Dr. Kalliwoda Capital Markets Conference. Marcus Sander, IR Warsaw, 15 January 2015

Transcription

1 Dr. Kalliwoda Capital Markets Conference Marcus Sander, IR Warsaw, 5 January 205

2 Founded as a lead insurer by German corporates Group structure History Large German corporates, e.g. Free float V.a.G. German Mittelstand Private policy holders 4.5% 79.0% 6.5% Industrial Lines including employee shares Retail Germany Retail International Reinsurance (P/C and Life/Health) Foundation as Haftpflichtverband der deutschen Eisen- und Stahlindustrie in Frankfurt Relocation to Hannover 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 business from HDI V.a.G. to individual Talanx subsidiaries Acquisition of Gerling insurance group by Talanx AG IPO of Talanx AG Listing at Warsaw Stock Exchange Strong roots: Originally founded by German corporate clients; HDI V.a.G still key shareholder 2

3 Four divisions with a strong portfolio of brands Industrial Lines Retail Germany Retail International Reinsurance (P/C and Life/Health) Corporate Operations Integrated international insurance group following a multi-brand approach 3

4 International footprint and focussed growth strategy International presence International strategy by divisions Industrial Lines Local presence by own risk carriers, branches and partners create efficient network in >30 countries Key target growth regions: Latin America, Southeast Asia/India, Arabian Peninsula Retail International Target regions: CEE (incl. Turkey) and Latin America # 2 insurer in Poland 2 # 5 motor insurer in Brazil 3 Presence in countries Total GWP: 28.2bn (203) 203 GWP: 52% in Primary Insurance (200: 5%), 48% in Reinsurance (200: 49%) Group wide presence in >50 countries ~2,500 employees in 203 (~,300 in Germany) Reinsurance Global presence focussing on Western Europe, North- and South America as well as Asia ~5.000 customers in >50 countries by branches, agencies, risk carriers, representative offices 2 in terms of GWP; KNF report in terms of GWP based on local GAAP; Siscorp Global network in Industrial Lines and Reinsurance leading position in retail target markets 4

5 Among the leading European insurance groups Top 0 German insurers Top 0 European insurers German insurers by global GWP (203, bn) European insurers by global GWP (203, bn) Allianz 03.4 Allianz 03.4 Munich Re 5. AXA Generali 66. R+V 2.8 Munich Re 5. Debeka 9.6 Zurich 39. Vk Bayern 7.2 Prudential 36.0 HUK Signal Iduna 5.6 CNP 27.7 Gothaer 4.3 Crédit Agricole 26.4 W&W 3.9 Aviva 26.0 Gross premiums earned Source: Annual reports Listed insurers Third-largest German insurance group with leading position in Europe 5

6 Regional and segmental split of GWP and EBIT GWP by regions 203 (consolidated Group level) GWP by segments 203 5% 7% % 25% 9% 33% Germany Central and Eastern Europe including Turkey (CEE) Rest of Europe North America Latin America RoW 8% 4% 9% 7% 32% Industrial Lines Retail Germany Retail International Non-Life Reinsurance Life/ Health Reinsurance GWP by regions 203 (Primary Insurance) EBIT by segments 203 6% 5% 2% 8% % 57% Germany Central and Eastern Europe including Turkey (CEE) Rest of Europe North America Latin America RoW 6% 47% 7% 2% 3% 5% Industrial Lines Retail Germany Retail International Non-Life Reinsurance Life/ Health Reinsurance Corporate Operations adjusted for the 50.2% stake in Hannover Re Well diversified sources of premium and EBIT generation 6

7 B2B competence as a key differentiator Strategic focus on B2B and B2B2C Excellence in distribution channels Industrial Lines Core focus on corporate clients with relationships often for decades Blue-chip client base in Europe Capability and capacity to lead international programs Bancassurance Brazil Retail Germany Market leader in Bancassurance Market leader in employee affinity business Automotive Retail International ~35% of segment GWP generated by Bancassurance Distribution focus on banks, brokers and independent agents Brokers Retail Industrial/Reinsurance Reinsurance Typically non-german business generated via brokers Unique strategy with clear focus on B2B business models Employee affinity business Samples of clients/partners Superior service of corporate relationships lies at heart of our value proposition 7

