Talanx Q4 Profit Triples after Gains at Industrial Insurance Unit

March 24, 2014

Talanx AG, Germany’s third-biggest insurer, said fourth-quarter profit tripled after higher earnings at its industrial insurance business and lower tax at its reinsurance unit.

Net income rose to €227 million ($313 million) from €76 million [$105 million] a year earlier, the Hanover, Germany-based insurer said in a statement today. That beat the €182 million [$251 million] average estimate of six analysts surveyed by Bloomberg.

Full-year profit climbed 22 percent to €762 million [$1.05 billion], exceeding Talanx’s goal of €700 million [$964 million], which was set in August after the sale of Swiss Life Holding AG shares boosted earnings by about €100 million [$137.75 million]. Chief Executive Officer Herbert Haas is targeting profit of at least €700 million this year.

Talanx raised its budget for large claims for 2014 to €185 million [$255 million] from €80 million [$110.2 million] in primary insurance and to €670 million [$923 million] from €625 million [$861 million] for its reinsurer Hannover Re.

Fourth-quarter profit at the industrial division, which provides transport, liability and fire insurance for companies, rose to €74 million [$102 million] from €23 million [$31.7 million] a year ago, helped by a positive run-off result.

Earnings at the German retail insurance unit, the company’s biggest in terms of premiums, rose 3 percent to €15 million [20.66 million] in the quarter.

The insurer said last week that management board member Heinz-Peter Ross, who heads its German retail operations, will leave the company by the end of June.

Rates Pressure

Talanx, which sold shares in an initial public offering in 2012, owns 50.2 percent of Hannover Re, the world’s third- biggest reinsurer led by CEO Ulrich Wallin. It also holds a 5 percent stake in Zurich-based insurer Swiss Life and 9.9 percent in German financial services broker MLP AG.

Hannover Re dropped the most in eight months in Frankfurt trading on March 11 after fourth-quarter operating profit missed analysts’ estimates. Prices charged by reinsurers are under pressure because of lower-than-average disaster losses and as the supply of capital is boosted by pension fund money that competes with traditional reinsurers through catastrophe bonds and other types of insurance-linked securities.

Talanx shares rose 1.4 percent this year, compared with a 2.4 percent gain for Hannover Re and a drop of 1 percent for the 33-member Bloomberg Europe 500 Insurance Index.

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