Talanx Ag · XETR:TLX
Talanx — FY2023 Earnings Presentation
58 slides from Talanx's earnings presentation, Mar 21, 2024
Slide 1: FY 2023 Results
FY 2023 Results Torsten Leue, CEO Jan Wicke, CFO 21 March 2024
Slide 2: Agenda
Agenda 1 CEO highlights 2 CFO highlights 3 Capital management 4 Segments 5 Group outlook 6 Appendix 2 FY 2023 Results | 21 March 2024
Slide 3: 2023 – Another record year
1 2023 – Another record year … Record result High quality earnings Increased dividend Net income Resiliency2 Dividend per share4 in EURm in EURm in EUR 1 3 1,581 > 3,500 2.35 Ahead of schedule for 2025 strategic targets 1 IFRS 4 2022: EUR 1,172m (2023 vs. 2022: + 35%); IFRS 17 2022: EUR 706m, no mea
Slide 4: … with strong Primary Insurance performance
1 … with strong Primary Insurance performance … Industrial Lines Retail International Retail Germany Combined ratio Return on equity in LatAm 91.5 % 2 11 % Underwriting champion Top player in LatAm Stable profit contributor 4 FY 2023 Results | 21 March 2024
Slide 5: … and a well diversified business with a strong B2B focus
1 … and a well diversified business with a strong B2B focus Insurance revenue mix Diversification Type of business Germany Retail2 B2B1 Rest of World ~85 % ~75 % ~85 % outside Germany ~75 % in hard B2B1 markets Note: Percentages are calculated in percent of Group insurance revenue, adjusted for Corp
Slide 6: A promise is a promise – Outlook 2023 outperformed
1 A promise is a promise – Outlook 2023 outperformed … Insurance Group Return revenue net income on equity in EURbn in EURm 43.21 1,581 16.6% > 42 ~ 1,4002 > 10%3 Outlook 2023 2023 Outlook 2023 2023 Outlook 2023 2023 1 Insurance revenue growth 2023 versus 2022: +9% (currency-adjusted: +12%) | 2 Init
Slide 7: … with Primary Insurance as key growth driver
1 … with Primary Insurance as key growth driver … Primary Insurance Reinsurance Group insurance revenue insurance revenue insurance revenue in EURbn in EURbn in EURbn +16%1 +2%3 +9%4 19.722 24.02 24.46 43.24 ~0.6 +13% 39.65 16.97 organic 19.12 2022 2023 2022 2023 2022 2023 Note: Primary Insurance is
Slide 8: … now contributing almost 50% to group results
1 … now contributing almost 50% to group results … Primary Insurance Primary Insurance revenue contribution net income contribution in EURm +4%pts +3%pts 45% 46% 41% 43% 2022 2023 2022 2023 (IFRS 41) Note: Primary Insurance is the sum of Industrial Lines, Retail Germany and Retail International. Per
Slide 9: … and lifting implied Primary Insurance valuation to new levels
1 … and lifting implied Primary Insurance valuation to new levels Development of market capitalisation In EURbn 18 16.71 16 +49% 3.62 P/E 232 Primary 4.6x 14 Insurance 12 11.2 Hannover Re 13.1 10 (50.2%) 8 30 Dec 2022 29 Dec 2023 Source: FactSet | Note: Primary Insurance is here defined as Talanx ma
Slide 10: Disciplined strategy execution is key
1 Disciplined strategy execution is key … A Capital management B People management C Focused divisional strategies Primary Insurance Reinsurance Industrial lines Retail Germany Retail International Staying Focused. Thinking Ahead. Focus Grow Accelerate D Sustainability 10 FY 2023 Results | 21 March
Slide 11: … to allow increased earnings outlook
1 … to allow increased earnings outlook… Strategic cycle Strategic cycle 2019 – 2022 2023 – 2025 Net income, IFRS 4, in EURm >1,900 CAGR1 ~ 17% >1,700 1,581 ~1,600 CAGR ~ 8% >1,400 1,172 1,011 923 648 2019 2020 2021 2022 2023 2024e 2025e 1 CAGR 2022 – 2025e; 2022 based on IFRS 4 11 FY 2023 Results |
Slide 12: … and accelerated dividend payout