8 Opportunities for Group-wide synergies Industrial Lines Retail Germany Retail International Reinsurance Selected examples Securing reinsurance support Opportunity for higher retention on Group level Fronting arrangements to expand global footprint Market entry support Support acquisition and product distribution Leveraging expertise across the Group Synergy benefits from shared back-office, IT and reinsurance procurement Group-wide asset management unit (Talanx Asset Management) Right of first choice for Hannover Re to underwrite business from Talanx s primary insurance companies Retail International acting as entry point and (licensed) platform to write industrial risk in new markets Business relationships by Industrial Lines help to sell retail policies (employee affinity business, auto dealerships) Leveraging expertise across Talanx Group ( best practice ), e.g. product development, underwriting capabilities, Bancassurance know-how Group-wide cooperation and best practice approach creates value for Talanx Group 8

9 Key Pillars of our risk management 2 3 Asset risk is limited to less than 50% of our SCR (solvency capital requirement) Generating positive annual earnings with a probability of 90% Sufficient capital to withstand at least an aggregated 3,000-year shock 9

10 Focus on insurance risk Risk components of Talanx Group Comments % 8% 6% 38% 37% Other risk Operational risk Further life risk Non-life risk 2 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 (9M 204) 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 2/203 2 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 0

11 2 Diversification of business model leads to earnings resilience Talanx Group net income Talanx Group and predecessors net income Talanx Group net income ( m) # of loss making competitors Net profit Net loss Net income of Talanx after minorities, after tax based on restated figures as shown in annual reports ( according to IFRS) 2 Adjusted on the basis of IAS 8 3 Top 20 European listed peers, each year measured by GWP;on group level; IFRS standards Source: Bloomberg, annual reports Robust cycle resilience due to diversification of segments

12 3 Strong capital base Current capitalisation levels Solvency I Economic Solvency 20 % AA [99.97%] = 86 % Regulatory view (S II) BBB [99.5%] = 233% S&P capital model Leverage AA mid-position in peer group 2 Regulatory view incl. haircut, excl. hybrids, at 99.5% probability. When including hybrids: 267%. 2 Senior and subordinated debt leverage of 27% (FY202: 25%), incl. pensions of 38% (FY202: 37%). Ratios calculated in % of total capital, i.e. shareholders equity incl. minorities, subordinated and senior debt. The 203 leverage still includes the Hannover Finance 5.75% 2024-NC m issue called in 204. Note: Solvency I, Economic Solvency and Leverage reflect FY203 levels. The S&P capital model reflects a 202 view. Strongly capitalised in all metrics 2

13 3 Solvency capital position Solvency I capital position ( bn) 202% 225% 20% 24% Comments Talanx has extensive experience in innovative capital management As of 30 September 204, available funds include.6bn of subordinated debt 2 Goodwill of.bn as of 30 September 204 (relative to shareholders equity excl. minorities of 7.9bn) M 204 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) 2.6bn of the Group s total subordinated debt ( 2.7bn) 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 3

14 Solvency capital requirement (SCR) SCR by division Comments (As of 3 December 203, bn) 30% 2% % % 0.5 (0.4) (25%) 48%.3 52%.4 (0.4) (5%) 2.4 Diversification effect of 25% among primary divisions The Group benefits from a diversification effect of 5% between primary insurance and reinsurance This overall diversification corresponds to an absolute amount of 0.8bn 0.4 Retail Germany Retail International Industrial Lines Corporate Operations Diversification between primary divisions and corporate functions Primary Insurance Reinsurance Diversification between primary and reinsurance Talanx Group Solvency capital requirement; determined according to 99.5% security level, economic view, after minorities Diversified business model has also a positive impact on solvency capital requirement 4

