Q1 2020 Results 7 May 2020 Dr Immo Querner, CFO
Q1 2020: Group net income of EUR 223m impacted by EUR 313m corona-related claims GWP grow by 6.4% (curr.-adj. +6.4%) – driven by Reinsurance and Industrial Lines Corona impact EBIT: EUR 313m claims (EUR 163m thereof overshooting the aggregate quarterly large loss budget), EUR 60m losses on investments, EUR 7m PVFP 1 impairment Aggregate net income impact of EUR 133m – partially compensated by realised net gains and positive one-offs Group net income of EUR 223m (-5.1%) – Group RoE at 9.0%, above minimum target 2020 Group net income outlook withdrawn on 21 April due to uncertain environment Resilient Solvency II ratio (excl. transitional) within upper half of target range (150 - 200%) Note: Approx. 90% of EUR 313m corona-related claims have been incurred but not reported as of 31 March 2020 1 PVFP: Present Value of Future Profits (German Life business) 2 Q1 2020 Results, 7 May 2020
Agenda 1 Group Highlights Q1 2020 2 Segments 3 Investments / Capital 4 Outlook 2020 5 Appendix Additional Information Risk Management 3 Q1 2020 Results, 7 May 2020
1 Q1 2020 results – Meaningful corona impact, net income down 5% EURm Q1 2020 Q1 2019 Delta Comments Gross written premiums (GWP) 12,467 11,716 +6% GWP growth driven by P/C Reinsurance (+EUR 592m) and Net premiums earned 8,354 7,842 +7% Industrial Lines (+EUR 279m). No currency effect Net underwriting result (425) (19%) (357) Technical result impacted by corona-related claims of 1 (99%) thereof P/C 143 EUR 313m and EUR 7m PVFP impairment thereof Life (427) (500) +15% Q1 2020 includes EUR 66m write-downs on equities and Net investment income 903 988 (9%) net EUR 20m unrealised losses on hedging instruments; Other income / expenses 81 (15) n.m. partially offset by higher realised gains on bonds in P/C Operating result (EBIT) 559 (9%) 616 Reinsurance; resilience due to low-beta profile (51) (12%) Financing interests (45) Positive swings in currency translation (+EUR 55m) and Taxes on income (116) (160) +28% deposit accounting (+EUR 25m) Net income before minorities 393 411 (4%) Non-controlling interests (170) (176) +4% Net income after minorities 223 (5%) 235 Combined ratio 99.8% 96.8% +3.0%pts 22.7% (5.3%pts) Tax ratio 28.0% Higher share of profits from lower-tax foreign operations 9.0% (1.3%pts) Return on equity 10.3% Return on investment 2.7% 3.2% (0.5%pts) 4 Q1 2020 Results, 7 May 2020
1 Corona impact partially offset by positive effects EBIT (before taxes and minorities) in Q1 2020, in EURm Corona 7 150 126 (60) (7) 656 (313) 559 426 Thereof Adjusted Claims Net PVFP EBIT after Realised Other one- Reported “operating” absorbed by net gains 1 off effects 2 related investment impair- corona EBIT otherwise EBIT to Corona income ment unused large loss budget Group net income 280 (143) 63 (48) (5) 147 54 22 3 223 equivalents 1 Realised net gains / losses on fixed income and real estate investments (net losses on equities and derivatives included in corona-related effects). Group excluding German Life business. Largest part realised in P/C Reinsurance. A portion of the realised gains would have occurred in a normalised quarter as well 2 EUR 7m deconsolidation gain in German Life 3 Includes EUR 7m deconsolidation gain in German Life (tax-free) and EUR 15m one-time tax effects in P/C Reinsurance and Corporate Operations 5 Q1 2020 Results, 7 May 2020
1 Corona: Aggregate net income impact of EUR 133m Total EBIT impact (before taxes and minorities) in Q1 2020, in EURm Retail Retail Industrial Retail Rein- Corporate Talanx Germany Germany Lines International surance Operations Group P&C Life Corona-related (34) (31) (20) (220) (8) (313) claims Accounting impact of Q1 claims: Thereof absorbed EUR 163m +26 +124 +150 by otherwise unused large loss budget Net investment (33) (9) (7) (10) (60) income Total EBIT (7) 1 (41) (40) (27) (106) (8) (229) impact Group net income (39) (28) (5) 1 (18) (38) (5) (133) impact Note: Numbers may not add up due to rounding. Group net income impact after taxes and minorities 1 PVFP (Present Value of Future Profits) impairment 6 Q1 2020 Results, 7 May 2020