1 … and accelerated dividend payout 2018 – 2021: 2022 – 2025e: Stable or upwards Upwards in EUR per share > 25% 2.502 2.352 2.504 2.001 > 10% +25% 1.60 1.50 1.50 1.45 2018 2019 2020 2021 2022 2023e 2024e 2025e 1 Dividend for 2022 paid in 2023 | 2 Subject to AGM approval; dividend for 2023 to be paid
Slide 13: Promise delivered one year ahead of plan
1 Promise delivered one year ahead of plan Return on equity Net income growth Dividend in EURm in EUR per share Promised until > 10% ~ 1,600 2.50 FY 2025 Guidance for FY 2024 ~ 15% > 1,700 2.50 13 FY 2023 Results | 21 March 2024
Slide 14: New financial mid-term targets already @ CMD 2024
1 New financial mid-term targets already @ CMD 2024 Capital Markets Day 2024 New financial mid-term targets Return on Equity Net income 11 December 2024 Dividend 14 FY 2023 Results | 21 March 2024
Slide 15: Agenda
Agenda 1 CEO highlights 2 CFO highlights 3 Capital management 4 Segments 5 Group outlook 6 Appendix 15 FY 2023 Results | 21 March 2024
Slide 16: 2023 – Exceptional growth meets profitability
2 2023 – Exceptional growth meets profitability ... Strong growth Record profitability Increased dividend Revenue growth RoE Dividend per share2 in EUR 1 9% 16.6 % 2.35 (+17.5% versus 2022) 1 Currency-adjusted: +12% | 2 Dividend for 2022 paid in 2023 and for 2023 to be paid in 2024, subject to AGM a
Slide 17: … driven by strong underwriting performance of Primary Insurance
2 … driven by strong underwriting performance of Primary Insurance … Primary Insurance Reinsurance Group insurance service result insurance service result insurance service result in EURm in EURm in EURm +66% +24% +32% 1,556 1,658 3,234 1,336 2,454 939 95.2% 93.4% 95.1% 95.0% 95.2% 94.3% 2022 2023 2
Slide 18: … and supported by normalised level of large losses within budget
2 … and supported by normalised level of large losses within budget … Net large losses in relative terms For 2012 – 2021 IFRS 4, in % of net premiums earned (P/C business only) NatCat Corona losses (P/C business only) For 2022 and 2023 IFRS 17, in % of insurance revenues (P/C business only) Man-made
Slide 19: … allowing significant strengthening of resiliency
2 … allowing significant strengthening of resiliency… 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 + + + > 1,500 ~ 2,000 > 3,500 1,166 1,378 2,648 > 8
Slide 20: … and prudent investment portfolio management
2 … and prudent investment portfolio management … High quality Average P&L sensitivity investment portfolio reinvestment yield2 of FVPL assets Investments for own risk, as of 31 Dec 2023, in EURbn Impact of “+/-10% scenario”. Shareholder view: Without Primary Life, after taxes and without minorities
Slide 21: … aiming at superior earnings growth for the future
2 … aiming at superior earnings growth for the future 2022 – 2025e 2022 – 2025e: Net income guidance Implied earnings per share in EURm in EUR > 1,900 CAGR > 1,700 > 7.36 ~ 17% > 6.58 6.21 1,581 1,600 OLD 4.632 1,1721 2022 2023 2024e 2025e 2022 20233 2024e4 2025e4 1 IFRS 4 | 2 Based on IFRS 4 2022 n
Slide 22: Agenda
Agenda 1 CEO highlights 2 CFO highlights 3 Capital management 4 Segments 5 Group outlook 6 Appendix 22 FY 2023 Results | 21 March 2024
Slide 23: 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 Dec 2023, in EURm 2,429 17,905 Value creation 5,029 +2,017 297 10,447 10,447 8,640 -507 31 Dec 2022 Net income Dividend Capital i
Slide 24: … and significantly improved market cap and trading liquidity
3 … and significantly improved market cap and trading liquidity … Market Share price Trading capitalisation performance liquidity in EURbn in % Average daily turnover2, in EURm 16.7 +46% 9.9 11.2 +13% 3.6 2022 2023 Peer - Ø 20231 Talanx 2023 2022 2023 > 5bn Top performing insurance stock in Trading