15 Talanx Group: Key financials Summary of 9M 204 m, IFRS FY20 FY202 FY203 9M 204 9M 203 Change Gross written premium 23,682 26,659 28,5 2,732 2, % Net premium earned 9,456 2,999 23,3 7,3 7,03 +0 % Net underwriting result (,690) (,447) (,69) (,353) (,228) n/m Net investment income 3,262 3,795 3,792 2,996 2,84 +6 % Operating result (EBIT),238,748,766,444, % Net income after minorities % Key ratios FY20 FY202 FY203 9M 204 9M 203 Change Combined ratio non-life insurance and reinsurance 0.0 Return on investment % 4.0% 0.0%pts Balance sheet FY20 FY202 FY203 9M 204 FY203 Change Investments under own management 75, ,052 86,30 Goodwill 690,52,05,08,05 +0 % Total assets 5,277 30,350 32,793 44,845 32, % Technical provisions 83,8 89,484 9,77 99,643 9,77 +9 % Total shareholders' equity 8,69,309,24 2,562,24 +3 % Shareholders' equity 5,407 7,53 7,27 7,937 7,27 + % Note: numbers adjusted on the basis of IAS8 97. Bottom-line result slightly ahead of 9M % 97.6% 0.0%pts 94,053 86,30 +9 % Comments GWP growth in line with 204 Outlook, still dampened by currency effects. All segments apart from Retail Germany with positive growth Lower self-retention in Life&Health Reinsurance while self-retention ratio in Industrial Lines is up by 5%pts Return on investment at 4.0%, well above the 204 Outlook 9M 204 net income ( 530m) exceeds 9M 203 level, even before adjusting for the base effect of partial disposal of SwissLife stake (~ 00m) Shareholders equity up to 7,937m, or 3.40 per share. Solvency I ratio up to 240.5% (FY203: 20.2%) 5

16 Summary - Investment highlights Global insurance group with leading market positions and strong German roots Leading and successful B2B insurer Value creation through group-wide synergies Strong earnings resilience due to proven business model Dedication to focus on insurance rather than market risks Commitment to continuouesly fulfill a AA capital requirement by Standard & Poor s Dedication to pay out 35-45% of IFRS earnings to shareholders 6

17 Outlook for Talanx Group 204 Gross written premium +2-3% Return on investment 3.4% Group net income 700m Return on equity 9-0% Dividend payout ratio 35-45% target range On divisional level, Talanx expects gross written premium growth of +3-5% in Industrial Lines, -(-2)% in Retail Germany, +4-8% in Retail International and a flat to low single-digit growth rate in Reinsurance 7

18 Targets for Talanx Group 205 Gross written premium +-3% Return on investment > 3.0% Group net income 2 700m Return on equity 2 ~ 9% Dividend payout ratio 35-45% target range On divisional level, Talanx expects gross written premium growth of +-3% in Industrial Lines, unchanged premium in Retail Germany, +6-8% in Retail International and a flat to low single-digit growth rate in Reinsurance 2 Based on an increased large loss budget of 290m (from 85m) in Primary Insurance Targets are subject to no large losses exceeding budget (cat), no turbulences on capital markets (capital), and no material currency fluctuations (currency) 8

19 - Segments - 9

20 Industrial Lines: Overview Key figures Share in 203 group GWP 83% 7% Key financials ( m) 203 GWP: geographic split FY20 Gross written premium 3,38 3,572 3,835 3,28 3,23 +3% Net premium earned,375,608,744,345,40 +4% Net underwriting result (43) (93) (66) n/m Net investment income % Operating result (EBIT) % Combined ratio 2 in % 7% 88.6 FY Return on Equity in % pts Based on total GWP adjusted for 50.2% share in Hannover Re; 2 net, including income from interest on deposits 203 GWP: split by line 2% 46% 3.8 bn 3.8 bn 37% Germany Europe (excl. Germany) RoW 3% 9% FY203 9M 203 9M 204 Change % % Property + Engineering Liability Motor % Marine Accident Aviation (2.2) pts Comments 9M GWP: +2.7% (curr.-adj: +3.8%), well in line with the segment s mid-term growth target of 3-5% 3 Sustainable growth resulting from international activities, incl. North America and Asia Pacific Self-retention in 9M 204 at 50.5% (9M 203: 45.7%) well on track to reach target of ca. 50% Profitability impacted by reinstatement premium ( 74m in Q3 204 alone) and large losses, e.g. storm Ela in Q2, flood in Michigan in Q3 (USA) and various man-made losses 3 organic growth only, currency-neutral Talanx is a leading European industrial lines insurer with global ambitions 20

21 Industrial Lines: Client relationships Relationships with large listed German companies (DAX-30) Selected client acquisitions since 203 Lead insurer in liability or property line; Lead insurer at least in one line Preferred lead insurer for large corporates 2

