Quarterly Report • Nov 20, 2017
Quarterly Report
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Quarterly Statement as at 30 September 2017
| Unit | 6M 2017 | Q3 2017 | 9M 2017 | 6M 2016 | Q3 2016 | 9M 2016 | 9M 2017 v. 9M 2016 |
+/– % | |
|---|---|---|---|---|---|---|---|---|---|
| Gross written premiums | EUR million | 17,553 | 7,686 | 25,239 | 16,427 | 7,322 | 23,749 | +6.3 | |
| by region | |||||||||
| Germany | % | 29 | 22 | 27 | 31 | 25 | 29 | –2.0 | pt. |
| United Kingdom | % | 7 | 8 | 8 | 9 | 8 | 9 | –1.0 | pt. |
| Central and Eastern Europe (CEE), including Turkey |
% | 9 | 10 | 9 | 8 | 8 | 8 | +1.0 | pt. |
| Rest of Europe | % | 16 | 15 | 15 | 16 | 14 | 16 | –1.0 | pt. |
| USA | % | 16 | 19 | 17 | 14 | 18 | 15 | +2.0 | pt. |
| Rest of North America | % | 2 | 2 | 2 | 2 | 3 | 2 | — | pt. |
| Latin America | % | 8 | 9 | 8 | 7 | 9 | 8 | — | pt. |
| Asia and Australia | % | 11 | 13 | 12 | 11 | 13 | 11 | +1.0 | pt. |
| Africa Gross written premiums by type and class of insurance |
% | 2 | 2 | 2 | 2 | 2 | 2 | — | pt. |
| Property/casualty primary insurance | EUR million | 5,590 | 1,917 | 7,507 | 5,183 | 1,769 | 6,952 | +8.0 | |
| Primary life insurance | EUR million | 3,271 | 1,413 | 4,684 | 3,305 | 1,510 | 4,815 | –2.7 | |
| Property/Casualty Reinsurance | EUR million | 5,193 | 2,679 | 7,872 | 4,354 | 2,403 | 6,757 | +16.5 | |
| Life/Health Reinsurance | EUR million | 3,499 | 1,677 | 5,176 | 3,585 | 1,640 | 5,225 | –0.9 | |
| Net premiums earned | 13,440 | 6,844 | 20,284 | 12,810 | 6,324 | 19,134 | +6.0 | ||
| Underwriting result | EUR million | –940 | –1,180 | –2,120 | –784 | –384 | –1,168 | –81.5 | |
| Net investment income | EUR million | 2,085 | 1,226 | 3,311 | 1,962 | 1,019 | 2,981 | +11.1 | |
| Net return on investment 1) | % | 3.7 | — | 3.9 | 3.5 | — | 3.5 | +0.4 pt. | |
| Operating profit/loss (EBIT) | EUR million | 1,125 | –21 | 1,104 | 1,0676) | 5846) | 1,6516) | –33.1 | |
| Net income (after financing costs and taxes) | EUR million | 784 | 18 | 802 | 6916) | 4026) | 1,0936) | –26.6 | |
| of which attributable to shareholders of Talanx AG |
EUR million | 463 | –19 | 444 | 4036) | 2336) | 6366) | –30.2 | |
| Return on equity 2) 3) | % | 10.3 | –0.9 | 6.6 | 9.5 | 10.57) | 9.8 | –3.2 pt. | |
| Earnings per share Basic earnings per share |
1.83 | –0.08 | 1.75 | 1.59 | 0.92 | 2.51 | –30.3 | ||
| Diluted earnings per share | EUR EUR |
1.83 | –0.08 | 1.75 | 1.59 | 0.92 | 2.51 | –30.3 | |
| Combined ratio in property/casualty primary insurance and Property/Casualty Reinsurance 4) |
% | 97.0 | 114.4 | 103.1 | 96.8 | 96.4 | 96.6 | +6.5 pt. | |
| Combined ratio of property/ casualty primary insurers 5) |
% | 97.6 | 109.0 | 101.6 | 98.8 | 98.7 | 98.7 | +2.9 | pt. |
| Combined ratio of Property/ Casualty Reinsurance |
% | 96.5 | 118.2 | 104.3 | 95.4 | 94.5 | 95.1 | +9.2 | pt. |
| EBIT margin primary insurance and reinsurance | |||||||||
| EBIT margin primary insurance 5) | % | 5.8 | –0.7 | 3.7 | 5.4 | 4.8 | 5.2 | –1.5 | pt. |
| EBIT margin Property/Casualty Reinsurance | % | 14.9 | –1.3 | 9.1 | 15.27) | 16.1 | 15.5 | –6.4 | pt. |
| EBIT margin Life/Health Reinsurance | % | 4.9 | 2.3 | 4.0 | 5.2 | 7.2 | 5.8 | –1.8 | pt. |