Slide 25: … are backed by strong earnings and cash generation of Primary Insurance
3 … are backed by strong earnings and cash generation of Primary Insurance … Cash contribution Net income from subsidiaries 2023, in EURm Local GAAP, as affecting income statement of Talanx AG in 2023, in EURm 870 -125 1,581 -127 743 363 42% 917 54% 507 58% 790 46% Primary Reinsurance Split Corporat
Slide 26: … as a basis for financing of acquisitions
3 … as a basis for financing of acquisitions … Liberty funding structure Consolidation in EURm 1,405 22 Nov 2023 Closing date 750 Brazil 01 Mar 2024 Closing date 655 Chile Colombia Ecuador Cash Senior Total debt HDI VaG 26 FY 2023 Results | 21 March 2024
Slide 27: … while preserving regulatory capital strength
3 … while preserving regulatory capital strength High solvency Strong ratings BOFCAR1 S2 CAR as of 31 Dec 2023 254% to be published on 211% 206% 208% 209% 7 May 2024 (AGM) Target range A+ (stable) 150 – 200% A+ (stable) 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 2019 2020 2021 2022 2023 Note: Insurer Financ
Slide 28: Profitable growth matters to us!
3 Profitable growth matters to us ! 2022 – 2025e 2022 – 2025e: Implied earnings per share Dividend guidance in EUR in EUR per share CAGR > 7.36 CAGR ~ 17% ~ 12%6 2.505 > 6.58 6.21 2.355 4.631 2.004 2022 20232 2024e3 2025e3 2022 2023 2024e 2025e 1 Based on IFRS 4 2022 net income of EUR 1,172m and num
Slide 29: Agenda
Agenda 1 CEO highlights 2 CFO highlights 3 Capital management 4 Segments 5 Group outlook 6 Appendix 29 FY 2023 Results | 21 March 2024
Slide 30: Industrial Lines: Continue to leverage hard market cycle
Industrial Lines 4 Continue to leverage hard market cycle Combined Return Insurance revenue ratio2 on equity in EURm +10%1 -1.5% pts 9,065 93.0% 91.5% 14.3% 8,218 > 9.5% 2022 2023 2022 2023 Outlook 2023 Strong growth driven by new RoE largely stable but affected by Improved technical performance and
Slide 31: Industrial Lines: Strong growth driven by good new business and rate changes
Industrial Lines 4 Strong growth driven by good new business and rate changes Sources of growth Adjusted rate changes1 in % of revenue growth 2023 vs. 2022 in % Ø 8.4 Liability (excl. Cyber) 11.1 Property 10.4 40% Engineering 7.2 Marine 9.3 60% Motor 4.3 Specialty 7.0 Net new business Rate changes 1
Slide 32: Industrial Lines: Well diversified business portfolio across regions and lines
Industrial Lines 4 Well diversified business portfolio across regions and lines of business Insurance revenue by Insurance revenue by region1 line of business 2023 2023 Germany Specialty Fire & Engineering 26% 32% 32% Rest of Europe 40% 20% 5% Motor North America 4% 23% 7% 10% Marine Rest of World C
Slide 33: Industrial Lines Outlook 2024
Industrial Lines 4 Outlook 2024 Insurance revenue Combined Return growth1 ratio2 on equity High single-digit < 93% ~ 13% Note: All targets are subject to large losses not exceeding the large loss budget (EUR 468m in 2024), no turbulences on capital markets, and no material currency fluctuations. In
Slide 34: Retail International: Strong profitable growth across regions
Retail International 4 Strong profitable growth across regions Combined Return Insurance revenue ratio3 on equity in EURm +33%1 -3.8% pts 7,099 98.8% 11.2% 5,337 ~ 8.5% 95.0% 2022 2023 2022 2023 Outlook 2023 2023 EUR 1.2 bn organic and Continuous improvement of Operating performance (> EUR 500m EUR
Slide 35: Retail International: Execution of HINexT 2025 set to exceed initial targets
