talanx group annual report 2011 en

44
The Talanx Group Strategy Enterprise
management
Business experience of the Group
Talanx Group. Annual Report 2011
Research and
development
In 2011, the Group’s gross written premiums rose by 4% (5% adjusted
for exchange-rate effects) over the previous year, to EUR 23.7 billion.
With the exception of Retail Germany, all segments of the Group
made a contribution to this increase. The top performer in terms of
growth was Retail International, up 11% followed by non-life reinsurance
with 8%.
As a result of a slight increase in our retention rate to 87.9 (87.3)%,
net premiums earned rose by 4% to EUR 19.5 (18.7) billion.
The underwriting result improved by EUR 346 million or 17% to
–EUR 1.7 billion. Here a marked recovery in the primary insurance
lines helped to compensate for poorer results in non-life reinsurance.
The Group’s combined ratio remained virtually unchanged
at 101.0 (100.9)%, an improved cost ratio counter-acting a slight
increase in the claims ratio by 0.9 percentage points.
Given the turbulence on the international capital markets in 2011,
the stable profit yielded by the Group’s investments under own
management, at EUR 3.0 (2.9) billion, is highly satisfactory. This
figure represents the balance of an increase in ordinary investment
income and a decline in extraordinary income. We took advantage
of the low interest level to sell off government bonds with a high
credit rating and re-invest the proceeds mainly in corporate bonds.
Nevertheless, the unrealised reserves in our investment portfolio
increased still further. Due to the two tranches of subordinated debt
totalling EUR 800 million issued in the third and fourth quarters of
2010, our financing costs rose by EUR 27 million.
The other income/expenses dropped sharply to −EUR 327 (−139)
million, above all due to declining exchange rates and to restructu
ring expenses in the Retail Germany segment. However, this
development was more than compensated by the improved underwriting
result, so that the EBIT rose by 21% compared to 2010, to
EUR 1,245 (1,032) million. This improvement is mainly attributable
to primary insurance, although the liquidation of reserves thanks
to two favourable court rules also had a positive effect. The first case
involved a dispute over double taxation of investment income generated
abroad, the second was an anti-trust case (see Notes, pages
270 and 282).
At EUR 520 (216) million, the Group’s net income was 141% up on the
previous year. The return on equity rose from 4.5 to 10.0%.
Markets and
general conditions
Business
development
Assets and
financial position
Development of the divisions within the Group
Segmental breakdown of gross premium
Life/Health
Reinsurance
��%
Non-Life
Reinsurance
��%
Industrial Lines
Industrial Lines
��%
Retail Germany
��%
Retail International
��%
2011 2010 2009
Figures in EUR million
Gross written premium 3,138 3,076 3,077
Net premium earned 1,375 1,413 1,405
Underwriting result 155 –57 134
Net investment income 204 231 240
Operating result (EBIT) 321 185 335
Combined ratio (net) 1) in % 88.6 104.1 90.5
1) Including income from interest on deposits
The Industrial Lines Division is led by HDI-Gerling Industrie
Versicherung AG (HG-I). The company offers the entire spectrum
of individual products and services for its clients from eleven locations
in Germany. Through subsidiaries, dependent branches and
network partners its activities span the globe. As an internationally
operating industrial insurer, HDI-Gerling Industrie supports its clients
at home and abroad with bespoke solutions optimally tailored
to their individual needs. The product range extends from casualty,
motor, accident, fire and property insurance to marine, special lines
and engineering insurance. Comprehensive insurance solutions are
assembled on the basis of customised coverage concepts, thereby
providing the complete product range needed to protect against entrepreneurial
risks. Just as importantly, thanks to its many years of
experience and proven expertise, HDI-Gerling provides professional
claims management that delivers the fastest possible assistance
worldwide in the event of loss or damage.
In the year under review, Nassau Verzekering Maatschappij N. V.
joined the Group and was merged with our existing Dutch subsidiary.
The purchase of this established niche insurer strengthened our
position in special lines of business such as professional indemnity,
D&O insurance and crisis management as a service. HG-I also took a
25% stake in Petro Vietnam Insurance Holdings.