| 30.9.2017 | 31.12.2016 | +/– % | |||||||
| Policyholders' surplus | EUR million | 15,903 | 16,671 | –4.6 | |||||
| Equity attributable to shareholders of Talanx AG |
EUR million | 8,717 | 9,078 | –4.0 | |||||
| Non-controlling interests | EUR million | 5,202 | 5,610 | –7.3 | |||||
| Hybrid capital | EUR million | 1,984 | 1,983 | +0.1 | |||||
| Assets under own management | EUR million | 107,172 | 107,174 | –0.0 | |||||
| Total investments | EUR million | 117,926 | 118,855 | –0.8 | |||||
| Total assets | EUR million | 157,569 | 156,6376) | +0.6 | |||||
| Carrying amount per share at end of period | EUR | 34.48 | 35.91 | –4.0 | |||||
| Share price at end of period | EUR | 34.21 | 31.77 | +7.7 | |||||
| Market capitalisation of Talanx AG at end of period | EUR million | 8,648 | 8,031 | +7.7 | |||||
| Employees | Full-time equivalents |
20,457 | 20,039 | +2.1 |
1) Ratio of annualised net investment income excluding interest income on funds withheld and contract deposits and profit on investment contracts to average assets under own management (30 September 2017 and 31 December 2016).
2) Ratio of annualised net income for the reporting period excluding non-controlling interests to average equity excluding non-controlling interests.
3) Ratio of annualised net income for the quarter excluding non-controlling interests to average equity excluding non-controlling interests at the beginning and end of the quarter.
4) Combined ratio taking into account interest income on funds withheld and contract deposits, before elimination of intra-Group cross-segment transactions.
5) Excluding figures from the Corporate Operations segment.
6) Adjusted in accordance with IAS 8 or IFRS 3.45 within the valuation period; for information about IFRS 3.45, see our comments in the half-yearly interim report.
7) Adjusted following the adjustment described in footnote 6.
Guideline on Alternative Performance Measures – for further information on the calculation and definition of specific alternative performance measures please refer to http://www.talanx.com/investor-relations/ueberblick/midterm-targets/definitions_apm?sc_lang=en
| EUR million | |||
|---|---|---|---|
| 9M 2017 |
9M 20161) |
+/–% | |
| Gross written premiums | 25,239 | 23,749 | +6.3 |
| Net premiums earned | 20,284 | 19,134 | +6.0 |
| Underwriting result | –2,120 | –1,168 | –81.5 |
| Net investment income | 3,311 | 2,981 | +11.1 |
| Operating profit (EBIT) | 1,104 | 1,651 | –33.1 |
| Combined ratio (net, property/ casualty only) in % |
103.1 | 96.6 | +6.5 pt. |
1) Adjusted in accordance with IAS 8 or IFRS 3.45 within the valuation period; for information about IFRS 3.45, see our comments in the half-yearly interim report.
| % | |||
|---|---|---|---|
| 9M 2017 |
9M 2016 1) |
+/–% | |
| Gross premium growth (adjusted for currency effects) |
6.7 | –0.4 | +7.1 pt. |
| Group net income in EUR million | 444 | 636 | –30.2 |
| Return on equity2) | 6.6 | 9.8 | –3.2 pt. |
| Net return on investment3) | 3.9 | 3.5 | +0.4 pt. |
1) Adjusted in accordance with IAS 8 or IFRS 3.45 within the valuation period; for information about IFRS 3.45, see our comments in the half-yearly interim report.