Retail International 4 Execution of HINexT 2025 set to exceed initial targets HINexT 2025 - Progress 2023 Technical excellence 1 2 Diversification Target: CoR1 < 95% Target: +EUR 900m GWP non-motor 98.8% 1,0042 95.0% 630 2022 2023 2022 2023 Digital transformation 3 4 M&A / Partnerships Target: expan
Slide 36: Retail International: No. 2 in Retail P&C in LatAm
incl. Liberty Retail International excl. Liberty 4 No. 2 in Retail P&C in LatAm and more balanced business mix Market positions in Regional business mix core P/C markets1 Insurance revenue, in EURbn 2022 2023 Top 5 Poland #2 #2 7.1 ~50% Türkiye #3 #4 Europe 61% Brazil #10 #2 #3 #13 39% ~50% Chile La
Slide 37: Retail International Outlook 2024
Retail International 4 Outlook 2024 Insurance revenue Combined Return growth1 ratio2 on equity P/C: Low double-digit Life: Mid single-digit < 95% > 8.5%3 Note: All targets are subject to large losses not exceeding the large loss budget (EUR 27m in 2024), no turbulences on capital markets, and no mat
Slide 38: Retail Germany: Targets achieved in challenging market environment
Retail Germany 4 Targets achieved in challenging market environment Combined Return Insurance revenue ratio2 on equity in EURm +4%1 +2.4% pts 3,412 3,558 95.1% 97.5% 11.0% > 9.0% 2022 2023 2022 2023 Outlook 2023 2023 Growth driven by P/C with stable Combined ratio in line RoE improvement revenues in
Slide 39: Retail Germany: Solid profitability with significant cash contribution
Retail Germany 4 Solid profitability with significant cash contribution to the group Group Group Group insurance revenue1 net income2 cash contribution3 2023 Retail Germany Other Primary Reinsurance Local GAAP, 2023 Retail Germany Other Primary Reinsurance Life SME Life Motor P/C 4.1% 1.4% 7.7% Othe
Slide 40: Retail Germany Outlook 2024
Retail Germany 4 Outlook 2024 P/C Life Insurance revenue Return combined new business value2 growth on equity ratio1 P/C: Stable Life: Stable < 98% > EUR 300m > 10% Note: All targets are subject to large losses not exceeding the large loss budget (EUR 45m for 2024), no turbulences on capital markets
Slide 41: Reinsurance: Strong and reliable profitability
Reinsurance 4 Strong and reliable profitability Return Insurance revenue Insurance service result on equity in EURm in EURm +2%1 +24% 24,456 1,658 19.4% 24,017 1,336 10.7%2 2022 2023 2022 2023 Minimum 2023 target 2023 Currency adjusted growth of ~ 5% Improved margins in combination with Strong earni
Slide 42: Reinsurance Outlook 2024
Reinsurance 4 Outlook 2024 Insurance revenue Combined Return growth1 ratio2 on equity > 5% P/C: < 89% > 14% Note: All targets are subject to large losses not exceeding the large loss budget (EUR 1,825m for 2024), no turbulences on capital markets, and no material currency fluctuations. In addition,
Slide 43: Agenda
Agenda 1 CEO highlights 2 CFO highlights 3 Capital management 4 Segments 5 Group outlook 6 Appendix 43 FY 2023 Results | 21 March 2024
Slide 44: Outlook
5 Outlook Return Group Dividend on equity net income per share 2024 ~ 15% > EUR 1,700m EUR 2.501 (to be paid in 2025) 2025 > EUR 1,900m 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
Slide 45: Agenda
Agenda 1 CEO highlights 2 CFO highlights 3 Capital management 4 Segments 5 Group outlook 6 Appendix 45 FY 2023 Results | 21 March 2024
Slide 46: Talanx Primary Insurance and Reinsurance Contributions to net income
Talanx Primary Insurance and Reinsurance 6 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 47: Q4 2023 and FY 2023 results overview – Talanx Group
6 Q4 2023 and FY 2023 results overview – Talanx Group EURm Q4 2022 Q4 2023 FY 2022 FY 2023 FY 2023 / FY 2022 Insurance revenue (gross) 9,774 10,964 39,645 43,237 +9% Insurance service result (net) 665 657 2,454 3,234 +32% thereof Non-Life 460 342 1,538 2,017 +31% Net investment income for own risk 1
