Results Presentation 6M 2014 14 August 2014 Dr. Immo Querner, CFO
Agenda I II III IV Group Highlights Segments Investments / Capital Outlook Appendix Mid-term Target Matrix 6M 2014 Additional Information 2
I 6M 2014 Remaining on track for FY2014 targets Adjusted for last year s SwissLife effect, net income of 381m ahead of 6M 2013 level Top-line growth regains momentum as GWP grew by 0.8% in Q2 2014 (6M 2014: +0.1%). International activities in Industrial Lines and in retail more than offset negative currency effects (6M 2014 currency-adjusted: +2.1%) Storm Ela and above-average Industrial Lines Property claims - largely in June - affect combined ratios mainly in Primary Insurance. In sum, Talanx Group remained comfortably within its large loss budget for the first half 2014 End of June 2014, shareholders equity grew to 7,645m (FY2013: 7,184m) or 30.24 per share (FY2013: 28.42) FY2014 net income outlook of at least 700m confirmed 3
I 6M 2014 results Key financials Summary of 6M 2014 m, IFRS 6M 2014 6M 2013 Change Gross written premium 14,975 14,966 +0 % Net premium earned 11,308 11,498 (2) % Net underwriting result (775) (716) n/m Net investment income 1,948 1,877 +4 % Operating result (EBIT) 1,005 1,032 (3) % Net income after minorities 381 410 (7) % Key ratios 6M 2014 6M 2013 Change Combined ratio non-life insurance and reinsurance 96.4% 96.1% 0.3%pts Return on investment 4.0% 4.0% 0.0%pts Balance sheet 6M 2014 FY2013 Change Investments under own management 90,252 86,310 +5 % Goodwill 1,109 1,105 +0 % Total assets 139,699 132,853 +5 % Technical provisions 96,829 91,717 +6 % Total shareholders' equity 11,925 11,181 +7 % Shareholders' equity 7,645 7,184 +6 % Comments GWP virtually flat (+0.1%), negatively impacted by currency effects (currency-adj.: +2.1%) and more selective Reinsurance underwriting. However, apart from Life/Health Reinsurance, all segments most recently with positive growth momentum Positive growth contribution from Industrial Lines and Retail International Combined ratio slightly increased by 0.3%pts to 96.4%, impacted by above-average man-made large losses, and impact from storm Ela Return on investment remained flat at 4.0% 6M 2014 net income ( 381m) exceeds 6M 2013 level, when adjusting for the base effect of partial disposal of SwissLife stake (~ 100m) Shareholders equity up to 7,645m, or 30.24 per share. Solvency I ratio up to 224.8% (FY2013: 210.2%) Note: numbers adjusted on the basis of IAS8 6M 2014 in line with target significant base effect from SwissLife disposal in 2013 4
I Large losses 1 in 6M 2014 ( m, net) 1 definition large loss : in excess of 10m gross Primary insurance Reinsurance Talanx Group Snowstorm, Japan 08 February 9 9 Storm Ela German, Belgium, France Aviation 5 31 36 Property 100 32 132 Total man-made losses 07 10 June 40 33 73 Total Nat Cat 40 42 82 105 63 168 Total large losses 145 105 250 Impact on combined ratio (incurred) 5.2% pts 3.1% pts 4.1% pts Total large losses (6M 2013) 159 260 419 Total large loss burden of 250m (6M 2013: 419m) Industrial Lines was affected by various large losses in Property. Storm Ela impacted Industrial Lines and Retail Germany (each ~ 20m) and Reinsurance ( 33m) Net burden of manmade large losses of 105m in Industrial Lines and 63m in Reinsurance 2014 net income outlook with implied capacity to bear in sum another ~ 650m of large losses in H2 2014 5
