Talanx Ag · XETR:TLX
Talanx — Q1 2024 Earnings Presentation
42 slides from Talanx's earnings presentation, May 15, 2024
Slide 1: Q1 2024 Results
Q1 2024 Results Jan Wicke, CFO 15 May 2024
Slide 2: Q1 2024 – With a head start into 2024
Q1 2024 – With a head start into 2024 Results Capital Revenue growth Earnings growth Resiliency2 Solvency 2 ratio Q1 2024 vs Q1 2023 Net income Q1 2024 vs Q1 2023 31 Dec 2023 vs 31 Dec 2022 as of 31 Mar 2024 1 +9 % +35 % +1.4 % pts 4 3 217 % (+ ~EUR 1.1bn ) Bottom-line outpacing top-line growth with
Slide 3: Agenda
Agenda 1 Group financials 2 Segments 3 Capital management 4 Outlook 5 Appendix 3 Q1 2024 Results | 15 May 2024
Slide 4: Very strong Q1 2024 performance …
1 Very strong Q1 2024 performance … Insurance revenue Group net income Return on equity in EURm in EURm +9% +35% +2.3% pts. 10,711 11,654 572 18.9% 21.2% 423 93.5% 90.9% Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Industrial Lines and Retail Improved net income Strong technical profitability Int
Slide 5: … with Primary Insurance top-line growth at solid double-digit rate …
1 … with Primary Insurance top-line growth at solid double-digit rate … Primary Insurance Reinsurance Group Insurance revenue, in EURm +23%1 +2%3 +9%4 5,3612 6,673 11,654 6,570 ~500 10,711 +11% 4,368 organic 4,861 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Note: Primary Insurance is the sum of
Slide 6: … and even stronger bottom-line growth
1 … and even stronger bottom-line growth Primary Insurance Reinsurance Group Group net income, in EURm +45% +24% +35% 267 305 572 247 184 423 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Note: Primary Insurance is the sum of Industrial Lines, Retail Germany and Retail International. 6 Q1 2024 Res
Slide 7: Growing earnings contribution from Primary Insurance
1 Growing earnings contribution from Primary Insurance Primary Insurance Net income contribution to group net income segment split in EURm Q1 2024, in EURm Retail 47% International 46% 120 (21%) Reinsurance 305 (53%) 104 Industrial 31% (18%) Lines 43 (8%) … … 2018 2023 Q1 2024 Retail Germany Note: P
Slide 8: Very low level of NatCat losses in Q1 2024 …
1 Very low level of NatCat losses in Q1 2024 … Net NatCat large losses in relative terms For Q1 2013 – Q1 2022 IFRS 4, in % of net premiums earned (P/C business only) For Q1 2023 and Q1 2024 IFRS 17, in % of insurance revenues (P/C business only) 5.7% 4.1% 2.7% 2.0% 2.2% 2.2% 1.9% 1.6% Ø 2.0% 0.5% 0
Slide 9: … but large loss budget is fully booked
1 … but large loss budget is fully booked Net large losses Q1 2024, in EURm 521 Large losses lower than last year in each segment 445 (in total: -EUR 343m) Unutilised budget fully booked1 Large losses of EUR 76m clearly below 76 28 pro-rata budget 48 (EUR 521m = 5.4%pts CR) NatCat Man-made Total Pro
Slide 10: Rising confidence to significantly exceed EUR 1.7bn net income
1 Rising confidence to significantly exceed EUR 1.7bn net income Insurance revenue Group Return growth net income on equity (FX-adjusted) in EURm 10% High >1,700 21.2% single-digit ~15% 572 Q1 2024 Outlook 2024 Q1 2024 Outlook 2024 Q1 2024 Outlook 2024 Note: All targets are subject to large losses n
Slide 11: Agenda
Agenda 1 Group financials 2 Segments 3 Capital management 4 Outlook 5 Appendix 11 Q1 2024 Results | 15 May 2024
Slide 12: Exceptional performance in Primary Insurance
