Goldman Sachs European Financials Conference. Dr Immo Querner, CFO Madrid, 10 June 2014

Transcription

1 Goldman Sachs European Financials Conference Dr Immo Querner, CFO Madrid, 0 June 04

2 Talanx - Key Investment Highlights Global insurance group with leading market positions and strong German roots Leading and successful BB insurer Focus on long-term increase in value by sustainable and profitable growth Dedication to focus on insurance rather than market risks Commitment to continuously fulfill a AA capital requirement by Standard & Poor s Target to achieve Group net income of at least 700m in 04 Dedication to pay-out 35-45% of IFRS earnings to shareholders

3 I II Talanx in a nutshell Outlook and targets Appendix 3

4 Talanx in a nutshell A global insurance player Location overview in Primary and in Reinsurance GWP split (Primary/Reinsurance): 44% / 56% Employees (Germany/abroad): 4,539 /,5 GWP split (Primary/Reinsurance): 53% / 47% Employees (Germany/abroad):,30 / 0,7 Countries with local presence Branch / office location Primary Insurance Branch / office location Reinsurance Global networks in Industrial Lines and Reinsurance. Leading positions in retail target markets 4

5 Talanx in a nutshell Among the leading European insurance groups Top 0 German insurers Top 0 European insurers German insurers by global GWP (03, bn) European insurers by global GWP (03, bn) Allianz 03.4 Allianz 03.4 Munich Re 5. AXA Generali 66. R+V.8 Munich Re 5. Debeka 9.3 Zurich 39. Vk Bayern 7. Prudential 36.0 HUK Signal Iduna 5.5 CNP 7.7 Gothaer 4. Crédit Agricole Aviva 6.0 Figure of 0 Gross premiums earned Source: SNL Financial, annual reports Listed insurers Third-largest German insurance group with leading position in Europe and strong roots in Germany 5

6 Talanx in a nutshell - Shareholders and divisions Free float 4.5 % V.a.G % 6.5 % Industrial Lines Retail Germany Retail International Reinsurance Lead insurer of choice Extremely strong home market position, i.e. lead mandates with most German DAX companies and strong position with German Mittelstand Bluechip client base in Europe Highly effective network of distribution partners Market leader in bancassurance Market leader in employee affinity business Leading provider of corporate pension solutions Focused exposure to CEE and LatAm (# insurer in Poland, #6 in Brazilian motor 3 ) Attractive rates of organic growth Experienced underwriter in motor Focused M&A track record Non-Life Life/Health Hannover Re world #3 reinsurer by GWP 4 Well diversified between life/non-life and geographically Consistently amongst sector leaders on profitability 5 Superior underwriting know-how including employee shares Combined ranking based on November 03 data of Polish regulator as per local GAAP 3 According to Siscorp based on local GAAP 4 Based on A.M. Best ranking (September 0) 5 Based on S&P ranking by average RoE and also number by average RoE as per KPMG 0 Integrated insurance group with leading market positions in all segments 6

7 Talanx in a nutshell Strategic group pillars Focus of the Group is on long-term increase in value by sustainable and profitable growth and vigorous implementation of our BB-expertise Profit target Capital management Risk management Growth target Human resource policy RoE > TOP0 European insurers RoE risk-free interest rate +750bps Fulfill S&P AA capital requirement Efficient use of available financing instruments Generate positive annual earnings with a probability of 90% Sufficient capital to withstand at least an aggregated 3,000-year shock 50% of primary GWP from foreign operations Selective profitable growth in Retail Germany and Reinsurance Continuous development and promotion of own workforce Individual responsibility and entrepreneurial spirit Investment risk 50% In accordance with IFRS Risk-free rate is defined as the 5-year rolling average of the 0-year German government bond yield Group and divisional strategies define goals and actions to be taken 7