2) Ratio of annualised net income for the reporting period excluding non-controlling interests to average equity excluding non-controlling interests.
3) Annualised ratio of net investment income excluding interest income on funds withheld and contract deposits and profit on investment contracts to average assets under own management.
The Talanx Group increased its gross written premiums by 6.3% (6.7% when adjusted for currency effects) to EUR 25.2 (23.7) billion in the first nine months of the year. The Retail International Division recorded a double-digit percentage increase in premiums, with gross premiums also up slightly in the Property/Casualty segment of the Retail Germany Division due to brisker retail business. The 4.3% rise in gross premiums in the Industrial Lines Division can chiefly be attributed to increased premium income in the international branches. The Property/Casualty Reinsurance segment also saw double-digit premium growth. Net premiums earned amounted to EUR 20.3 (19.1) billion, up 6.0% year-on-year. The retention ratio increased slightly to 88.0% (87.7%).
The underwriting result slipped to EUR –2,120 (–1,168) million because of significant large losses in the third quarter of the year. The Industrial Lines and Property/Casualty Reinsurance segments (EUR 315 million and EUR 894 million respectively) were hit particularly hard, meaning that the figures forecast for large losses over the entire year have already been exceeded. The highest single losses were caused by the hurricanes in the the USA and Caribbean and the earthquakes in Mexico, which caused a combined loss of some EUR 900 million. This pushed the Group's combined ratio up 6.5 percentage points year-on-year to 103.1% (96.6%). The slightly lower net expense ratio and the improvements in the property/ casualty retail business in Germany failed to offset the increase in the net loss ratio.
Net investment income rose by 11.1% to EUR 3,311 (2,981) million. Extraordinary net investment income also increased, due not least to the realisation of gains to finance the additional interest reserve in the Retail Germany Division and the sale of securities in the Property/Casualty Reinsurance segment. The Group's net return on investment was 3.9% (3.5%) in the first nine months of 2017, up 0.4 percentage points year-on-year.
The operating profit (EBIT) fell by more than 33% to EUR 1,104 (1,651) million due to the large-loss burden, with the improvements in the Property/Casualty segment of the Retail Germany Division and in the International Division failing to compensate for the poorer result in the other segments. Group net income also fell by 30.2% to EUR 444 (636) million due to the high large-loss burden. The return on equity was 6.6% (9.8%), below the 7.5% target for the whole of 2017.
Talanx divides its business into seven reportable segments: Industrial Lines, Retail Germany – Property/Casualty and Life Insurance – Retail International, Property/Casualty Reinsurance, Life/Health Reinsurance and Corporate Operations. Please refer to the section entitled "Segment reporting" in the Notes to the Talanx 2016 Group Annual Report for details of these segments' structure and scope of business.
| EUR million | |||
|---|---|---|---|
| 9M 2017 |
9M 2016 |
+/–% | |
| Gross written premiums | 3,536 | 3,390 | +4.3 |
| Net premiums earned | 1,764 | 1,630 | +8.2 |
| Underwriting result | –179 | 33 | –642.4 |
| Net investment income | 203 | 165 | +23.0 |
| Operating profit (EBIT) | 25 | 204 | –87.7 |
%
| 9M 2017 |
9M 2016 |
+/–% | |
|---|---|---|---|
| Gross premium growth (adjusted for currency effects) |
4.4 | –0.5 | +4.9 pt. |
| Retention | 54.4 | 52.9 | +1.5 pt. |
| Combined ratio (net)1) | 110.1 | 98.0 | +12.1 pt. |
| EBIT margin2) | 1.4 | 12.5 | –11.1 pt. |
| Return on equity3) | 0.8 | 8.2 | –7.4 pt. |
1) Including net interest income on funds withheld and contract deposits.
2) Operating profit (EBIT)/net premiums earned.
