talanx group annual report 2011 en

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The Talanx Group Strategy Enterprise
management
Talanx Group. Annual Report 2011
Research and
development
Turnaround in energy policy: Germany has decided in principle
to meet its energy demand primarily from renewable sources in
future. The Government’s resolution to abandon nuclear power by
2022 has set the points for this objective. This reversal of energy
policy is a major societal challenge. It involves on the one hand
making renewable energy resources available nation-wide while
at the same time finding new ways to save energy and to use it
more efficiently. We see the new energy system as an opportunity
to strengthen Germany as a business location by stimulating innovation
and technological progress. As an insurance group, we
are actively accompanying this transition. We offer our industrial
clients tailor-made solutions for developing, marketing and using
renewable energy resources. In addition to subsidies for wind farms,
photovoltaic installations, biomass and hydro-electric power plants,
expanding the electric power grid is of crucial importance. In the
summer of 2011 we joined in a consortium to buy shares in the RWE
power grid subsidiary Amprion as a longterm investment. We see
this participation as a sustainable commitment and intend to make
more such investments in future.
Financial market stability: Recent turbulence on the financial
markets has severely shaken clients’ trust in banks. Among policyholders,
too, today’s low interest levels and volatility on the stock
markets have created a mood marked by a high degree of uncertainty.
However, this macro-economic environment also offers opportunities
for insurance companies to develop innovative products
designed specifically to address these new concerns. In Europe, the
USA and Asia, life insurers had been concentrating more on selling
modern, versatile and stock-market-indexed products. Classical
German life insurance, which gives guarantees for the entire policy
term, was put to the test. Given the high equity requirements for
conducting this business, it is in principle imaginable that in future
the guarantees could be limited to a certain period.
Markets and
general conditions
Business
development
Assets and
financial position
Regulatory changes: Against the backdrop of impending and in
some cases already effective regulatory amendments, the entire
insurance industry is faced with extensive changes, especially in the
context of IFRS, Solvency II and a deluge of associated European and
German implementation provisions. We are following the financial
reporting and regulatory changes closely, have identified the associated
stricter requirements and have taken action accordingly. At the
same time, this situation offers an opportunity to evolve our risk
management to cope with the more complex and extensive future
requirements. An in-house, Solvency II-compliant stochastic risk
capital model for evaluating risk categories and the Group’s overall
risk position is currently being implemented which will make it possible
to use in-house models across the Talanx Group and is already
in the process of approval by BaFin.
In Europe, reinsurance companies may profit from demand for
reinsurance solutions increasing as a result of the higher capital requirements
under Solvency II, as transfering risk to reinsurers with
good ratings offers an economically attractive alternative.
Opportunities created by the company
To make our Group more competitive and fit for the future and
to eliminate cost disadvantages in German retail business, we are
currently re-aligning our Retail Germany segment. The bottom-line
aim is to reduce complexity and make our processes more efficient.
The basis for this is the four action areas we have defined as: benefit
for the client, profitable growth, efficiency and performance culture.
Only if our clients are fully satisfied will we be successful. With
this in mind we are working on making it as easy as possible for
both end clients and sales partners to decide in our favour – a clear
language, quick solutions, convincing products. For example we
are introducing a new modular product structure which enables
clients to put together their own ideal insurance cover – while
pre-defined modules also reduce our own administrative effort. We
are also improving our in-house cooperation. To achieve a positive
development in premiums and results, we need to align our business
to clear-cut risk and profit requirements and to consistently
take advantage of opportunities arising in the market. For that
reason we have to scrutinise each individual product for sustainable
profitability. To improve profitability, we are also working on
ways to make even more systematic cross-divisional use of existing
client contacts. We are only working efficiently if the dedicated
resources are reasonably proportionate to the results achieved. In
this context we have already launched a number of initiatives to
simplify complex processes and reduce inordinate costs. With our
integrated annual planning cycle, for example, we have introduced
a central management instrument for sales, operations, marketing