I Combined ratios Development of net combined ratio 1 Combined ratio by segment/selected carrier 95.1 97.1 100.7 95.3 94.3 98.4 6M 2014 6M 2013 Q2 2014 Q2 2013 Industrial Lines 99.4% 102.1% 108.6% 103.9% Retail Germany 101.2% 99.9% 102.1% 104.6% 68.9% 70.6% 75.1% 68.6% 67.7% 70.8% Retail International 95.3% 94.9% 95.6% 95.7% HDI Seguros S.A., Brazil 97.7% 94.6% 97.9% 93.5% HDI Seguros S.A., Mexico 4 91.4% 87.6% 92.6% 95.0% TUiR Warta S.A., Poland 2 94.8% 94.6% 94.6% 95.6% 26.3% 26.6% 25.7% 26.8% 26.7% 27.7% TU Europa S.A., Poland 3 81.5% 77.2% 84.0% 86.6% HDI Sigorta A.Ş., Turkey 104.0% 106.9% 103.7% 107.2% Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 HDI Assicurazioni S.p.A., Italy 95.3% 99.9% 96.0% 100.4% Expense ratio Loss ratio Non-Life Reinsurance 95.1% 94.2% 95.7% 94.3% 1 incl. net interest income on funds withheld and contract deposits 2 Warta acquisition closed on 1 July 2012; numbers incl. HDI Asekuracia TU S.A. (legal merger on 28 Dec 2012) 3 TU Europa acquisition closed on 1 June 2012 4 numbers incl. Metropolitana Note: numbers adjusted on the basis of IAS8 Despite large losses in Property, Group combined ratio well below the 100% level 6
I GWP trend GWP development ( bn) 8.5 1.6 2.2 1.1 6.5 6.4 1.6 1.5 1.9 1.9 6.8 1.6 1.9 8.4 1.5 2.1 1.2 6.6 1.5 2.0 Seasonal pattern unchanged In Q2 2014, some slight GWP improvement (+0.8%) vs. Q2 2013 despite still negative currency effects 1.1 2.1 1.1 1.0 2.0 1.1 1.5 1.6 1.8 1.5 1.7 1.8 0.7 0.7 0.7 0.7 (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 Industrial Lines Retail Germany Retail International Non-Life Reinsurance Life/Health Reinsurance Corporate Functions and Consolidation Uptick in Q2 2014 growth momentum results mainly from Industrial Lines, various entities in Retail International and Non-Life Reinsurance Q2 2014 regains growth momentum 7
I Group Key quarterly financials Summary of Q2 2014 m, IFRS Q2 2014 Q2 2013 Change Gross written premium 6,561 6,508 +1 % Net premium earned 5,709 5,783 (1) % Net underwriting result (405) (464) n/m Net investment income 938 1,002 (6) % Operating result (EBIT) 451 505 (11) % Net income after minorities 165 204 (19) % Key ratios Q2 2014 Q2 2013 Change Combined ratio non-life insurance and reinsurance 98.4% 97.1% 1.3%pts Return on investment 3.8% 4.2% -0.4%pts Balance sheet 6M 2014 FY2013 Change Investments under own management 90,252 86,310 +5 % Goodwill 1,109 1,105 +0 % Total assets 139,699 132,853 +5 % Technical provisions 96,829 91,717 +6 % Shareholders equity 7,645 7,184 +6 % Comments Combined ratio slightly up by 1.3%pts to 98.4%, mainly as Industrial Lines faces a number of man-made large losses Decline in quarterly extraordinary investment income in Retail Germany Life business largely explains the improved net underwriting result in the quarter In Q2 2013, Group functions included a 75m positive EBIT effect (~70% in investment income, ~30% in currency result) from the SwissLife disposal Note: numbers adjusted on the basis of IAS8 EBIT decline due to SwissLife base effect 8
Agenda I II III IV Group Highlights Segments Investments / Capital Outlook Appendix Mid-term Target Matrix 6M 2014 Additional Information 9