3) Ratio of annualised net income for the reporting period excluding non-controlling interests to average equity excluding non-controlling interests.
Gross written premiums for the division amounted to EUR 3.5 (3.4) billion as at 30 September 2017, an increase of around 4.3% (4.4% after adjustment for currency effects). The highest increases in premium income were achieved by the international branches of HDI Global SE, especially those in Australia and Hong Kong, as well as the subsidiary in the USA. Additional new domestic business and the acquisition of a new portfolio in the motor insurance line also contributed to the increase in premium income. The retention ratio in the division was up year-on-year at 54.4% (52.9%). This development was largely due to lower payments to external reinsurers in the third-party liability line as well as significant growth in the motor insurance line with a high level of retention. This pushed net premiums earned up by 8.2% compared with the previous-year quarter, to EUR 1,764 (1,630) million, outstripping gross growth.
The Industrial Line Division's net underwriting result was significantly lower year-on-year at EUR –179 (33) million. The result was negatively impacted by extraordinarily high expenditure for large losses due to natural disasters in North and Central America and an unusual accumulation of burdens totalling EUR 315 (123) million, mainly from the international property insurance business. This development led to an increase in the loss ratio (net) to 88.1% (75.6%). At 22.1% (22.4%), the net expense ratio was slightly lower year-on-year. The higher project expenditure resulting from the growth recorded was offset by higher premium volume.
Net investment income rose by 23.0% to EUR 203 (165) million. This significant increase was due to a positive earnings contribution resulting from the early repayment of fixed-income securities (collateralised loan obligations) and slightly higher income from equities and real estate. In addition, earnings were generated with equities, while lower impairment losses also contributed to the positive developments here.
At EUR 25 (204) million, the division's operating profit was significantly lower year-on-year due to the negative claims experience in the third quarter of 2017. The positive trend in premiums and net investment income only went some way towards offsetting the high large losses caused by natural disasters. The Group net income amounted to EUR 14 (132) million.
Since the second quarter of 2016, the Talanx Group has managed the Retail Germany Division on the basis of the Property/Casualty and Life Insurance segments, and has reported accordingly about the performance of these two segments.
EUR million
| 9M 2017 |
9M 2016 |
+/–% | |
|---|---|---|---|
| Gross written premiums | 1,284 | 1,260 | +1.9 |
| Net premiums earned | 1,049 | 1,049 | — |
| Underwriting result | 2 | –33 | +106.1 |
| Net investment income | 71 | 69 | +2.9 |
| Operating profit (EBIT) | 49 | –9 | +644.4 |
| % | |||
|---|---|---|---|
| 9M 2017 |
9M 2016 |
+/–% | |
| Gross premium growth | 1.9 | –1.5 | +3.4 pt. |
| Combined ratio (net)1) | 100.3 | 103.2 | –2.9 pt. |
| EBIT margin2) | 4.6 | –0.9 | +5.5 pt. |
1) Including net interest income on funds withheld and contract deposits. 2) Operating profit (EBIT)/net premiums earned.
Continued growth of up to 2.9% is to be assumed in property/ casualty insurance for the current year. Increases are expected in particular in motor insurance and comprehensive homeowners' insurance.
A 1.9% increase in written premium income to EUR 1.3 (1.3) billion was recorded in the Property/Casualty Insurance segment. The higher premium income was in particular due to the expansion of unemployment insurance. Overall, the share of the total Retail Germany Division attributable to the property/casualty insurers therefore increased to 27.4% (26.4%).
The underwriting result rose from EUR –33 million to EUR 2 million in the current financial year due to positive claim trends. This was caused by an improved run-off result and a lower burden from natural catastrophes and large losses.
The positive trend in the underwriting result led to a 2.9 percentage point decline in the combined ratio (net), from 103.2% to 100.3%.
At EUR 71 (69) million, net investment income was at the prior year's level, with this development due to a higher level of extraordinary net investment income.