22 Retail Germany: Overview Key figures Share in 203 group GWP 32% Key financials ( m) FY20 Gross written premium 6,70 6,829 6,954 5,96 5,079 (2%) Net premium earned 5,46 5,50 5,605 4,036 3,793 (3%) Net underwriting result (,258) (,425) (,55) (,30) (,264) n/m Net investment income,530,62,786,39,430 +8% Operating result (EBIT) % Combined ratio 2 in % Life GWP 203: P&C GWP 203: split by line split by business 3% 6% 2% 9% 49% 52% 33% Traditional Unit-linked bn Risk Products Other FY % FY203 9M 203 9M 204 Change % Motor Casualty 0.6.5bn Property Accident pts Return on Equity in % pts Based on total GWP adjusted for 50.2% share in Hannover Re 2 Including interest income on funds withheld and contract deposits; net, property/casualty only Other Comments In line with targets, slight reduction in GWP, primarily reflecting a decline in traditional life business (9M 204: -2%) and a profitabilisation of the motor line Cost ratio impacted by additional preseasonal service capacities, loss ratio affected by storm Ela (~ 20m) in June, normalized in Q Decline in underwriting results largely due to higher RfB contribution on the back of higher realised capital gains to finance ZZR ~75% of anticipated 204 ZZR allocation (forecast of ~355m) already booked. Total ZZR stock expected to rise to ~.bn until end of FY 204 Strong German retail insurance business more than 80% from B2B distribution channels (203) 22

23 Retail Germany: Division breakdown Retail Germany Bancassurance Life P&C Share in 203 segment GWP Share in 203 segment GWP Share in 203 segment GWP 2% 3.bn 44% 2.4bn.4bn 35% Strategic focus on credit risk protection and annuities business Talanx cooperates through bancassurance agreements with two of the three pillars of the German banking market (private and public sectors) Strategic focus on corporate pension business, disability insurance and hybrid products ( Two Trust ) Non-bancassurance life business distributed via various external channels, own branches and tied agents Offers full product spectrum of P&C insurance products Distribution via various external channels, own branches (with focus on B2B business) and tied agents 23

24 Retail International: Overview Key figures Comments Share in 203 group GWP 9% 34% 203 GWP: business split 203 GWP: geographic split 4.2 bn 4.2 bn 66% 28% Non-Life Life 2% 5% CEE/CIS 2 LatAm 2 Western Europe 2 9M 204 GWP growth of 5.5% (currency-adj.:+0.0%). Brazil and Mexico gaining significant growth momentum Turkey continues its positive trend (9M 204 EBIT:.9m), CoR in Mexico and TU Europa well below the 00%-level Key financials ( m) FY20 FY202 FY203 9M 203 9M 204 Change Gross written premium 2,482 3,26 4,220 3,33 3,307 +6% Net premium earned,862 2,62 3,53 2,597 2,820 +9% Net underwriting result (42) (6) n/m Net investment income % Operating result (EBIT) % Combined ratio in % pts Return on Equity in % n/m Increase in asset base and higher interest rates in Brazil support improvement in investment income Signed acquisition in Chile ( Inversiones Magallanes ) fits perfectly into strategy Based on total GWP adjusted for 50.2% stake in Hannover Re 2 CEE/CIS including Turkey and Russia; LatAm including Mexico; Western Europe including Italy, Austria, Liechtenstein and Luxembourg Business in Retail Intern. compensates for German business with limited growth perspectives 24

25 Retail International: Strategic Initiatives Post-merger integration in Poland Clean-up in Turkey Poland Pricing & sales strategy implemented Higher synergies materialised earlier Lower integration costs EBIT target 207: 00m Outlook EBIT : 79m Turkey Pricing & sales strategy implemented MTPL 2 prices adjusted by +53% y/y Break-even in Q 204 Outlook EBIT: ~ m Power Pricing in Brazil Claims Management in Mexico Brazil Power Pricing implemented (HDI Digital) Higher growth than the market Top 5 Position in Motor /.5m cars Outlook EBIT: 47m Mexico Best in class claims management 20% lower Motor claims handling cost 30% faster Motor claims closing Outlook EBIT: 3m Warta only 2 Motor third-party liability Strategic initiatives are key drivers of EBIT supported by transfer of best practises 25