II Segments Industrial Lines P&L for Industrial Lines m, IFRS 6M 2014 6M 2013 Δ Q2 2014 Q2 2013 Δ Gross written premium 2,497 2,399 +4% 733 664 +10% Net premium earned 927 895 +4% 520 456 +14% Net underwriting result 6 (19) n/m (45) (18) n/m Net investment income 151 108 +40% 79 53 +48% Operating result (EBIT) 141 70 +101% 35 40 (13%) Group net income 89 41 +117% 21 24 (13%) Return on investment (annualised) Combined ratio* 100% 104% 4.3% 3.1% +1.2%pts 4.5% 3.1% +1.4%pts FY2013: 101% 117% 87% 88% 81% 84% 98% 61% 69% 6M 2014: 99% 109% 81% 19% 20% 18% 26% 19% 27% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Expense ratio Loss ratio *incl. net interest income on funds withheld and contract deposits Note: numbers adjusted on the basis of IAS8 Comments Top-line in Q2 2014 with catch-up effects, growing 10.4% y/y; 6M GWP +4.1% (curr.-adj: +5.2%), well in line with the segment s mid-term growth target Main growth contribution resulting from international activities, mainly in Western Europe Increase of self-retention to above 50% in 6M 2014 (6M 2013: 47.8%) Positive IAS8 EBIT adjustment in Q1 2014 ( +45m), offset by charges against 2013 earnings and equity 6M 2014 combined ratio strongly impacted by Ela ( 20m) as well as by significant man-made large losses ( 105m); total combined ratio impact: 13.5%pts; close to 2/3 of the man-made large losses materialised in June 2014 6M 2014 result burdened by a significant accumulation of man-made losses 10
II Segments Retail Germany P&L for Retail Germany m, IFRS 6M 2014 6M 2013 Δ Q2 2014 Q2 2013 Δ Gross written premium 3,563 3,623 (2%) 1,536 1,510 +2% of which Life 2,536 2,585 (2%) 1,317 1,307 +1% of which Non-Life 1,027 1,038 (1%) 219 203 +8% Net premium earned 2,613 2,663 (2%) 1,326 1,340 (1%) Net underwriting result (808) (733) n/m (378) (436) n/m of which Life (801) (734) n/m (371) (420) n/m of which Non-Life (7) 1 n/m (7) (16) n/m Net investment income 937 872 +7% 436 484 (10%) Operating result (EBIT) 97 90 +8% 43 24 +79% Group net income 57 52 +10% 28 9 +223% Return on investment (annualised) Combined ratio* 4.4% 4.3% +0.1%pts 4.0% 4.7% (0.7%)pts FY2013: 102% 6M 2014: 101% 95% 105% 105% 105% 100% 102% 59% 69% 76% 64% 67% 70% 36% 35% 29% 41% 33% 32% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Expense ratio Loss ratio *incl. net interest income on funds withheld and contract deposits Comments Premium decline stopped in Q2 thanks to slight growth in Life business and 8% y/y growth in Non- Life Large losses of 20m from storm Ela in June 2014 affect 6M combined ratio by ~3%pts Cost ratio in 6M 2014 declined by 3.0%pts. to 32.8% y/y Slight improvement in 6M RoI to 4.4% (6M 2013: 4.3%) ~50% of anticipated 2014 ZZR allocation booked (forecast of ~ 308m for FY2014; FY 2013: 313m, both according to HGB). Total ZZR stock expected to rise to slightly above the 1bn-level until year-end 2014 Sound profit contribution, also resulting from improved ordinary capital gains 11
II Segments Retail Germany Storm Ela : Regional exposure of Retail Germany Source: www.unwetterzentrale.de, Perils AG, Talanx Nat Cat Survey 2014 (basis: 31.12.2013) Storm Ela hit areas where Retail Germany is most exposed 12