EBIT of EUR 49 (–9) million was significantly higher than in the same period in the previous year. This development was due to positive claim trends, operating cost reductions and the discontinuation of the restructuring outlay for our investment and modernisation programme. In line with this, the EBIT margin increased to 4.6% (–0.9%).
| EUR million | |||
|---|---|---|---|
| 9M 2017 |
9M 2016 |
+/–% | |
| Gross written premiums | 3,397 | 3,515 | –3.4 |
| Net premiums earned | 2,493 | 2,557 | –2.5 |
| Underwriting result | –1,310 | –1,206 | –8.6 |
| Net investment income | 1,398 | 1,334 | +4.8 |
| Operating profit (EBIT) | 67 | 79 | –15.2 |
| New business measured in annual premium equivalent |
280 | 296 | –5.4 |
| Single premiums | 1,005 | 1,049 | –4.2 |
| Regular premiums | 179 | 191 | –6.3 |
| New business by product in annual premium equivalent |
280 | 296 | –5.4 |
| Capital-efficient products1) | 102 | n.a. | — |
| Capital-inefficient products1) | 78 | n.a. | — |
| Biometric products1) | 100 | n.a. | — |
1) Comparison with prior year not possible due to new product structure.
| % | |
|---|---|
| 9M | 9M | ||
|---|---|---|---|
| 2017 | 2016 | +/–% | |
| Gross premium growth | –3.4 | –9.0 | +5.6 pt. |
| EBIT margin1) | 2.7 | 3.1 | –0.4 pt. |
1) Operating profit (EBIT)/net premiums earned.
In life insurance, the current financial year continues to be influenced by persistently low market interest rates and a low tendency for consumers to save. Due to these circumstances, a decline in premiums for life insurance of around 0.7% and a decrease in premiums for new business measured in APE of approximately 1.0% are expected.
The life insurance segment registered a decline in premiums of 3.4% down to EUR 3.4 (3.5) billion at the end of September – including the savings elements of premiums from unit-linked life insurance. In line with expectations, regular premiums fell by EUR 76 million due to an increase in policies that matured in 2016, while single premiums declined by EUR 44 million. In contrast, premium volume for residual debt insurance increased. The retention ratio in the life insurance business fell to 95.3% (95.5%). Allowing for the savings elements under our unit-linked products and the change in the unearned premium reserve, the net premiums earned in the Life Insurance segment decreased by 2.5%, from EUR 2.6 to EUR 2.5 billion. The Life Insurance segment share in the overall Retail Germany Division declined to 72.6% (73.6%).
New business in life insurance products – measured in the internationally applied metric of the annual premium equivalent (APE) – declined from EUR 296 million to EUR 280 million due to the switch to capital-efficient and risk products and a limitation on the single premium business. The share of capital-efficient products rose to 72% in the current financial year.
In the current financial year, the underwriting result decreased to EUR –1.3 (–1.2) billion. This was partly due to the unwinding of discounts on technical provisions and policyholder participation in net investment income. These expenses were offset by investment income, which is not recognised in the underwriting result.
Net investment income rose by 4.8% to EUR 1.4 (1.3) billion, thanks in particular to the realisation of unrealised gains to finance the additional interest reserve. The decline in ordinary net investment income by 3.1% to EUR 1.0 (1.0) billion was influenced by persistently low interest rates.
The operating profit (EBIT) was negatively impacted by the provision for premium refunds resulting from tax income at a number of our companies. As a result, the operating profit declined to EUR 67 (79) million.
| % | |||
|---|---|---|---|
| 9M 2017 |
9M 2016 |
+/–% | |
| Return on equity1) | 4.8 | 1.9 | +2.9 pt. |
non-controlling interests to average equity excluding non-controlling interests.
After adjustment for taxes on income, financing costs and noncontrolling interests, the Group net income more than doubled to EUR 90 (39) million, causing the return on equity to rise by 2.9 percentage points to 4.8%.