2 Exceptional performance in Primary Insurance Industrial Lines Retail International Retail Germany CR < 90% (#21) Earnings growth Return on equity2 Net income +51 % CR < 90% (#1 ) 1 13.2 % (+1.4%pts. vs Q1 2023) Leveraging hard market Right region & right timing Diversification pays off 1 Market po
Slide 13: Industrial Lines Continuing profitable growth
Industrial Lines 2 Continuing profitable growth Insurance Group Return revenue net income on equity in EURm +13%1 +51% +3.0% pts 2,348 104 15.1% 2,072 12.2% 69 93.2%2 91.8%2 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 High profitability driven by Strong growth Improved results despite high level
Slide 14: Industrial Lines Rising confidence to outperform 2024 targets
Industrial Lines 2 Rising confidence to outperform 2024 targets Insurance revenue Combined Return growth ratio1 on equity (FX-adjusted) 13.9% < 93% 15.1% High 91.8% ~13% single-digit Q1 2024 Outlook 2024 Q1 2024 Outlook 2024 Q1 2014 Outlook 2024 Note: All targets are subject to large losses not exce
Slide 15: Retail International Jump start into 2024 driven by technical excellence
Retail International 2 Jump start into 2024 driven by technical excellence Insurance Group Return revenue net income on equity in EURm in EURm +45%1 +60% +2.3% pts 2,153 120 15.6% 13.3% 1,489 51% Europe 75 64% Europe 49% LatAm 93.4%2 91.2%2 36% LatAm Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 E
Slide 16: Retail International Strong Q1 will normalise in the course of 2024
Retail International 2 Strong Q1 will normalise in the course of 2024 – LatAm integration on track Insurance revenue Combined Return growth ratio1 on equity (FX-adjusted) P/C Life 51% 49% 91.2% < 95% 15.6% > 8.5% Low double-digit Mid single-digit Q1 2024 Outlook 2024 Q1 2024 Outlook 2024 Q1 2024 Out
Slide 17: Retail Germany Uneventful start into 2024
Retail Germany 2 Uneventful start into 2024 Group Return Insurance revenue net income on equity2 in EURm in EURm +7% +7% +1.4% pts 807 860 40 43 13.2% 11.8% 95.1%1 97.9%1 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Stronger performance in Life offsets Stable segment performance Solid growth lowe
Slide 18: Retail Germany On track for 2024 outlook
Retail Germany 2 On track for 2024 outlook Insurance revenue Combined Return growth ratio1 on equity P/C Life 9.0% 97.9% < 98% 13.2%2 > 10% 4.5% stable stable Q1 2024 Outlook 2024 Q1 2024 Outlook 2024 Q1 2024 Outlook 2024 Q1 2024 Outlook 2024 Note: All targets are subject to large losses not exceedi
Slide 19: Reinsurance Strong and increasing profitability
Reinsurance 2 Strong and increasing profitability Insurance Insurance Return revenue service result on equity in EURm in EURm +2%1 +27% +1.9% pts 6,570 6,673 720 21.6% 23.5% 568 92.3%2 88.0%2 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Continued growth in a favourable Focus on higher margin Stro
Slide 20: Reinsurance Confidence to reach guidance
Reinsurance 2 Confidence to reach guidance Insurance revenue Combined Return growth ratio1 on equity (FX-adjusted) in EURm > 5% < 89% 23.5% 3% 88.0% > 14% Q1 2024 Outlook 2024 Q1 2024 Outlook 2024 Q1 2024 Outlook 2024 Note: All targets are subject to large losses not exceeding the large loss budget,
Slide 21: Agenda
Agenda 1 Group financials 2 Segments 3 Capital management 4 Outlook 5 Appendix 21 Q1 2024 Results | 15 May 2024
Slide 22: Continued regulatory capital strength