II Segments Retail International P&L for Retail International m, IFRS 6M 2014 6M 2013 Change Q2 2014 Q2 2013 Change Gross written premium 2,255 2,151 +5% 1,091 1,095 (0%) of which Life 827 712 +16% 371 369 +1% of which Non-Life 1,428 1,439 (1%) 720 726 (1%) Net premium earned 1,912 1,748 +9% 929 871 +7% Net underwriting result 14 17 (18%) 6 (0) n/m of which Life (40) (42) n/m (21) (25) n/m of which Non-Life 54 59 (10%) 26 25 +3% Net investment income 156 146 +7% 82 72 +14% Operating result (EBIT) 124 113 +10% 62 47 +30% Group net income 74 66 +12% 35 28 +25% Return on investment (annualised) Combined ratio* 4.8% 5.1% (0.3%)pts 4.8% 4.9% (0.1%)pts FY2013: 96% 6M 2014: 95% 94% 96% 98% 96% 95% 96% 67% 67% 67% 64% 65% 65% 27% 29% 30% 32% 30% 30% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Expense ratio Loss ratio *incl. net interest income on funds withheld and contract deposits Comments 6M 2014 top-line growth of 5% burdened by currency effects (currency-adj.:+10.7%). Q2 2014 was flat Significant GWP improvement in Brazil, gaining further momentum in Q2 2014 Life-wise, strong single-premium business in Italy continues, while lower momentum in Poland 6M 2014 combined ratio slightly up by 0.4%pts due to initial consolidation effects. Adj. combined ratio improved by 1%pt to 95.6% Ordinary investment income benefits from higher interest rates in Brazil, slightly compensated by interest rate decline in Poland Turkey continues positive trend in Q2 2014 (6M 2014 EBIT: 1.5m) Retail International delivering another strong quarter - Turkey continues its positive trend 13
II Segments Non-Life Reinsurance P&L for Non-Life Reinsurance Comments m, IFRS 6M 2014 6M 2013 Change Q2 2014 Q2 2013 Change Gross written premium 4,078 4,097 (0%) 1,970 1,899 +4% Net premium earned 3,370 3,404 (1%) 1,739 1,712 +2% Net underwriting result 156 191 (18%) 70 93 (25%) Net investment income 412 378 +9% 201 184 +9% Operating result (EBIT) 533 567 (6%) 247 301 (18%) Group net income 165 166 (0%) 70 88 (20%) Return on investment (annualised) Combined ratio * 3.2% 3.0% +0.3%pts 3.1% 2.8% +0.3%pts FY2013: 95% 6M 2014: 95% 94% 94% 97% 95% 95% 96% 69% 69% 72% 72% 69% 70% 26% 26% 25% 23% 26% 26% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Expense ratio Loss ratio * incl. net interest income on funds withheld and contract deposits 1 EBIT margins reflect a Talanx Group view Pleasing underwriting result in a competitive market environment 6M 2014 GWP slightly down by -0.5% y/y (adj. for currency effects: +2.0%) with growth effects mainly from Southeast Asia and China. NPE -1.0% y/y (curr.-adj.:+1.6%) Large losses of 105m (3.1% of NPE) below budget ( 276m for 6M 2014) Conservative loss reserving policy maintained in particular for the large loss budget Net investvent income increased mainly due to normalised results from inflation swaps Other income/expenses in line with expectations; not impacted by positive currency effects as in 2013 EBIT margin 1 of 15.8% (6M 2013: 16.6%) is well above target 14
II Segments Life/Health Reinsurance P&L for Life/Health Reinsurance m, IFRS 6M 2014 6M 2013 Change Q2 2014 Q2 2013 Change Gross written premium 2,987 3,130 (5%) 1,470 1,570 (6%) Net premium earned 2,469 2,787 (11%) 1,188 1,398 (15%) Net underwriting result (147) (172) n/m (60) (104) n/m Net investment income 299 315 (5%) 147 153 (4%) Operating result (EBIT) 152 130 +17% 88 29 +206% Group net income 57 47 +20% 36 9 +248% Return on investment 4.0% 4.1% (0.1%)pts 4.0% 3.9% +0.1%pts EBIT ( m) 101 88 64 34 29-25 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 1 EBIT and EBIT margin reflect a Talanx Group view Comments 6M GWP: -1.8% on curr.