German insurance company Talanx Heading Towards Bright Future
By Alex | Published July 12, 2012
German insurance company Talanx has recently scaled Poland’s insurer rankings to sit comfortably as the second largest German insurance company.
Within the past month, Talanx has made several core acquisitions that helped it expand in size and quality. After cooperating with Japanese insurer Meiji Yasuda to acquire Wroclaw-based Europa Group, Talanx went on to complete the acquisition of Belgium-based KBC Bank subsidiary, TUiR Warta, no more than a few weeks later, securing its position among Poland’s top insurers.
Talanx has a history of providing comprehensive insurance services in Poland with its two subsidiaries, HDI-Gerling Zycie and HDI-Asekuracja.
The Europa Group experienced a solid 2011 business year, with a a net profit of EURO42 million (USD51.5 million) from premiums totaling EURO173 million (USD212.2 million).
Also, the acquisition of Warta contributed an additional Zloty649 million (USD194.4 milion) of non-life premiums, and Zloty599 million (USD175.14 million) of life premiums to Talanx during quarter one 2012, amounting to an overall premium increase of 8% at EURO7.6 billion (USD9.32 billion). Meiji-Yasuda Life is set to by 30 percent of Warta’s shares from Talanx.
Compared to last year, Talanx almost tripled its first quarter results, earning a net profit of EURO211 million (USD268.3 million), as opposed to only EURO77 million (USD85.87 million) for the first quarter of 2011.
Currently, Talanx is the 11th largest insurance group in Europe. It is already moving several of its insurance lines and retail to the international market. Therefore, judging from the successful year Talanx has had so far, it should come as no surprise that the insurance group is close to having its initial public offering (IPO).
Originally, its IPO was unofficially due for June or at the latest, early July. Though this date has been postponed because of the European debt crisis and stock market developments, everything is in place for the big change.
Talanx has already confirmed Citigroup, JP Morgan Chase, and Deutsche Bank as bookrunners, switched to quarterly reporting, and formed an investor relations department.
The German insurance giant apparently worries about receving a low valuation at its IPO, as the majority of German insurance companies are currently being traded at 20 percent less than book value.
Although Talanx is fully owned by mutual HDI-V.a.G., which is intent on maintaining a majority of the firm, plans to go public will not change as the extra financing is crucial to the Talanx’s international expansion. During the past year, the group already made 5 global acquisitions.
Talanx plans to offer no more than 25 percent of its capital to the stock exchange at first, valuing roughly EURO1.4 billion. Meiji-Yasuda, which has partnered with Talanx before, already bought EURO300 million in convertible bonds for the German insurer.
In addition to its own IPO, one of Talanx’s subsidiaries, Hannover Re, had its IPO in 1994, which was the largest insurance IPO in Germany to date. At the moment,Talanx holds 50.2 percent of Hannover Re, and is also restructuring its entire reinsurance service.
By solely using HDI Reinsurance (Ireland) as a major internal reinsurer, Talanx is attempting to bring up its retention rates, a part of its new strategy to improve profitability. However, Hannover Re, Talanx’s largest reinsurer, will not supply retrocession to HDI Reinsurance (Ireland).
Overall, significantly improved results so far this year are partly because of the good claims development, which suffered greatly last year. Additionally, Talanx managed to increase its investment income to EURO961 million (USD1.18 billion), a 15 percent jump. This was largely due to sales of assets.
Herbert K. Haas, CEO of Talanx, said that the group was able to come out of the year 2011 in good health, and is only continuing the positive progress it began last year. Haas ended with confirmation that Talanx’s premium growth in the global market is a clear signal that their strategy is working well.
German Insurance Companies Mentioned
Meiji Yasuda Life
Established in 1881, Meiji Yasuda Life Insurance was the first life insurance company established in Japan. Headquartered in Tokyo, Meiji Yasuda Life now has over 40,000 employees in Japan, as well as 81 regional offices, 22 group marketing offices and over 1,000 agency offices. The company also has 8 subsidiaries or representative offices oveseas.
Europa Insurance Group
Based in Poland, the Europa Insurance Group is a leading provider of bancassurance and all finance related insurance products. For nearly 17 years, Europa has been actively influencing the Polish financial market, and creating innovative products to adapt to the needs of each customer.
Talanx Group and all of its subsidiaries are managed by the financial and management holding company Talanx AG, based in Hannover, Germany. Talanx Group is a multi-brand provider in many prominent lines of insurance and in the financial services industry. In the year 2011, Talanx Group earned over EUR23 billion in premium.
With history as far back as 1920, WARTA guarantees stability and experience in its services. WARTA Group provides motor, property, personal, and life insurance, and has been the recipient of many prestigious awards in theinsurance sector.
HDI-Gerling is one of the largest German property & casualty insurers, serving private customers to commercial and industrial clients. HDI-Gerling offers tailor-made insurance and retirement plans.
HDI-Asekuracja has operated in the Polish property & casualty market for over 20 years. HDI-Asekuracja TU SA, Poland is wholly owned by the management group Talanx AG based in Hannover, Germany.
Hannover Re is the third-largest reinsurer in the world, with a gross premium of EUR 12 billion. It has branches on all continents in the world, supporting roughly 2,200 staff. Hannover Re maintains very strong financial strength ratings (S&P “AA-” and A.M. Best “A”).