8 Talanx in a nutshell - Industrial Lines Key figures Share in 03 group GWP 7% 83% Highlights 03 geographic split (GWP) 46% 54% Germany International Key financials ( m) FY03 Gross written premium 3,076 3,38 3,57 3,835 Net premium earned,43,375,608,744 Net underwriting result (57) (4) Net investment income Operating result (EBIT) Combined ratio (net) in % Return on Equity in % A leading provider of industrial insurance capacity in Germany Long standing and close relationships with European blue chips and major German Mittelstand companies Highly experienced and long-term consistent management team Lead insurer of choice and highly experienced leader of international programmes Track record of 5 years successfully building an international network Attractive cost structure High profitability over the cycle Based on total GWP adjusted for 50.% share in Hannover Re Including income from interest on deposits Talanx is a leading European industrial lines insurer with global ambitions 8

9 Talanx in a nutshell - Retail Germany Key figures Share in 03 group GWP 03 business mix (GWP) Key financials ( m) FY03 3% % 78% Life Non-life Gross written premium 6,83 6,70 6,89 6,954 Net premium earned 5,50 5,46 5,50 5,605 Net underwriting result (,63) (,58) (,45) (,55) Net investment income,577,530,6,786 Operating result (EBIT) (44) Combined ratio (net) in % Return on Equity in % Highlights Leading positions in German Life and P&C Excellent customer access through innovative distribution strategy BB focussed specialised distribution channels Unrivalled client access in German bancassurance Specialist know-how and market leader in employee affinity business Superior access to leading brokers Based on total GWP adjusted for 50.% share in Hannover Re Including interest income on funds withheld and contract deposits; net, property/casualty only Strong German retail insurance business more than 70% from BB distribution channels 9

10 Talanx in a nutshell - Retail International Key figures Share in 03 group GWP 9% 34% 03 business split (GWP) 66% 03 geographic split (GWP) % 8% 5% Key financials ( m) FY03 Gross written premium,33,48 3,6 4,0 Net premium earned,738,86,6 3,53 Net underwriting result (36) (4) 3 3 Net investment income Operating result (EBIT) Non-Life Life CEE/CIS LatAm Western Europe Combined ratio (net) in % Return on Equity in % Highlights In 03, Retail International was active in 5 countries outside Germany with a focus on Latin America (LatAm) and CEE P&C: strong growth with focus on growth driver motor insurance Life: significant growth potential with focus on risk business Strong organic growth pattern with organic GWP growth 03 of 4% y/y Disciplined M&A track record Export of the successful bancassurance model Based on total GWP adjusted for 50.% stake in Hannover Re CEE/CIS including Turkey and Russia; LatAm including Mexico; Western Europe including Italy, Austria, Liechtenstein and Luxembourg 3 EBIT 00 after income allowance from Talanx AG (before income allowance: EBIT 00 = -4m) Focus on major growth markets in Latin America and CEE 0

11 Talanx in a nutshell - Reinsurance Key figures Share in 03 group GWP GWP development (total, bn) 3% Highlights Non-life Life / health Key financials ( m) 0 0 FY FY03 Gross written premium 6,86 7,77 7,88 5,70 6,058 6,45 Net premium earned 5,96 6,854 6,866 4,789 5,46 5,359 Net investment income Operating result (EBIT) 637,34, Comb.Ratio in % n.m. n.m. n.m. Reinsurance 0 0 FY03 Return on Equity in % Strong market positioning Third-largest global reinsurer Top rating (S&P: AA-; A.M. Best: A+) ensures attractive new business Consistently among the most profitable reinsurers globally Cost leader Strong growth track record Strong risk management both qualitative and quantitative Conservative investment policy Very good diversification (across business lines life / non-life as well as geographically) Lower volatility due to improved diversification Strong cash generation Based on total GWP adjusted for 50.% share in Hannover Re Incl. expenses on funds withheld and contract deposits; net Hannover Re is one of the largest and most profitable reinsurers globally

12 Talanx in a nutshell Sources for growth Industrial Lines Growth through globalisation Increase retention Retail Germany Elimination of cost disadvantages Intelligent products and BB focus Retail International Focus on emerging markets (LatAM / CEE) Consolidation and integration of acquisitions Reinsurance Efficient cycle management Expansion into emerging markets