3 Continued regulatory capital strength High solvency Strong ratings BOFCAR1 254% 206% 208% 209% 215% 217% A+ (stable) Target range 150 – 200% A+ (stable) 31 Dec 31 Dec 31 Dec 31 Dec 31 Mar 2020 2021 2022 2023 2024 Note: Insurer Financial Strength Rating Note: Solvency 2 ratio of HDI Group as the re
Slide 23: Sensitivities of capital ratio largely unchanged versus prior year
3 Sensitivities of capital ratio largely unchanged versus prior year Estimation of sensitivity impact1 215% Target range SII Ratio CAR S2 31 31.12.2021 Dec 2023 2 Interestrate Interest rate+50bps +50bps + 1%pts 2 Interestrate Interest rate-50bps -50bps - 6%pts 3 Creditspread Credit spread+50bps +50b
Slide 24: High level of resiliency embedded in best estimate
3 High level of resiliency embedded in best estimate Talanx Primary Group2 Reinsurance Talanx net3 (Hannover Re) Resiliency embedded in best estimate for P/C net claims reserves (undiscounted) 1, before taxes and minorities, as of year end in EURm + ~400 + ~700 + ~1,100 1,542 2,057 3,704 1,1615 1,37
Slide 25: Strong capital generation
3 Strong capital generation Shareholders’ Shareholders’ capital equity development components After taxes and minorities, in EURm After taxes and minorities, as of 31 Mar 2024, in EURm Value creation 2,423 19,0302 5,439 10,447 +721 11,1682 11,168 31 Dec 2023 Net income and OCI 31 Mar 2024 Shareholde
Slide 26: Unchanged low-beta strategy with high quality investment portfolio
3 Unchanged low-beta strategy with high quality investment portfolio Investments for own risk 138.2 More than 80% allocated to Fixed 18% 111.5 111.5 Income, of which 69% invested in 1% 7% government and covered bonds 17% 44% 20% 93% invest- 81% ment US real estate exposure: 25% grade ~ EUR 1bn out o
Slide 27: Sustainable investments exceeding 2025 target
3 Sustainable investments exceeding 2025 target Sustainable investments1 Investment categories In EURbn Sustainability 2 Social Green 31. Dec 2023 Sustainable Social Green 11.31 22% 4.0 7.9 43% 2.8 2.5 0.9 4.2 4.9 35% 31 Dec 2022 31 Dec 2023 1 Methodology of eligible sustainable investments was expa
Slide 28: Agenda
Agenda 1 Group financials 2 Segments 3 Capital management 4 Outlook 5 Appendix 28 Q1 2024 Results | 15 May 2024
Slide 29: Outlook 2024
4 Outlook 2024 Return Group Dividend on equity net income per share ~ 15% > EUR 1,700m EUR 2.501 (to be paid in 2025) Note: All targets are subject to large losses not exceeding the large loss budget (EUR 2,435m for 2024), no turbulences on capital markets, and no material currency fluctuations. In
Slide 30: Agenda
Agenda 1 Group financials 2 Segments 3 Capital management 4 Outlook 5 Appendix 30 Q1 2024 Results | 15 May 2024
Slide 31: Talanx Primary Insurance and Reinsurance Contributions to net income
Talanx Primary Insurance and Reinsurance 5 Contributions to net income Net income attributable to Talanx AG shareholders, in EURm 1 2 3 4 5 6 7 8 Industrial Retail Retail ∑ Primary Reinsurance Corporate Conso- Talanx Lines Germany International Insurance Operations lidations Group 2018 -16 102 161 2
Slide 32: Q1 2024 results overview – Talanx Group
5 Q4 2023 and FY 2023 results overview – Talanx Group EURm Q1 2023 Q1 2024 Q1 2024 / Q1 2023 Insurance revenue (gross) 10,711 11,654 9% Insurance service result (net) 880 1,072 22% thereof Non-Life 568 888 56% Net investment income for own risk 764 1,165 52% Result from unit-linked contracts 394 924
Slide 33: Results overview - Segments