Slide 48: FY 2023 results overview - Segments
6 FY 2023 results overview - Segments EURm Industrial Lines Retail Germany Retail International Primary Insurance Reinsurance 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 Insurance revenue (gross) 8,218 9,065 3,412 3,558 5,337 7,099 16,967 19,722 24,017 24,456 Insurance service result (net) 574
Slide 49: Sustainability – Our commitments recognized by improving ratings
6 Sustainability – Our commitments recognized by improving ratings 1 Operations 2 Underwriting 25% emissions Withdrawal from thermal Ratings reduction1 by 2025 coal risks until 2038 and oil & gas exclusions4 3 Investment Net Zero 20302 Operations Net Zero 2050 4 Social / Governance A CCC to AAA (top
Slide 50: Large loss detail
Large loss detail 6 Large losses in line with budget Net losses Industrial Retail Retail ∑ Primary Corporate Talanx Reinsurance in EURm, 2023 (2022) Lines Germany International Insurance Operations Group TOP 10 NatCat 1. Storm and hail, Italy (July) 11.0 5.0 16.0 313.1 25.0 354.1 2. Earthquake, Türk
Slide 51: Well diversified business portfolio with Primary Insurance contributing almost 50%
6 Well diversified business portfolio with Primary Insurance contributing almost 50% Corporate Industrial Retail Retail Primary Operations Talanx FY 2023 Lines International Germany Insurance Reinsurance & Group Consolidation In EURm 43,237 -941 19,722 24,456 Insurance 3,558 revenue 7,099 45%1 9,065
Slide 52: Low beta strategy with high quality in investment portfolio
6 Low beta strategy with high quality in investment portfolio Investments for own risk 135.4 17% 110.1 110.1 Investments for own risk 1% 7% increased by 6.4% 17% to EUR 135.4bn compared to 44% 31 Dec 2022 19% 93% invest- 81% ment 26% grade 56% 31% Decline in AAA bonds Asset allocation Currency split
Slide 53: Strong capital generation – Shareholders' equity up by EUR 1.8bn
6 Strong capital generation – Shareholders’ equity up by EUR 1.8bn Shareholders’ equity development After taxes and minorities, in EURm +1,829 Value creation +2,017 436 297 10,447 1,581 8,640 -507 31 Dec 2022 Net income Other comprehensive Dividend Capital 31 Dec 2023 after minorities income paid in
Slide 54: IFRS 17 / 9 implementation accomplished
6 IFRS 17 / 9 implementation accomplished Reconciliation of consolidated net income 2022 Group net income, 2022, in EURm 1,172 -101 -315 -49 706 IFRS 4 / IAS 39 Primary Insurance Reinsurance Corporate Operations IFRS 17 / 9 & Consolidation 54 FY 2023 Results | 21 March 2024
Slide 55: FVPL assets: Fair value changes on investments 2023
6 FVPL (Fair Value Through Profit & Loss) assets Fair value changes on investments 2023 Shareholder view: Without Primary Life, after taxes and without minorities 1, 2023, in EURm Total +27 Thereof Private -12 Equity Equity securities +37 and derivatives Fixed +49 income Real estate -60 funds Infra-
Slide 56: Real estate portfolio
6 Real estate portfolio By type By segment As of 31 Dec 2023 Directly held real estate Retail Germany Retail International More than half of the real Real estate funds Reinsurance Industrial Lines estate exposure in Germany and approx. 15% in the US 10% 22% 3% 8 EURbn 47%1 8 EURbn Portfolio impairme
Slide 57: Contact us
6 Contact us Join us 25 Mar 2024 Post FY 2023 results roadshow, Paris 09 Apr 2024 Post FY 2023 results roadshow, London Bernd Sablowsky Anna Färber Bernt Gade 23 Apr 2024 Head of Investor Relations and M&A Event Management Equity & Debt IR Quirin Champions Conference +49 511 3747-2793 +49 511 3747-2
Slide 58: 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