talanx group annual report 2011 en

112
The Talanx Group Strategy Enterprise
management
Talanx Group. Annual Report 2011
Research and
development
Other risks also encompass Talanx AG’s participation risks,
especially those associated with the performance of subsidiaries,
the stability of results in our portfolio of participating interests
and a potentially inadequate balance in the business. Talanx AG
participates directly in the business development and risks of its
subsidiaries through profit transfer agreements and dividend payments.
Negative results trends at the subsidiaries may also make
it necessary to write down the values of participating interests on
Talanx AG’s books.
The Group uses appropriate tools in the areas of controlling, internal
auditing and risk management to counter risks arising out of
the development of results at subsidiaries. A standardised reporting
system regularly provides decision-makers with the latest information
about the Group and business trends at all major subsidiaries,
enabling them to intervene at any time to control risks. Risks associated
with a lack of stability in the results of the portfolio of participating
interests or with an inadequate business balance are reduced
for the various risk sources primarily by means of segmental and
regional diversification, appropriate strategies for risk minimisation
and risk shifting, and by investing systematically in growth markets
and in product and portfolio segments that stabilise results.
The risk of asset erosion or inadequate profitability of acquisitions
is kept as low as possible through intensive due diligence checks
conducted in cooperation with independent professional consultants
and auditors and by closely monitoring their business development.
Furthermore, Talanx pays close attention to risks deriving
from the financing of acquisitions and those associated with the
capital needs of subsidiaries and keeps track of their anticipated
profitability. It counters the financing risk by regularly updating
cash flow calculations and forecasts and by defining priorities for
the allocation of funds.
Markets and
general conditions
Business
development
Forecast and
opportunities report
Assets and
financial position
The following remarks about the expected development of the
Talanx Group and its member companies are based on wellfounded
assessments by external experts and on in-house plans
and forecasts that we consider logically consistent; nevertheless,
they are our own subjective assessments. Although we arrived at
the underlying assumptions with great diligence and to the best
of our knowledge, the fundamental uncertainties applicable to all
statements regarding the future, and particularly as regards future
developments on the capital markets, natural catastrophes and
the legal environment, make it impossible to rule out that actual
events may diverge from the developments anticipated here. The
uncertainties inherent in any forecasting have been aggravated
still further by the global intermeshing of economic relations and
capital markets. The effects of the financial and economic crisis that
have already made themselves felt in the year under review will, in
our opinion, continue to reverberate in the insurance industry in
the years ahead.
Economic environment
We consider a further slowdown in the pace of growth in the developed
countries, such as was already becoming apparent in the last
quarter of 2011, to be possible in the current year, too. We regard
the economic environment, especially in the Eurozone, as critical
in 2012. As the resources of both fiscal and monetary policy appear
to be approaching exhaustion, it may well prove more difficult in
future to revive the economy by means of stimulus packages or
lowering interest rates. The labour markets in the countries on the
Eurozone periphery are likely to remain under pressure due to austerity
measures. Whether the USA manages to extricate itself from
this trend, against the background of a slowdown in growth in the
emerging countries, remains to be seen.
Given the global cool-down, we do not see prices coming under
pressure despite ongoing monetary-policy interventions. All in all,
the worsening European sovereign debt and banking crisis (including
the ensuing recapitalisation requirements) and the debate
about the disintegration of the Eurozone are likely to remain the
major risk factors in 2012. Whether the emerging countries can
continue to have the same stabilising effect as in the past appears
doubtful.