Talanx raises earnings targets as it posts results for 2023
Talanx raises earnings targets as it posts results for 2023 | Insurance Business Australia
Insurance News
Talanx raises earnings targets as it posts results for 2023
New financial targets to be announced by the end of the year
Insurance News
By
Kenneth Araullo
Talanx Group has reported its results for the fiscal year 2023, announcing that it plans to lift its earnings targets following growth across its segments.
Following its preliminary results in February, the insurance group has announced an increase in its dividend per share to €2.35, up by 35 cents, after recording a group net income of €1,581 million for the financial year 2023.
The group’s outlook remains positive, with projections for group net income to surpass €1.7 billion in 2024 and expectations to exceed €1.9 billion in 2025, thereby achieving and notably surpassing its original 2025 earnings goal of €1.6 billion well in advance. Plans to unveil new financial targets for 2025 to 2027 at the upcoming Capital Market Day in December were also disclosed.
In 2023, Talanx saw a 9% increase in insurance revenue, reaching €43.2 billion, and an operating profit boost to €3.1 billion, with all divisions contributing to this growth. Primary insurance was a significant contributor, representing 46% of group net income.
The group also benefited from a strong insurance service result, aided by large losses remaining within budget and inflation-related price adjustments. With a return on equity at 16.6%, Talanx exceeded its strategic goal of a minimum of 10%.
The insurance service result for the year also soared by 32% to €3.2 billion, driven by inflation adjustments, interest rate effects, and large loss payments totalling €2,168 million, just under the €2.2 billion budget. The combined ratio saw an improvement to 94.3%.
Another development during the year was a cash capital increase in September 2023, aimed at enhancing Talanx’s free float and share trading liquidity. This involved issuing new shares and selling existing ones, which not only bolstered Talanx’s capital resources but also supported its growth ambitions.
Talanx’s 2023 results across segments
The industrial lines division reported 10% growth in insurance revenue to €9.1 billion, attributing success to its global industrial insurer strategy. The division enjoyed a strong insurance service result and maintained large loss payments within budget, leading to an improved combined ratio of 91.5%.
The retail international division also saw growth, with insurance revenue up by 33% to €7.1 billion, largely thanks to contributions from the property/casualty and life insurance segments. This division witnessed significant organic growth and benefited from inflation-related premium increases and strong market performance in Latin America.
Meanwhile, the retail Germany division experienced a boost in operating profit to €260 million, driven by growth in the property/casualty insurance segment.
The reinsurance segment recorded an increase in group net income, with insurance revenue rising to €24.5 billion. This was accompanied by a strong insurance service result and an improvement in the net insurance financial and investment result. Large loss payments remained within expectations, and the segment reported growth across both property/casualty and life/health reinsurance.
Looking ahead to 2024, Talanx has raised its ambitions, targeting a group net income of more than €1.7 billion and aiming for a return on equity of around 15%, significantly above its strategic target. That said, these projections are contingent on stable market conditions and expected large loss levels, acknowledging ongoing geopolitical uncertainties.
“We proved yet again in 2023 that our focused and ambitious strategy is a success,” board of management chairman Torsten Leue said. “We are growing sustainably and profitably in the interests of our business partners, customers, shareholders, and employees. We generated record Group net income while also enhancing our resilience despite macroeconomic and geopolitical challenges. This demonstrates the high quality of our earnings and makes us optimistic for the coming years.”
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