KEY FIGURES FOR THE RETAIL INTERNATIONAL DIVISION
EUR million
| 9M | 9M | ||
|---|---|---|---|
| 2017 | 2016 | +/–% | |
| Gross written premiums | 4,065 | 3,669 | +10.8 |
| Net premiums earned | 3,422 | 3,099 | +10.4 |
| Underwriting result | 31 | –3 | +1,133.3 |
| Net investment income | 255 | 244 | +4.5 |
| Operating profit (EBIT) | 179 | 163 | +9.8 |
MANAGEMENT METRICS FOR THE RETAIL INTERNATIONAL DIVISION
| % | |||
|---|---|---|---|
| 9M 2016 |
9M 2016 |
+/–% | |
| Gross premium growth (adjusted for currency effects) |
9.3 | 11.9 | –2.6 pt. |
| Combined ratio (net, property/casualty only)1) |
95.9 | 97.0 | –1.1 pt. |
| EBIT margin2) | 5.2 | 5.3 | –0.1 pt. |
| Return on equity3) | 7.0 | 6.3 | +0.7 pt. |
1) Including net interest income on funds withheld and contract deposits.
2) Operating profit (EBIT)/net premiums earned.
3) Ratio of annualised net income for the reporting period excluding non-controlling interests to average equity excluding non-controlling interests.
This division bundles the activities of the international retail business in the Talanx Group and is active in both Europe and Latin America.
Compared to the first nine months of 2016, the division's gross written premiums (including premiums from unit-linked life and annuity insurance) increased by 10.8% to EUR 4.1 (3.7) billion. Adjusted for currency effects, gross premiums increased by 9.3 % on the comparison period.
The premium volume increased in both regions in the reporting period. Compared to the same period in the previous year, in the Latin America region, the gross written premiums increased by 14.0% to EUR 1.2 billion. There was an increase of 8.4% when adjusted for currency effects, which was essentially due to the Mexican company HDI Seguros S.A. The premium volume for the company increased, particularly in motor insurance and from bank sales, which resulted both from an increased number of insured vehicles and from higher average premiums. Chile, where the premium volume was similarly increased in motor insurance as well as through a new bank sales channel, also had positive effects on the gross written premiums for the Latin America region. In addition, there was also increased demand here for building insurance as a result of natural disasters. Of the premium volume generated in the region, 53% was attributable to the Brazilian company HDI Seguros S.A. Taking into account currency effects, gross written premiums for the company increased by 13.8% to EUR 656 million, primarily thanks to ongoing price increases in motor insurance; after adjustment for currency effects, the increase was 2.1%.
In the Europe region, gross written premiums rose by 9.6% to EUR 2.8 billion, driven primarily by a 29.1% increase in premiums to EUR 871 million at the Polish property insurer TUiR warta S.A. The Polish motor insurance market has been in a "hard" market cycle since the second half of 2016; this has resulted in an increase in average premiums in motor liability insurance. An increase in the number of insured vehicles to over 4.7 (approx. 3.8) million also contributed to this positive trend. Gross written premiums at HDI Assicurazioni S.p.A. in Italy rose by 4.1%, whereby this development was primarily due to the first-time full nine-month recognition of life insurance premiums from the Italian company CBA Vita S.p.A., which HDI Assicurazioni S. p.A. acquired on 30 June 2016. This enabled the overall negative trend in the single premium business from other bank sales channels to be more than offset. Adjusted for currency effects, the growth in premium volume in Europe stood at 9.9%.
As compared to the first nine months of 2016, the combined ratio of the property insurance companies improved by 1.1 percentage points to 95.9%. The expense ratio for the division was 2.1 percentage points lower than in the previous year, at 29.0% (31.1%). This resulted from a decline in both the acquisition expense ratio and the administrative expense ratio (by 0.7 percentage points to 5.5%) due to cost optimisations, primarily at the Polish company TUiR warta S.A. as well as in Brazil. By contrast, the loss ratio rose by 1.2 percentage points due to negative effects, including the natural disasters in Chile in the first quarter.
Overall the underwriting result recorded in this division was EUR 31 million, which was well above the previous year's level (EUR –3 million).