-adj. level, mainly due to reduced premiums from enhanced annuities business, single large transactions, run-off of US mortality block (ING); increased volume from UK-BAT Technical result benefited mainly from improved result in US mortality Net investment income at expected level, minor impact from ModCo derivatives Other income improved mainly due to reduced collateral cost for our US business Strong increase in EBIT 1 by ~17%. EBIT margins 1 in financial solutions/longevity business as well as in mortality and morbidity business ahead of targets Significantly improved result in Life/Health Reinsurance 15
Agenda I II III IV Group Highlights Segments Investments / Capital Outlook Appendix Mid-term Target Matrix 6M 2014 Additional Information 16
III Investments Breakdown of investment portfolio Asset allocation as of 30 June 2014 1% Other Equities 9% 90% Fixed income securities Total: 90.3bn Fixed-income-portfolio split Breakdown by type Other 28% 33% Covered bonds Corporate bonds Government bonds 2% Total: 81.3bn Breakdown by rating 19% 24% 25% 37% 33% BBB and below A AA AAA Comments Fixed-income securities continue to dominate the investment portfolio (portfolio share Q2 2014: 90%; 2013: 91%); just 1% invested in equities 81% (FY2013: 81%) of fixedincome portfolio invested in A or higher-rated bonds 16% of investments under own management are held in USD, 29% overall in non-euro currencies Slight increase in GIIPS sovereign exposure to 1.8% of total assets (from 1.7% in Q1 2014) Investments under own management up by +5% y/y Prudent investment style remains unchanged 17
III Net investment income Net investment income Talanx Group m, IFRS 6M 2014 6M 2013 Change Q2 2014 Q2 2013 Change Ordinary investment income "thereof current investment income from interest" "thereof profit/loss from shares in associated companies" Realised net gains on investments "Write-ups/write-downs on investments" "Unrealised net gains/losses on investments" 1,554 1,553 +0% 790 790 (0%) 1,438 1,435 +0% 722 722 (0%) 6 6 0% 2 5 (60%) 304 320 (5%) 94 245 (62%) (16) (36) n/m (7) (22) n/m 41 (47) n/m 25 (51) n/m Investment expenses (102) (93) +10% (48) (50) (4%) "Income from investments under own management" Income from investment contracts "Interest income on funds withheld and contract deposits" 1,781 1,697 +5% 854 913 (6%) 2 4 (37%) 2 1 +54% 165 176 (6%) 81 87 (7%) Total 1,948 1,877 +4% 938 1,002 (6%) Comments Ordinary investment income virtually unchanged vs 6M 2013 despite further drop in interest rates, supported by higher asset base Realised net gains of 304m - mainly used to finance the ZZR charge slightly below the level of 6M 2013 (containing ~ 70m capital gain from SwissLife transaction). Significantly lower realised gains in Q2 2014 vs. Q2 2013 Solid return on investment of 4.0% in 6M 2014 (6M 2013: 4.0%) Unrealised gains helped by contribution from reinsurance derivatives: in Q2 2014: ModCo 3m (Q2 2013: - 5m) and inflation swaps 6m (- 38m); in 6M 2014: ModCo: 5m (6M 2013: 1m); inflation swap 5m ( -40m) 6M 2014 RoI of 4.0% unchanged vs. 6M 2013 - despite 2013 SwissLife disposal effect 18