Large losses: Substantial share of corona losses absorbed by otherwise unused 1 large loss budget in Industrial Lines and Reinsurance ∑ Primary Retail Net losses Talanx Group Industrial Lines Retail Germany + Reinsurance = Talanx Group International Insurance in EURm, Q1 2020 (Q1 2019) Bush Fires New South Wales , Australia [Jan.] 12.7 12.7 22.4 35.1 Hurricanes Ciara, Elsa, Sabine , Europe [Feb.] 4.5 8.5 0.6 13.7 17.6 31.3 Hailstorm Victoria , Australia [Jan.] 12.4 12.4 15.1 27.5 Tornado Nashville , USA [Mar.] 12.8 12.8 12.8 Flood East Coast , China [Feb.] 0.6 0.6 8.5 9.1 Sum NatCat 43.0 (40.5) 8.5 (7.0) 0.6 (3.4) 52.1 (50.9) 63.6 (40.3) 115.7 (91.2) Fire/Property 6.0 0.1 6.1 6.1 Credit Marine Aviation Casualty Cyber Sum other large losses 6.0 (27.2) 0.0 (0.0) 0.1 (0.0) 6.1 (27.2) 0.0 (18.6) 6.1 (45.8) 5.9%pts total impact on CR Corona losses 34.4 dd 31.0 dd 20.0 dd 92.9 dd 220.0 dd 312.9 Total large losses 83.4 (67.7) 39.5 (7.0) 20.7 (3.4) d 151.1 (78.1) 283.6 (59.0) 434.7 (137.0) Pro-rata large loss budget 75.2 7.4 2.3 90.0 188.0 278.0 FY large loss budget 300.6 29.5 9.0 360.1 975.0 1,335.1 Impact on CR: materialised large losses 11.5%pts (10.7%pts) 11.4%pts (2.0%pts) 2.4%pts (0.4%pts) 7.7%pts (4.2%pts) 8.5%pts (2.0%pts) 8.2%pts (2.9%pts) Corresponds to EUR 163m Impact on CR: large loss budget 10.4%pts (10.9%pts) 2.1%pts (1.7%pts) 0.3%pts (0.2%pts) 4.6%pts (4.3%pts) 5.6%pts (6.0%pts) 5.2%pts (5.3%pts) accounting impact Corona impact on CR above pro-rata budget 1.1%pts 8.9%pts 2.3%pts 3.4%pts 2.9%pts 3.1%pts of corona claims Note: Definition "large loss": in excess of EUR 10m gross in either Primary Insurance or Reinsurance. EUR 7.5m large losses (net) in Corporate Operations in Q1 2020 Primary Insurance (Q1 2019: EUR 0.0m). No corona-related absorption of large loss budget in Retail Germany, Retail International and Corporate Operations. 7 Q1 2020 Results, 7 May 2020
1 Combined ratio still below 100%; deterioration mainly driven by corona Retail Germany P/C Talanx Group Industrial Lines Retail International Reinsurance P/C 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Q1 99.8% 96.8% 101.6% 102.9% 103.8% 99.3% 96.6% 94.7% 99.8% 95.7% Ex corona 96.7% 100.5% 94.9% 94.3% 96.9% impact 1 Poland 2020 2019 TUiR Warta Q1 89.4% 90.7% Mexico TU Europa Q1 99.0% 91.0% 2020 2019 Q1 96.8% 96.9% Brazil Chile Italy Turkey 2020 2019 2020 2019 2020 2019 2020 2019 Q1 97.2% 97.2% Q1 97.7% 96.8% Q1 89.6% 91.7% Q1 110.9% 109.4% Note: This page highlights only core markets plus Italy for Retail International. Turkey Q1 2020 EBIT of EUR 3m (vs. EUR 2m in Q1 2019). Ergo Sigorta acquisition in Turkey fully included in Q1 2020, not included in Q1 2019 1 Q1 2020 combined ratio as if no corona losses above large loss budget had occurred in Industrial Lines and Reinsurance 8 Q1 2020 Results, 7 May 2020
1 EBIT and net income development by division In EURm EBIT change (15%) (46%) +3% (6%) (9%) (5) (28) 2 (25) 1 616 559 Q1 2019 Industrial Retail Retail Reinsurance Corporate Q1 2020 Lines Germany International Operations (incl. Consolidation) Net income 235 (5) (16) 1 2 8 223 change Note: Numbers may not add up due to rounding 9 Q1 2020 Results, 7 May 2020
Agenda 1 Group Highlights Q1 2020 2 Segments 3 Investments / Capital 4 Outlook 2020 5 Appendix Additional Information Risk Management 10 Q1 2020 Results, 7 May 2020
2 Industrial Lines: Positive momentum continues despite corona EURm, IFRS 2020 2019 Gross written premiums (GWP) Operating result (EBIT) Net income +12% (15%) (24%) 2,575 2,296 35 30 23 17 Q1 Q1 Q1 Retention rate in % Combined ratio in % RoE in % 56.1 102.9 3.7 53.1 101.6 3.1 Q1 Q1 Q1 Almost two thirds of GWP growth of EUR 279m or Corona-related claims of EUR 34m, e.g. from event Reduced return on equity of 3.1%, also impacted by 12.2% (currency-adj.: +11.9%) come from Specialty cancellation. As a result, total large losses of EUR negative corona investment impact of EUR 33m, business. Remaining growth in Liability and 83m above pro-rata budget of EUR 75m mainly from unrealised losses on equities and Property outside Germany derivatives Combined ratio ~100% excl. corona losses above Higher growth in NPE (+14.5%) due to increasing large loss budget, due to 20/20/20 project Swing in other result from EUR -18m in Q1 2019 to retention in Specialty business. In addition, Q1 Run-off result of EUR -9m (Q1 2019: EUR 6m). EUR 7m in Q1 2020 mainly due to positive 2019 impacted by EUR 18m reinstatement currency result and a EUR 6m gain from real estate Positive core run-off result at Q1 2019 level premiums disposal excluding Specialty (bush fires in Australia and some Q1 noise) Medium and long-term targets (97% and 95% On-going profitabilisation measures throughout the combined ratio) remain intact division 11 Q1 2020 Results, 7 May 2020
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