talanx group annual report 2011 en

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The Talanx Group Strategy Enterprise
management
The sovereign debt of some member countries of the euro single
Talanx Group. Annual Report 2011
Research and
development
currency zone and low interest levels in 2011 have been putting
pressure on investment returns. In some of the largest insurance
markets, surplus reserves had to be liquidated in order to meet
earnings targets. These effects emphasise the need for profit-
oriented underwriting, which is reflected in a higher price level.
Major uncertainties persist in the context of estimating the number
and the scale of insolvencies which could possibly impact the
credit and surety lines.
Opportunities for growth can be discerned as a result of changes
to natural hazards models for the principal hazards in the USA and
Europe and demand for capacity in response to Solvency II regulations.
Similar considerations concerning the capital base and associated
increasing demand are also to be observed in some emerging
countries.
Life/Health Reinsurance
The global terms of reference in life/health reinsurance remain
encouraging. In the industrial nations such as the USA, UK, Japan
and Germany, the demographic trend is unbroken and is triggering
a steady rise in demand for senior-citizen, longterm care and
pension insurance products. In the emerging countries such as
India, China, Brazil and even Russia, the trend towards urbanisation
continues. A middle class with high purchasing power is emerging
that is increasingly interested in safeguarding their wealth, looking
after their health, and providing for their dependants.
Primary insurers are taking advantage of tailor-made reinsurance
cover to optimise their capital, liquidity and risk management
and to reduce their underwriting risk. We are expecting increasing
demand for customised reinsurance solutions, especially in the
context of Solvency II, as a means of reducing the amount of risk
capital the primary insurers need to hold themselves. Given these
favourable conditions, we anticipate that the life/health reinsurance
market will offer us encouraging earnings opportunities in the
years to come.
Life/health reinsurance business typically follows a stable course
with low susceptibility to random fluctuations in results over time.
Nevertheless, attention must still be paid to economic risks such
as the interest rate, default and exchange rate risks and to underwriting
risks; these include in particular mortality and longevity,
morbidity and invalidity, and the risk of cancellations. The trends
in these parameters are fully factored into our risk management.
We regularly review the adequacy of our risk management in terms
of the underlying computational assumptions, ongoing research
into developments in the biometric calculation basis, sufficient
reserving to cover all our insurance obligations, and risk diversification
(both geographic and by type of risk, e.g. mortality versus
longevity).
Markets and
general conditions
Business
development
Assets and
financial position
Corporate Operations
Talanx AG heads up the Group, acting as a financial and management
holding company with the associated central organisational
units with responsibility for the Group as a whole.
The Corporate Operations segment also includes Talanx Reinsurance
Broker AG, the in-house service companies Talanx Service AG
and Talanx Systems AG, and asset management via the companies
Talanx Asset Management GmbH, AmpegaGerling Investment
GmbH and Talanx Immobilien Management GmbH.
Talanx Reinsurance Broker AG serves as a professional reinsurance
consultant and intermediary for the non-life primary insurance
companies of the Talanx Group in Germany and abroad. The
primary objective is to secure reinsurance capacities for the Group
companies in the long term, at the best possible terms, and with
reinsurance partners of the best possible financial standing. There
was no shortage of capacity for the 2012 reinsurance cessions of all
Group cedants serviced by Talanx Reinsurance Broker AG.
The Group in-house service companies Talanx Service AG and
Talanx Systems AG make no contribution to the Group’s profit, as
by agreement they work on an at-cost basis. Talanx Service AG was
founded at the start of 2011 and offers bundled essential services
primarily for our German primary insurance operations. In June
2011, Talanx Systems AG was set up, bundling essential services
(first and foremost all IT functions) for our German primary insurance
companies. Besides optimising the IT cost structure, the key
elements of its mission are to improve the infrastructure and to
standardise sales applications.
Talanx Asset Management GmbH manages the Group’s own investments,
including accounting, reporting and risk management. In
line with our efforts to expand our insurance business, an increase
in the investments managed for own account is also intended. As
a result of the ongoing sovereign debt and financial market crisis,
however, there is great uncertainty precisely as regards the future
development of investments in general. Our strategic partnership
with the Austrian asset manager C-QUADRAT Investment AG,
in which Talanx Asset Management GmbH holds a share of 25.1%,
is to be further strengthened going forward. One of the elements
of this cooperation is an exchange of services between the partners
along the lines of their respective skills profiles – especially
AmpegaGerling’s expertise in the management of annuity funds
and C-QUADRAT’s management of umbrella funds with an absolutereturn
profile. A further step in this partnership is the establishment,
scheduled for the first half of 2012, of a joint venture that will
be geared specifically toward institutional sales partners and will
thus serve to open up new sales channels.