III Equity and capitalization Solid equity base Optimized capital structure Capital breakdown ( bn) 14.7 13.7 14.0 14.3 14.1 14.3 3.1 3.1 3.1 3.1 2.4 2.4 4.2 4.2 4.3 3.9 4.0 3.8 7.4 6.8 7.0 7.2 7.5 7.6 31 Mar 13 30 June 13 30 Sep 13 31 Dec 13 31 Mar 14 30 June 14 Shareholders equity Minorities Subordinated liabilities Shareholders equity is up by 1.4% vs. Q1 2014 and flat vs. FY2013. Effects of dividend payment (~ 300m) were overcompensated by net earnings. OCI effects from rates and currencies add an additional 382m Goodwill stands at 1,109m. When deducting non-controlling interests, the amount reduces to 1,102m Book value per share stands at 30.24, while NAV 1 per share is 25.92 at the end of June 2014 Both figures do not contain off-balance sheet reserves. After the recent decline in interest rates, these amount to ~4.3bn (see next page), or 1.59 per share (shareholder share only) 1 NAV calculated as shareholders equity minus shareholder share in goodwill Note: Figures adjusted due to IAS8 Shareholders equity up by ~ 320m vs. FY2013 based on strong earnings and OCI effects 19
III Equity and capitalization Unrealised gains Unrealised gains and losses (off and on balance sheet) as of 30 June 2014 ( m) 3,357 384 3,741 8,082 4,346 134 117 68 (324) 4,340 Loans and receivables Held to maturity Investment property Real estate own use Subordinated loans Off balance sheet reserves Available for sale Other assets On balance sheet reserves Total Total unrealised gains (losses) 31 Dec 13 2,779 139 150 49 (250) 2,867 1,619 321 1,940 4,808 market value vs. book value Talanx s off-balance sheet reserves significantly up by ~ 1.5bn since FY2013 ( 2.9bn) 20
Agenda I II III IV Group Highlights Segments Investments / Capital Outlook Appendix Mid-term Target Matrix 6M 2014 Additional Information 21
IV Outlook for Talanx Group 2014 1,3 Gross written premium 2 +2-3% Return on investment 3.4% Group net income 700m Return on equity ~ 10% Dividend payout ratio 35-45% target range 1 2014 net income outlook with implied capacity to bear in sum another ~ 650m of large losses in H2 2014 2 On divisional level, Talanx expects gross written premium growth of +3-5% in Industrial Lines, -(1-2)% in Retail Germany, +4-8% in Retail International and a flat to low single-digit growth rate in Reinsurance 3 The outlook is subject to a thorough assessment of the Life Insurance Reform Act ( LIRA ) impact on German retail activities Targets are subject to no large losses exceeding budget (cat), no turbulences on capital markets (capital), and no material currency fluctuations (currency) 22
Agenda I II III IV Group Highlights Segments Investments / Capital Outlook Appendix Mid-term Target Matrix 6M 2014 Additional Information 23
Mid-term Target Matrix Segments Key figures Strategic targets Group Industrial Lines Retail Germany Retail International Non-life reinsurance Life & health reinsurance Return on equity 750 bps above risk free 1 Group net income growth ~ 10% Dividend payout ratio 35-45% Return on investment 2 3.5% Gross premium growth 3 3-5% Combined ratio 96% EBIT margin 4 10% Retention rate 60-65% Gross premium growth 0% Combined ratio (non-life) 97% New business margin (life) 2% EBIT margin 4 4.5% Gross premium growth 3 10% Combined ratio (non-life) 96% Value of New Business (VNB) growth 5-10% EBIT margin 4 5% Gross premium growth 3-5% Combined ratio 96% EBIT margin 4 10% Gross premium growth 3 5-7% Value of New Business (VNB) growth 10% EBIT margin 4 financing and longevity business 2% EBIT margin 4 mortality and health business 6% 1 Risk-free rate is defined as the 5-year rolling average of the 10-year German government bond yield 2 Derived from actual asset duration. Currently ~ 6.5 years, therefore the minimum return is the 13-year average of 13-year German government bond yield. Annually rolling 3 Organic growth only; currency neutral 4 EBIT/net premium earned Note: growth targets are on p.a. basis. They are based on 2012 results. 24