The division's net investment income amounted to EUR 255 million in the first nine months of 2017, a year-on-year rise of 4.5%. Ordinary net investment income climbed by 3.2%, chiefly due to larger investment portfolios overall than in the same period of the previous year. The reporting period was also positively impacted by higher extraordinary net income in Italy. The average return on assets under own management declined by 0.1 percentage points to 3.6%.
Compared with the same period of the previous year, in the first nine months of 2017, operating profit (EBIT) in the Retail International Division increased by 9.8% to EUR 179 million. While the Europe region, with a 16.1% year-on-year rise in EBIT, contributed EUR 137 (118) million to the division's operating profit, EUR 49 (53) million of EBIT was generated in the Latin America region. The decline in the EBIT in Latin America resulted primarily from the natural catastrophes in Chile. The Group net income after minority interests rose by 13.4% to EUR 110 (97) million. The return on equity rose by 0.7 percentage points to 7.0% compared to the same period in the previous year.
EUR million
| 9M 2017 |
9M 2016 |
+/–% | |
|---|---|---|---|
| Gross written premiums | 4,065 | 3,669 | +10.8 |
| Property/casualty | 2,733 | 2,347 | +16.4 |
| Life | 1,332 | 1,322 | +0.8 |
| Net premiums earned | 3,422 | 3,099 | +10.4 |
| Property/casualty | 2,322 | 2,005 | +15.8 |
| Life | 1,100 | 1,094 | +0.5 |
| Underwriting result | 31 | –3 | +1,133.3 |
| Property/casualty | 94 | 61 | +54.1 |
| Life | –63 | –64 | +1.6 |
| Others | — | — | — |
| Net investment income | 255 | 244 | +4.5 |
| Property/casualty | 152 | 138 | +10.1 |
| Life | 106 | 107 | –0.9 |
| Others | –3 | –1 | –200.0 |
| New business by product in annual premium equivalent (life) |
162 | 161 | +0.6 |
| Single premiums | 1,137 | 1,112 | +2.2 |
| Regular premiums | 48 | 50 | –4.0 |
| New business by product in annual premium equivalent (life) |
162 | 161 | +0.6 |
| Capital-efficient products 1) | 66 | n.a. | — |
| Capital-inefficient products1) | 51 | n.a. | — |
| Biometric products1) | 45 | n.a. | — |
1) Comparison with prior year not possible due to new product structure.
EUR million
| 9M | 9M | ||
|---|---|---|---|
| 2017 | 2016 | +/–% | |
| Gross written premiums | 4,065 | 3,669 | +10.8 |
| of which Europe | 2,819 | 2,571 | +9.6 |
| of which Latin America | 1,229 | 1,078 | +14.0 |
| Net premiums earned | 3,422 | 3,099 | +10.4 |
| of which Europe | 2,370 | 2,136 | +11.0 |
| of which Latin America | 1,051 | 961 | +9.4 |
| Underwriting result | 31 | –3 | +1,133.3 |
| of which Europe | –3 | –9 | +66.7 |
| of which Latin America | 28 | 6 | +366.7 |
| Net investment income | 255 | 244 | +4.5 |
| of which Europe | 189 | 173 | +9.2 |
| of which Latin America | 69 | 72 | –4.2 |
| Operating profit (EBIT) | 179 | 163 | +9.8 |
| of which Europe | 137 | 118 | +16.1 |
| of which Latin America | 49 | 53 | –7.5 |
EUR million
| 9M 2017 |
9M 2016 1) |
+/–% |
|---|---|---|
| 8,200 | 7,121 | +15,2 |
| 6,754 | 5,925 | +14.0 |
| –306 | 274 | –211.7 |
| 965 | 663 | +45.6 |
| 612 | 919 | –33.4 |
1) Adjusted in accordance with IAS 8 within the valuation period.
| % | |||
|---|---|---|---|
| 9M 2017 |
9M 2016 |
+/–% | |
| Gross premium growth (adjusted for currency effects) |
16.1 | –1.5 | +17.6 pt. |
| Combined ratio (net)1) | 104.3 | 95.1 | +9.2 pt. |
| EBIT margin2) | 9.1 | 15.5 | –6.4 pt. |
1) Including net interest income on funds withheld and contract deposits. 2) Operating profit (EBIT)/net premiums earned.