13 I II Talanx in a nutshell Outlook and targets Appendix 3

14 Outlook for Talanx Group 04 Gross written premium +-3% Return on investment 3.4% Group net income 700m Return on equity ~ 0% Dividend payout ratio 35-45% target range The targets are based on an increased large loss budget of 85m (from 80m) in Primary Insurance and 670m (from 65m) in Reinsurance On divisional level, Talanx expects gross written premium growth of +3-5% in Industrial Lines, -(-)% in Retail Germany, +4-8% in Retail International and a flat to low single-digit growth rate in Reinsurance Targets are subject to no large losses exceeding budget (cat), no turbulences on capital markets (capital), and no material currency fluctuations (currency) 4

15 Outlook and targets Mid-term target matrix Segments Key figures Strategic targets Group Industrial Lines Retail Germany Retail International Non-life reinsurance Life & health reinsurance Risk-free rate is defined as the 5-year rolling average of the 0-year German government bond yield Derived from actual asset duration. Currently ~ 6.5 years, therefore the minimum return is the 3-year average of 3-year German government bond yield. Annually rolling Return on equity 750 bps above risk free Group net income growth ~ 0% p.a. Dividend payout ratio 35-45% Return on investment 3.5% Gross premium growth 3 3-5% Combined ratio 96% EBIT margin 4 0% Retention rate 60-65% Gross premium growth 0% Combined ratio (non-life) 97% New business margin (life) % EBIT margin 4 4.5% Gross premium growth 3 0% Combined ratio (non-life) 96% Value of New Business (VNB) growth 5-0% EBIT margin 4 5% Gross premium growth 3-5% Combined ratio 96% EBIT margin 4 0% Gross premium growth 3 5-7% Value of New Business (VNB) growth 0% EBIT margin 4 financing and longevity business % EBIT margin 4 mortality and health business 6% 3 Organic growth only; currency neutral 4 EBIT/net premium earned Note: growth targets are on p.a. basis. They are based on 0 results. 5

16 I II Talanx in a nutshell Outlook and targets Appendix 6

17 Appendix - FY03 target achievement Return on Investment 4.5% 4.0% 3.5% 3.0%.5%.0%.5%.0% 0.5% 0.0% 4.0%.0% 0.0% 8.0% 6.0% 4.0%.0% 0.0% 3.7%.8% 4.% 4.0% 4.3% Outlook Rol > 3.5% Return on Equity 4.5% 0.0% 0.0% 4.0% target ROE 0.6% GWP growth in bn in mn % +9.3% +3.6% Outlook GWP growth 4% Net income and Payout % (.05 p.s.) % (.0 p.s. 3 ) Outlook RoE 750 bps + risk-free 03 Outlook Net income ~ 700m; pay-out ratio 35-45% Risk-free rate is defined as the 5-year rolling average of the 0-year German government bond yield (ROE target 03: 9.8%) Actual pay-out ratio based on AGM proposal: 39.8% for 03 (was 4.% for 0 3 proposal to AGM Note: 0 figures restated on the base of IAS8; 03 Outlook reflects increased targets as presented in Aug 03 7