6M 2014 Additional Information - Segments Industrial Lines Retail Germany Retail International m, IFRS 6M 2014 6M 2013 Change P&L Gross written premium 2,497 2,399 +4% Net premium earned 927 895 +4% Net underwriting result 6 (19) n/m Net investment income 151 108 +40% Operating result (EBIT) 141 70 +101% Net income after minorities 89 41 +116% Key ratios Combined ratio non-life insurance and reinsurance 99.4% 102.1% (2.7%)pts Return on investment 4.3% 3.1% 1.2%pts 6M 2014 6M 2013 Change 3,563 3,623 (2%) 2,613 2,663 (2%) (808) (732) n/m 937 872 +7% 97 90 +8% 57 52 +10% 101.2% 99.9% 1.3%pts 4.4% 4.3% 0.1%pts 6M 2014 6M 2013 Change 2,255 2,151 +5% 1,912 1,748 +9% 14 17 (18%) 156 146 +7% 124 113 +9% 74 66 +12% 95.3% 94.9% 0.4%pts 4.8% 5.1% (0.3%)pts Note: Differences due to rounding may occur. 25
6M 2014 Additional Information - Segments (continued) m, IFRS 6M 2014 6M 2013 Change P&L Gross written premium 4,078 4,097 (0%) Net premium earned 3,370 3,404 (1%) Net underwriting result 156 191 (18%) Net investment income 412 378 +9% Operating result (EBIT) 533 567 (6%) Net income after minorities 165 166 (0%) Key ratios Combined ratio non-life insurance and reinsurance Non-Life Reinsurance 95.1% 94.2% 0.9%pts Return on investment 3.2% 3.0% 0.2%pts Life and Health Reinsurance 6M 2014 6M 2013 Change 2,987 3,130 (5%) 2,469 2,787 (11%) (147) (172) n/m 299 315 (5%) 152 130 +17% 57 47 +20% --- --- --- 4.0% 4.1% (0.1%)pts Group 6M 2014 6M 2013 Change 14,975 14,966 +0% 11,308 11,498 (2%) (775) (716) n/m 1,948 1,877 +4% 1,005 1,032 (3%) 381 410 (7%) 96.4% 96.1% 0.3%pts 4.2% 4.0% 0.0%pts Note: Differences due to rounding may occur. 26
6M 2014 Additional Information GWP of main risk carriers Retail Germany GWP, m, IFRS 6M 2014 6M 2013 Change Retail International GWP, m, IFRS 6M 2014 6M 2013 Change Non-life Insurance 1,027 1,038 (1%) HDI Versicherung AG 1 957 965 (1%) Life Insurance 2,536 2,585 (2%) HDI Lebensversicherung AG 1,084 1,101 (2%) neue leben Lebensversicherung AG 2 485 525 (8%) TARGO Lebensversicherung AG 480 476 +1% PB Lebensversicherung AG 388 384 +1% Total 3,563 3,623 (2%) Non-life Insurance 1,428 1,439 (1%) HDI Seguros S.A., Brazil 404 421 (4%) TUiR Warta S.A. 3, Poland 438 444 (1%) TU Europa S.A. 4, Poland 89 76 +17% HDI Assicurazioni S. p. A., Italy (P&C) 171 172 (1%) HDI Seguros S.A. De C.V., Mexico 5 82 87 (5%) HDI Sigorta A.Ş., Turkey 99 97 +2% Life Insurance 827 712 +16% TU Warta Zycie S.A., Poland 6 105 152 (31%) TU Europa Zycie 4, Poland 108 194 (44%) Open Life 4 8 9 (13%) 1 Entity results from Sept 2012 merger of HDI Direkt Versicherung AG and HDI-Gerling Firmen und Privat Versicherung AG 2 Talanx ownership 67.5% 3 includes HDI Asekuracja TU S.A., Poland; Talanx ownership of 75.74% 4 Talanx ownership 50% + 1 share; closed on 1 June 2012 5 includes Metropolitana 6 includes HDI-Gerling Zycie, Poland; Talanx ownership of 75.74% HDI Assicurazioni S. p. A., Italy (Life) 416 153 +173% Total 2,255 2,151 +5% Numbers for main carriers represent data entry values, fully consolidated 27