5 FY 2023 results overview - Segments EURm Industrial Lines Retail Germany Retail International Primary Insurance Reinsurance Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Q1 2023 Q1 2024 Insurance revenue (gross) 2,072 2,348 807 860 1,489 2,153 4,368 5,361 6,570 6,673 Insurance se
Slide 34: Large loss detail Large losses clearly below pro-rata budget
Large loss detail 5 Large losses clearly below pro-rata budget Net losses Industrial Retail Retail ∑ Primary Corporate Talanx Reinsurance in EURm, Q1 2024 (Q1 2023) Lines Germany International Insurance Operations Group TOP 10 NatCat 1. Earthquake, Japan (January) 25.0 25.0 2. Wildfire, Chile (Febru
Slide 35: Resiliency embedded in best estimate for P/C net claims reserves
5 Resiliency embedded in best estimate for P/C net claims reserves1,2 In EURm In % of net reserves As of year end, undiscounted As of year end, undiscounted 2019 2020 2021 20225 2023 2019 2020 2021 20225 2023 Talanx Primary Talanx Primary 738 1,020 1,221 1,161 1,542 6.2% 8.4% 8.8% 7.4% 8.8% Group3 G
Slide 36: Development of Solvency 2 ratio (excl. transitionals)
5 Development of Solvency 2 ratio (excl. transitionals) +5%pts. 225% -3%pts. 209% 215% -15%pts. -7%pts. -5%pts. 31%pts 213% 31 Dec 2022 Opening Operating Market Other 31 Dec 2023 Change in Capital 31 Dec 2023 adjustments impact variances (incl. taxes) after open. adj. eligibility management and oper
Slide 37: P&L impact of “+/-10% scenario”
5 FVPL assets with minor impact on P&L so far P&L impact of “+/-10% scenario” Shareholders view: Without Primary Life, after taxes and without minorities 1, as of 31 March 2024, in EURm Total +/-492 ~90% of financial investments without P&L volatility Thereof Private +/-190 Equity Equity and +/-24 d
Slide 38: Fair value changes on FVPL assets in Q1 2024
5 Fair value changes on FVPL assets in Q1 2024 Shareholder view: Without Primary Life, after taxes and without minorities 1, in EURm Total +17 Thereof Private 9 Equity Equity securities -3 and derivatives Fixed +12 income Real estate -24 funds Infra- +23 structure 1 Based on flat / average tax rates
Slide 39: Highlights of Sustainability Report 2023
5 Highlights of Sustainability Report 2023 -34% -34% Carbon intensity reduction of liquid investment CO2 emissions in global primary insurance portfolio compared to the 2019 baseline CO2 operations 2023 vs. 2019 CO2 Target: New Net-zero in Operations until 2030, and in 2030 exclusions for investment
Slide 40: Contact us
6 Contact us Join us 15 May 2024 3M 2024 results 16 May 2024 Q1 2024 results roadshow, virtual Bernd Sablowsky Anna Färber Bernt Gade Head of Investor Relations and M&A Event Management Equity & Debt IR 22 May 2024 +49 511 3747-2793 +49 511 3747-2227 +49 511 3747-2368 Berenberg European Conference,
Slide 41: Details on reserve review by WTW
6 Details on reserve review by WTW (as per pages 2, 24 and 35 of this presentation) ▪ WTW was separately engaged by Talanx AG and Hannover Rück SE to review certain parts of the undiscounted loss and loss adjustment expense reserve from the consolidated financial statements in accordance with IFRS a
Slide 42: Qualifications and caveats
6 Qualifications and caveats This presentation contains forward-looking statements which are based on certain assumptions, expectations and opinions of the management of Talanx AG (the “Company”) or cited from third-party sources. These statements are, therefore, subject to certain known or unknown