18 Appendix - Q 04 results Key financials Summary of Q 04 m, IFRS Q 04 Q 03 Change Gross written premium 8,44 8,458 () % Net premium earned 5,599 5,75 () % Net underwriting result (45) (49) n/m Net investment income, % Operating result (EBIT) (4) % Net income after minorities 9 08 (7) % Key ratios Q 04 Q 03 Change Combined ratio non-life insurance and reinsurance 95.8% 95.0% 0.8%pts Return on investment 4.3% 3.7% 0.6%pts Balance sheet Q 04 FY 03 Change Investments under own management 88,069 86,30 + % Goodwill,03,05 (0) % Total assets 36,760 3, % Technical provisions 95,7 9, % Total shareholders' equity,74, +5 % Shareholders' equity 7,538 7,4 +4 % 03 numbers in this presentation adjusted on the basis of IAS8 Comments Slight decline in gross written premium, mainly due to currency effects (currency-adj. GWP: +.6%), the decline in traditional German life business and more selective Reinsurance underwriting Combined ratio rises by only 0.8%pts to 95.8%, predominantly due to a lower run-off result in Retail Germany Realisation of capital gains, in Retail Germany to finance Zinszusatzreserve (ZZR). ~40% of the anticipated ZZR charge for FY04 ( ~7m in German local GAAP, HGB) already digested in Q 04 Q 04 net income ( 9m) even exceeds the strong Q 03 level, when adjusting for the base effect of m from last year s partial disposal of Talanx s SwissLife stake Shareholders equity up to 7,538m, or 9.8 per share. Solvency I ratio up to 0% (FY03: 0%) Good results, even when compared to the strong Q 03 figures 8

19 Appendix - Large losses in Q 04 ( m) Primary insurance Reinsurance Talanx Group Total Nat Cat Aviation Property Total man-made large losses Total large losses Large loss burden of 4m in Q 04 higher than in Q 03 ( 3m), but still at a moderate level Net burden of manmade large losses of 0m in Primary and 3m in Reinsurance No large losses from Nat Cat Impact on Combined Ratio (incurred) 0.8%pts.9%pts.4%pts Total large losses (Q 03) definition large loss : in excess of 0m gross Treatment of unused large loss budget in Primary Insurance in correspondence with established Reinsurance practice 9

20 Appendix - Solvency capital position Solvency I capital position ( bn) 0% 5% 0% 0% Comments Talanx has extensive experience in innovative capital management As of 3 March 04, available funds include.3bn of subordinated debt Goodwill of.bn as of 3 March 04 (relative to shareholders equity excl. minorities of 7.5bn) Q 04 Available funds Solvency capital requirements Solvency I margin Talanx Group based on the solvency of HDI V.a.G. (HDI V.a.G. is the relevant legal entity for the calculation of group solvency from a regulatory perspective).3bn of the Group s total subordinated debt (.4bn) are eligible for Solvency I capital (after accounting for minority interest and capped by regulatory thresholds) Solid solvency and high-quality capital with relatively low goodwill supporting optimal balance sheet strength 0

21 Appendix - Rating overview Current financial strength ratings rating of Talanx Primary Group Standard & Poor s A. M. Best 3//3 6/05/4 Grade Outlook Grade Outlook Anchor rating a+ Business Risk Profile Strong Financial Risk Profile Very Strong Modifiers Talanx Group - - A Stable IICRA 4 ) Intermediate Risk Capital & Earnings Very Strong ERM Strong Talanx Primary Group A+ Stable - - Competitive Position Strong Risk Position Intermediate Risk Management & Governance Satisfactory Risk Position Liquidity Hannover Re subgroup 3 AA Stable A+ Stable Strong Exceptional The designation used by A. M. Best for the Group is Talanx AG and its leading non-life direct insurance operation and its leading life insurance operation This rating applies to the core members of Talanx Primary Group (the subgroup of primary insurers in Talanx Group) 3 This rating applies to Hannover Re and its major core companies. The Hannover Re subgroup corresponds to the Talanx Reinsurance segment 4 Insurance Industry and Country Risk Assessment Financial strength underpinned by S&P and A.M. Best ratings

22 Appendix - Focus on insurance risk Risk components of Talanx Group Comments % 8% 6% 38% 37% Other risk Operational risk Further life risk Non-life risk Market risk 3 Total market risk of 37%, of solvency capital requirements, which is comfortably below the 50% limit Risk capacity priority for insurance risk Non-life is the dominating insurance risk category, comprising premium and reserve risk, NatCat and counterparty default risk Equities ~% of investments under own management GIIPS sovereign exposure.7% of total assets (Q 04) Talanx Group Figures show approximate risk categorisation, in terms of solvency capital requirements, of the Talanx Group after minorities, after tax, post diversification effects as of 03 Includes premium and reserve risk (non-life), net NatCat and counterparty default risk 3 Refers to the combined effects from market developments on assets and liabilities Market risk sensitivity (limited to less than 50% of solvency capital requirement) is deliberately low