Q2 2014 Additional Information Details on GIIPS exposure Total GIIPS exposure (30 June 2014) m Government bonds Corporate bonds GIIPS exposure Sovereign 10 12 Semi- Sovereign 194 230 Financial Corporate Covered Other Total Greece 12 - - - - - 12 Ireland 230-11 50 127 272 689 Italy 1,466-467 500 922-3,354 Portugal 35-5 4 - - 43 Spain 710 641 155 263 368-2,136 Total 2,452 641 637 816 1,417 272 6,235 Details on sovereign exposure in m Total: 2,229m (amortized cost), 2,452m (fair value) 33 35 Total unrealised gain: 223m 670 710 Greece Ireland Italy Portugal Spain Amortized cost 1,466 1,322 Fair value Comments Total GIIPS exposure incl. private sector assets at ~4.5% of total assets GIIPS sovereign exposure at 1.8% of total assets (Q2 2013: 0.8%, FY2013: 1.2%) Talanx may top up its sovereign exposure to selected GIIPS government issuers to up to 3% of total assets in the course of 2014 Talanx over time has slightly raised its exposure to Italian and Spanish issuers very selectively, while Ireland and Portugal issuers are slightly reduced Since 31 Dec. 2013 additional investments of ca. 1.7bn mainly in sovereign ( ~0.9bn) and semisovereign ( ~0.4bn), but also in selected financial and corporate issuers Total unrealised gains increased by ~ 80m since 31 March 2014 Slight increase in GIIPS investments significant increase in unrealised gains 28
Group Key quarterly financials Summary Talanx Group (restated numbers) m, IFRS Q1 2013 Q2 2013 Q3 2013 Q4 2013 FY2013 Q1 2014 Q2 2014 Gross written premium 8,458 6,508 6,414 6,771 28,151 8,414 6,561 Net premium earned 5,715 5,783 5,605 6,010 23,113 5,599 5,709 Net underwriting result (252) (464) (513) (391) (1,619) (370) (405) Net investment income 875 1,002 937 978 3,792 1,010 938 Operating result (EBIT) 527 505 344 390 1,766 553 451 Net income after minorities 206 204 119 222 750 216 165 Key ratios Q1 2013 Q2 2013 Q3 2013 Q4 2013 FY2013 Q1 2014 Q2 2014 Combined ratio non-life insurance and reinsurance 95.1% 97.1% 100.7% 95.3% 97.1% 94.3% 98.4% Return on investment 3.7% 4.2% 4.0% 4.1% 4.0% 4.3% 3.8% Balance sheet Q1 2013 Q2 2013 Q3 2013 Q4 2013 FY2013 Q1 2014 Q2 2014 Investments under own management 86,568 85,670 86,070 86,310 86,310 88,069 90,252 Goodwill 1,149 1,121 1,102 1,105 1,105 1,103 1,109 Total assets 134,594 132,644 133,100 132,853 132,853 136,766 139,699 Technical provisions 92,340 91,935 92,009 91,717 91,717 95,127 96,829 Shareholders equity 7,339 6,768 6,960 7,184 7,184 7,532 7,645 Numbers for Talanx Group are restated for 2013 and Q1 2014 according to IAS 8 effect 29
Segments Industrial Lines P&L for Industrial Lines (restated numbers) m, IFRS Q1 2013 Q2 2013 Q3 2013 Q4 2013 FY2013 Q1 2014 Q2 2014 Gross written premium 1,735 664 729 707 3,835 1,763 733 Net premium earned 439 456 450 399 1,744 407 520 Net underwriting result (1) (18) (74) 51 (43) 50 (45) Net investment income 55 53 59 73 240 72 79 Operating result (EBIT) 30 40 (20) 78 129 105 35 Group net income 17 24 (14) 69 96 67 21 Return on investment (annualised) 3.2% 3.1% 3.4% 4.4% 3.6% 4.2% 4.5% Loss Ratio 81.2% 84.3% 98.1% 61.4% 81.8% 69.1% 81.3% Expense Ratio 19.1% 19.7% 18.4% 25.9% 20.6% 18.6% 27.2% Combined Ratio 100.1% 103.9% 116.5% 87.2% 102.4% 87.7% 108.6% Numbers for Industrial Lines are restated for 2013 and Q1 2014 according to IAS 8 effect 30
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 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 14 August 2014. 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. 31