HANNOVER (dpa-AFX) – Despite the violent upheavals caused by the coronavirus pandemic, the insurance company Talanx is sticking to its profit target for 2020. “We don’t know how long the crisis will last, how profound the effects will be, and how deep a recession will be,” said CEO Torsten Leue on Monday when he presented the balance sheet in Hanover. However, the direct burden on the insurer with its brands such as HDI and the reinsurer Hannover Re is likely to be limited. Leue already announced an “at least stable” dividend for the current financial year.
However, the news on the stock exchange did not stop investors’ uncertainty. Talanx shares declined by eleven percent by lunchtime. Her course followed the downward trend in the SDAX small-value index. The Talanx course has sunk more than 40 percent since the turn of the year.
The Talanx management continues to aim for a net profit of 900 to 950 million euros for the current year. The goal, however, is subject to the proviso that the major losses remain within expectations and “there are no larger distortions on the currency and capital markets than currently caused by the Corona virus”. On average, analysts recently even assumed a good one billion euros.
With regard to the recent stock market turmoil, the board pointed out that the insurer had invested less than one percent of its financial assets in shares. “We wanted to be able to better control the robustness in shock scenarios”, CFO Immo Querner justified the strategy. In addition, according to Leue, 95 percent of the bonds in which the Group has invested money have an investment grade rating, i.e. a high credit rating.
In the insurance business, the Management Board expects a total burden in the low three-digit million euro range. Crisis consequences such as the cancellation of large events and business interruptions in companies could hit Hannover Re up to a total of around EUR 200 million. Since the reinsurer is only half owned by Talanx, only half of it would impact on the net result of the parent company.
In addition, companies that would have insured against business interruption, but usually could not count on benefits from their insurer. Because pandemics are mostly excluded as a cause in the contracts. In the primary insurance business, Leue only expects a low to medium double-digit million loss if many major events were canceled.
Thanks to the restructuring of the loss-making fire industry insurance and a record profit from Hannover Re, Talanx earned more than ever in the past year. The surplus rose by 31 percent year-on-year to EUR 923 million. The shareholders are now to receive a dividend of EUR 1.50, five cents more than in the previous year. However, analysts had expected a somewhat higher payout. Leue announced that the dividend should remain at least stable for 2020./stw/eas/jha/
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