talanx group annual report 2011 en
talanx group annual report 2011 en
talanx group annual report 2011 en
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74<br />
The Talanx Group Strategy Enterprise<br />
managem<strong>en</strong>t<br />
Talanx Group. Annual Report <strong>2011</strong><br />
Research and<br />
developm<strong>en</strong>t<br />
least alleviate it. In the case of significant overcapitalisation at the<br />
company level, for example, capital managem<strong>en</strong>t measures may be<br />
geared to systematically reducing free excess capital in order to allocate<br />
it to more effici<strong>en</strong>t reinvestm<strong>en</strong>t elsewhere within the Group.<br />
Our stated aim is to achieve the most effici<strong>en</strong>t possible utilisation<br />
of our capital while at the same time <strong>en</strong>suring appropriate capital<br />
adequacy and making allowance for the effects of diversification.<br />
Another major objective is to substitute shareholders’ equity by<br />
equity surrogates such as hybrid capital, which has a positive effect<br />
on the capital structure of the Group and the ability of Talanx AG<br />
to make own funds available to the operational units.<br />
By optimising the Group’s capital structure, our capital managem<strong>en</strong>t<br />
safeguards the adequacy of our capital resources both from<br />
a rating standpoint and in light of solv<strong>en</strong>cy and economic considerations.<br />
At the same time, it <strong>en</strong>sures that returns on the invested<br />
capital can be g<strong>en</strong>erated for shareholders on a sustainable basis<br />
in accordance with the Talanx strategy. Not only that, the capital<br />
structure must make it possible to respond to organic and inorganic<br />
growth opportunities at both the Group and company level and it<br />
must provide certainty that volatilities on the capital markets and<br />
in insurance business can be absorbed without undershooting the<br />
desired confid<strong>en</strong>ce level. The effici<strong>en</strong>t handling of capital resources<br />
is a crucial indicator for existing and pot<strong>en</strong>tial investors that Talanx<br />
utilises the capital made available to it in a responsible and effici<strong>en</strong>t<br />
manner.<br />
The Group steering function of capital managem<strong>en</strong>t thus<br />
<strong>en</strong>ables us to<br />
create transpar<strong>en</strong>cy as to the actually available (company’s)<br />
capital<br />
specify the required risk-based capital and coordinate<br />
the calculation thereof, and<br />
optimise the capital structure, implem<strong>en</strong>t financing measures<br />
and support all structural changes that have implications<br />
for the required capital.<br />
Markets and<br />
g<strong>en</strong>eral conditions<br />
Business<br />
developm<strong>en</strong>t<br />
Assets and<br />
financial position<br />
In the context of preparations for Solv<strong>en</strong>cy II, the int<strong>en</strong>tion is to allocate<br />
our capital according to a new in-house model in 2012.<br />
Shareholders’ equity<br />
Profit target<br />
The Talanx Group sets itself the goal of g<strong>en</strong>erating above-average<br />
profitability in the long term. Our yardstick for this is the return on<br />
equity under IFRS. We compare ourselves with the 20 largest insurance<br />
companies in Europe. Our minimum target in terms of Group<br />
profit after taxes and minority interests is an IFRS return on equity<br />
750 basis points above the average risk-free interest rate. This is defined<br />
as the average market rate over the past five years for 10-year<br />
German governm<strong>en</strong>t bonds.<br />
The equity ratio, defined as the total of all equity compon<strong>en</strong>ts relative<br />
to total assets, has performed as follows:<br />
History of equity ratio <strong>2011</strong> 2010 1) 2009 1)<br />
Total equity as shown in<br />
the balance sheet In EUR million 8,706 7,980 7,153<br />
of which minority<br />
interests In EUR million 3,285 3,035 2,579<br />
Total assets In EUR million 115,268 111,100 101,213<br />
Equity ratio In % 7.6 7.2 7.1<br />
1) Adjusted on the basis of IAS 8<br />
Allowing for other equity compon<strong>en</strong>ts recognised by regulators<br />
such as subordinated liabilities, the modified equity ratio was as<br />
follows:<br />
Other equity compon<strong>en</strong>ts and<br />
modified equity ratio <strong>2011</strong> 2010 1) 2009 1)<br />
Other equity compon<strong>en</strong>ts In EUR million 1,497 1,469 1,117<br />
Modified equity ratio In % 8.9 8.5 8.2<br />
1) Adjusted on the basis of IAS 8