23 Appendix BB distribution as a key differentiator Linkage between different Group segments Excellence in BBC channels Industrial Lines Retail Germany Bancassurance Brazil BBC Automotive Core value proposition: BB competence Retail Industrial Brokers BBC Retail International Reinsurance Employee affinity business Samples of clients/partners Superior service of corporate relationships lies at heart of our value proposition 3

24 Appendix - HDI V.a.G. history and structure Overview V.a.G. History HDI V.a.G. is a mutual insurance company and majority-owner of the holding company Talanx AG The organisational setup reflects the historic roots of HDI, an association of important companies of the German industry that offers mutual insurance cover Approx. 0.8m members of HDI V.a.G. Alignment of interests of HDI V.a.G. and Talanx Group through - Providing efficient and reliable insurance to mutual members at market rates, often syndicate-based - Same decision makers: Mr Haas, Dr Hinsch, Dr Querner - HDI V.a.G. has no other investments besides Talanx and is interested to further strengthen and enable Talanx to provide stable insurance capacity to industrial clients - Talanx and HDI V.a.G. committed to capital market oriented dividend policy Foundation as Haftpflichtverband der deutschen Eisen- und Stahlindustrie in Frankfurt Companies of all industry sectors are able to contract insurance with HDI V.a.G. Foundation of Hannover Rückversicherungs AG Diversification into life insurance IPO of Hannover Rückversicherung AG Renaming of HDI Beteiligungs AG to Talanx AG Start transfer of insurance business from HDI V.a.G. to individual entities Acquisition of Gerling insurance group by Talanx AG IPO of Talanx AG Listing at Warsaw Stock Exchange 4

25 Talanx Investor Relations Financial Calendar 6/7 June 04 Capital Markets Day (Warsaw) 4 August 04 Interim Report 6M 04 3 November 04 Interim Report 9M 04 Contact Talanx AG Riethorst Hannover Germany ir@talanx.com Carsten Werle, CFA Phone: carsten.werle@talanx.com Marcus Sander, CFA Phone: marcus.sander@talanx.com Wiebke Erler Phone: wiebke.erler@talanx.com Christian Marx Phone: christian.marx@talanx.com 5

26 Disclaimer This presentation contains forward-looking statements which are based on certain assumptions, expectations and opinions of the management of Talanx AG (the "Company") or cited from third-party sources. These statements are, therefore, subject to certain known or unknown risks and uncertainties. A variety of factors, many of which are beyond the Company s control, affect the Company s business activities, business strategy, results, performance and achievements. Should one or more of these factors or risks or uncertainties materialize, actual results, performance or achievements of the Company may vary materially from those expressed or implied as being expected, anticipated, intended, planned, believed, sought, estimated or projected.in the relevant forward-looking statement. The Company does not guarantee that the assumptions underlying such forward-looking statements are free from errors nor does the Company accept any responsibility for the actual occurrence of the forecasted developments. The Company neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by the Company as being accurate. Presentations of the company usually contain supplemental financial measures (e.g., return on investment, return on equity, gross/net combined ratios, solvency ratios) which the Company believes to be useful performance measures but which are not recognised as measures under International Financial Reporting Standards, as adopted by the European Union ("IFRS"). Therefore, such measures should be viewed as supplemental to, but not as substitute for, balance sheet, statement of income or cash flow statement data determined in accordance with IFRS. Since not all companies define such measures in the same way, the respective measures may not be comparable to similarly-titled measures used by other companies. This presentation is dated as of 03 June 04. Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. This material is being delivered in conjunction with an oral presentation by the Company and should not be taken out of context. 6