26 Reinsurance: Overview Key figures Share in 203 group GWP GWP development (total, bn) 32% Comments Non Life: Growth effects mainly from China and Southeast Asia Large losses (9M 204: 242m) well below 9M-budget ( 49m); conservative loss reserving policy maintained EBIT margin 3 (9M 204:7%) well above target Life/Health: Growth effects mainly from Australia and Longevity BATs Improved technical result due to normalised result from Australian disability business EBIT margins ahead of targets Key financials ( m) Non-Life Life / Health FY20 FY202 FY203 9M 203 9M 204 Change FY20 FY202 FY203 9M 203 9M 204 Change Gross written premium 6,826 7,77 7,88 5,956 6,060 +2% 5,270 6,058 6,45 4,582 4,644 Net premium earned 5,96 6,854 6,866 5,093 5,04 n/m 4,789 5,426 5,360 4,024 3,86 Net investment income % Operating result (EBIT) 637,34, % Comb.Ratio 2 in % pts % (4%) n/m +45% - Reinsurance Return on Equity in % FY20 4. FY FY M M Change +0.2pts Based on total GWP adjusted for 50.2% share in Hannover Re 2 Incl. expenses on funds withheld and contract deposits; net Hannover Re is one of the largest and most profitable reinsurers globally 26

27 Hannover Re keeps its leading position in RoE ranking Company RoE Rank RoE Rank RoE Rank RoE Rank RoE Rank avg. RoE Rank Hannover Re 22.4% 3 8.2% 2.8% 5.4% 3 5.0% 3 6.8% Peer 9, Bermuda, Property & Casualty Peer 6, Bermuda, Composite Peer 5, Bermuda, Property & Casualty Peer 8, US, Life & Health Peer 2, Germany, Composite Peer 7, France, Composite Peer 4, US, Property & Casualty Peer, Switzerland, Composite Peer 3, US, Property & Casualty 24.4% 2 8.% 2 (2.4%) 8 5.9% 2 8.0% 2 4.8% %.5% 4 (7.6%) 0 6.9% 9.7% 7.3% 3 4.6% 4 9.9% 7 (.3%) 7 2.9% 6 8.4% 0.9% 4 2.6% 5 2.9% 3 0.% 2 9.9% 8 6.5% 0 0.4% 5.8% 6 0.7% 5 3.% 6 2.6% 7 2.3% 5 0.% 6 0.2% 7 0.% 6 7.5% 4 9.% 9.2% 6 9.6% 7 9.9% 8 7.% 8 4.9% 5 5.2% 4 9.4% 8 9.3% 8 2.3% 0 3.6% 0 9.6% 3 3.4% 5 3.7% 4 8.5% 9 2.7% 9 5.8% 9 (4.4%) 9 5.8% 0 9.% 9 3.8% 0 Source: Hannover Re company presentation as of 9 December 204; reflects Hannover Re s reported numbers on a stand-alone basis 27

28 - Appendix - 28

29 Large losses in 9M 204 ( m, net) Snowstorm, Japan Earthquake, Chile Storm, USA February 204 April 204 June 204 Primary insurance 0.8 Reinsurance Talanx Group Net burden from large losses of overall 50m in 9M 204 (9M 203: 668m) Storm Ela, Germany, Belgium, France Hail, Canada Flood, USA June 204 August 204 August Q3 net burden of 3m in Primary and 38m in Reinsurance Total NatCat Aviation Credit Transport Fire/Property Primary Insurance affected by significant amount of man-made losses in Industrial Lines Other Total other large losses Total large losses Impact on Combined Ratio % pts % pts % pts Reinsurance mainly impacted by aviation loss, but very well within large loss budget Total large losses (9M 203) definition large loss : in excess of 0m gross in either Primary insurance or Reinsurance 29

30 Rating overview Current financial strength ratings rating of Talanx Primary Group Standard & Poor s A. M. Best last update Grade Outlook Grade Outlook 30/06/4 6/05/4 Anchor rating a+ Business Risk Profile Strong Financial Risk Profile Very Strong Modifiers Modifiers Neutral Talanx Group - - A Stable IICRA 4 ) Intermediate Risk Capital & Earnings Very Strong ERM Strong Talanx Primary Group 2 A+ Stable - - last update 30/06/4 22/05/4 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 2 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 30

31 Talanx Investor Relations Financial Calendar 23 March 205 Annual Report May 205 AGM 205 May 205 Interim Report Q August 205 Interim Report 6M September 205 Capital Markets Day 2 November 205 Interim Report 9M 205 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 3

32 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 forwardlooking 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 08 January 204. 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. 32