Talanx Q3 Earnings Call Highlights

Key Points

• Talanx raised its 2026 net income outlook to more than EUR 2.8 billion after nine-month net income climbed 12% to EUR 2.195 billion, with records across all four segments. It expects net income to exceed EUR 3 billion in 2027.
• The group booked its full EUR 2.4 billion large-loss budget despite only EUR 1.7 billion in notified claims, leaving roughly EUR 750 million unused. Talanx plans fourth-quarter actions to strengthen resilience and expects full-year return on equity slightly above 19%.
• Primary insurance profit contribution rose 18%, while reinsurance profit contribution increased 8% to more than EUR 1 billion. Investment income was up 13% year over year, and Talanx expects a 2026 dividend clearly above EUR 4 per share.

Talanx ETR: TLX raised its 2026 net income outlook to more than EUR 2.8 billion after reporting record earnings for the first nine months, and said it expects to exceed EUR 3 billion in 2027 despite softer insurance markets.

Chief Financial Officer Jan Wicke said nine-month net income rose 12% to EUR 2.195 billion, with record results in each of the group’s four segments. Insurance revenue increased 3% in euro terms and 4.1% on a currency-adjusted basis, while return on equity was 20.6%.

The group’s combined ratio, a measure of claims and expenses relative to premiums, was 89%. Wicke said Talanx had booked its full large-loss budget for the first nine months even though reported claims were below that allocation.

Loss budget and earnings outlook

Talanx included EUR 2.4 billion in its nine-month large-loss budget, against EUR 1.7 billion in notified claims. The unused amount of roughly EUR 750 million would translate into approximately EUR 400 million of net income, assuming no late claims notifications, Wicke said.

The largest event was an earthquake in Colombia, which resulted in a EUR 270 million net loss for the group. Wicke said the Retail International business bore EUR 9 million of that loss after reinsurance, despite gross claims of more than EUR 250 million in the unit.

Wicke said Talanx plans to take measures that would reduce its fourth-quarter result, including realizing additional losses on fixed-income holdings and further strengthening its resilience. The company expects full-year return on equity slightly above 19%.

For 2027, Wicke expects investment income to contribute more strongly to growth than the insurance service result, partly because of softening market conditions. He said it was too early to say whether Talanx would continue building resilience next year and suggested revisiting the question after Hannover Re’s January renewals update.

Primary insurance and reinsurance grow profits

Primary insurance contributed 53% of nine-month group profit, with its net income contribution rising 18%. Reinsurance, through Talanx’s stake in Hannover Re, accounted for the remaining 47%. Its profit contribution rose 8% to more than EUR 1 billion.

Corporate & Specialty’s revenue was flat, but its net income contribution increased 11% to EUR 455 million. The segment posted a 90.3% combined ratio. Wicke said claims inflation was slightly higher than achievable price increases, particularly in property and cyber insurance.

Retail International increased revenue 9% and its net income contribution 18% to EUR 561 million. Its combined ratio was 91.4%, despite the Colombia earthquake and flooding in Chile. Poland and Brazil were the main drivers of third-quarter growth, followed by Mexico, Wicke said.

In Poland, Wicke said stronger price competition was beginning to reduce the market’s contribution to the insurance service result. He expects Retail International’s earnings growth to be lower in coming years than the 18% recorded in the first nine months.

Retail Germany’s net income contribution rose 37%, helped primarily by cost-efficiency measures and a smaller tax benefit. Revenue was stable despite the loss of the Targobank agreement, which had accounted for roughly EUR 100 million in insurance revenue.

Investment portfolio and capital

Talanx’s solvency ratio stood at 241%, compared with 243% at the beginning of the year. Equity increased by roughly EUR 1.5 billion over the first nine months, Wicke said.

The group has been selling bonds purchased during the low-interest-rate period at a loss and reinvesting in securities with higher coupons. Wicke said the strategy should increase investment income in future years; nine-month investment income was already 13% higher than a year earlier.

Wicke said Talanx expects to pay a dividend clearly above EUR 4 per share for 2026, with the amount to be announced alongside full-year results on March 18, 2027. He said the group’s capital base was not a restriction on a higher payout.

On acquisitions, Wicke said Talanx is looking predominantly for non-life targets in Latin America and Europe, as well as opportunities in Corporate & Specialty with a focus on the United States. He said the company would also examine suitable opportunities in Germany, although nothing was readily available.

About Talanx (ETR:TLX)

Talanx AG provides insurance and reinsurance products and services worldwide. It offers life, casualty, liability, motor, aviation, legal protection, fire, burglary and theft, water damage, plate glass, windstorm, comprehensive householders, comprehensive home-owners, hail, livestock, engineering, omnium, marine, business interruption, travel assistance, aviation and space liability, financial lines, and other property insurance, as well as coverage for fire and fire loss of profits insurance. The company also provides bancassurance products; unit-linked life insurance, annuity and risk insurance, and long term and occupational disability insurance products; and personal accident insurance.

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