UK (+0.7 pp.)
- 8% CEE & Turkey (-1.0 pp.)
- 14% rest of Europe (-0.2 pp.)
- 22% USA (+0.8 pp.)
- 3% rest of North America (+0.7 pp.)
- 7% Latin America (-0.7 pp.)
- 18% Asia & Australia (+2.2 pp.)
- 1% Africa (-0.1 pp.)
- Net premiums earned: EUR 16,746 million (+5.2%),
- Consolidated combined ratio: 101.3% (+3.8 pp.)
- Net investment income: EUR 1,785 million (-10.1%),
- Operating profit: EUR 745 million (-40.1%),
- RoE: 6.4% (-4.0 pp.)
- Net income: EUR 325 million (-31.8%),
Gross written premiums rose by 5.5% in the first half of 2020 to EUR 22 billion (1H2019: 20.9), or 6.3% after adjustment for exchange rate effects.
Gross written premiums in the Industrial Lines division rose by 10.6% to EUR 3.9 billion (1H2019: 3.5). Once again, HDI Global Specialty SE was the main growth driver.
The Retail Germany division's gross written premiums fell by 5.4% year-on-year to EUR 3,147 million (1H2019: 3,327). Property/Casualty GWP fell by 3.6% to EUR 1,005 million (1H2019: 1,042), while fell Life GWP decreased by 11.3% to EUR 231 million (1H2019: 260), both segments being affected by pandemic effects.
Reinsurance division's GWP increased in the first half of the year, despite the coronavirus, by 12.4% to EUR 13.1 billion (1H2019: 11.7). Property/Casualty Reinsurance GWP increased by 16.9% year-on-year to EUR 9.2 billion (1H2019: 7.8), while Life Reinsurance GWP rose by 3.3% to EUR 4.0 billion (1H2019: 3.8).
Net coronavirus expenses of EUR 658 million impacted operating profit, which decreased by 40.1% to EUR 745 million (1H2019: 1,244).
In total, losses from the pandemic in the first half of the year amounted to EUR 824 million; however, these were absorbed in part by the budgeted large loss reserve. Other negative effects relate to investments (EUR 174 million) and provisions for future premium decreases (EUR 104 million). Conversely, the coronavirus reduced losses at certain lines by EUR 93 million. The positive developments in the divisions continued despite the coronavirus.
Coronavirus loss expenses were far greater than losses from natural disasters, although the latter were higher in the first half of the year than in the prior-year period at EUR 190 million (1H2019: 138). The largest losses were caused by the Nashville tornado in the USA (EUR 44 million) and the New South Wales bush fires in Australia (EUR 40 million).
The combined ratio was 101.3% (1H2019: 97.5%). Excluding positive and negative coronavirus effects, it would have been stable, at 97.4%.
The underwriting result fell by almost 60% due to the coronavirus to EUR -1,129 million (1H2019: -708). EUR 281 million of the total large losses of EUR 1,018 million is attributable to primary insurance and EUR 737 million to reinsurance. Large losses exceeded the pro rata budget for the period of EUR 594 million (1H2019: 527). The main causes apart from natural disasters were business interruptions and event insurance.
Excluding transitional measures, the Solvency II ratio as at 30 June 2020 was a comfortable 191% (1Q2020: 196%), at the upper end of the target range of between 150-200%.
TorstenLeue, Chairman of Talanx AG's Board of Management, commented:
"The coronavirus pandemic made the first half of 2020 difficult for us. The impact in the second quarter in particular - the height of the lockdown in Europe - was enormous and clearly exceeded our loss budget.
However, adjusted for the losses from the pandemic, our underwriting would have been stable. We saw considerable premium growth in primary insurance and our profitability enhancement programmes are having the desired effect. Nevertheless, we must also be prepared for a challenging second half of the year.
The coronavirus pandemic is not over yet and the consequences for economic growth are still unknown. What is clear is that the low-interest rate environment has been further exacerbated and that the hurricane season is only just starting. In other words, the situation remains extremely opaque and means we are still unable to provide an outlook for financial year 2020."
More financial information about Talanx Group can be found at www.talanx.com/en/investor_relations