The global market environment for property/casualty reinsurance has not changed much overall and remains challenging. However, recent natural disasters are likely to generate extensive price movements. The supply of reinsurance capacity has significantly exceeded demand thus far, and the additional capacities from the market for CAT bonds (ILS) has led to sustained pressure on prices and conditions. Nevertheless, higher demand has been observed in certain regions in Asia and North America, in lines such as Cyber, in parts of certain speciality lines and in the capital controlling coverage sector.
As expected, the treaty renewal rounds in the Property/Casualty Reinsurance segment on 1 June and 1 July 2017 were marked by continuous competition. During this time, parts of the North America business, the area of natural disaster risks and the credit and surety business were renewed. The main renewal of the business in Australia and New Zealand was also carried out, whereby extensive price erosion was observed in some cases, although significant price increases were also achieved in property/casualty programmes. We are generally satisfied with the treaty renewal for the North American market: we increased our premium volume by approximately 15%. Among other things, this development was due to the fact that we were able to renew most of our business with selected customers. In the case of the natural disaster business, premium erosion occurred in most markets, but this was offset by the positive development of rates in Australia. Our credit and surety business grew. Here, we underwrote new programmes and increased our shares in existing policies. We achieved solid growth of 10% in all the components of the Property/ Casualty Reinsurance portfolio that were up for renewal.
Gross written premiums for the entire portfolio increased by 15.2% to EUR 8.2 (7.1) billion as at 30 September 2017. At constant exchange rates, growth would have amounted to 16.1%. Retention rose to 89.2% (88.3%) year-on-year. Net premiums earned increased by 14.0% to EUR 6.8 (5.9) billion; growth would have amounted to 14.9% when adjusted for currency effects.
After recording very moderate large losses in the first half of the year, we experienced a third quarter marked by an extraordinarily high number of losses resulting from three hurricanes and two earthquakes. After Hurricane "Harvey" caused extensive destruction in Texas and neighbouring states, Hurricane "Irma" devastated Florida and the Caribbean, while Hurricane "Maria" caused major damage in Puerto Rico in particular. These three events alone generated a burden in the amount of EUR 651 million (net). The two devastating earthquakes in Mexico in September led to a combined loss of EUR 72 million. All in all, our large loss burden totalled EUR 894 (393) million as at 30 September 2017. This figure was around EUR 270 million higher than our planned large loss budget for the first nine months of the year.
As early as the second quarter of 2017, extraordinary burdens in our third-party liability insurance business in the UK were offset by reversals of conservatively calculated IBNR reserves. We also benefited in the third quarter from positive run-offs of loss reserves. As a result of the large losses incurred, the underwriting result for the Property/ Casualty Reinsurance segment fell to EUR –306 (274) million. The combined ratio was thus 104.3% (95.1%), which means the target of 96% was not reached. The combined ratio for the third quarter alone was 118.2% (94.5%).
As a result of the high realisation of gains, our net investment income from assets under own management in the Property/ Casualty Reinsurance segment rose to EUR 952 (644) million. Total net investment income stood at EUR 965 (663) million.
The operating profit (EBIT) for the Property/Casualty Reinsurance segment totalled EUR 612 (919) million as at 30 September 2017. This represents a decrease of 33.4%. The EBIT margin was lower than the target level of at least 10%, at 9.1% (15.5%).
EUR million 9M 2017 2016 1) +/–% Gross written premiums 5,284 5,334 –0.9 Net premiums earned 4,787 4,841 –1.1 Underwriting result –363 –237 –53.2 Net investment income 433 494 –12.3 Operating profit (EBIT) 194 282 –31.2
1) Adjusted in accordance with IAS 8 within the valuation period.
| % | |||
|---|---|---|---|
| 9M 2017 |
9M 2016 |
+/–% | |
| Gross premium growth (adjusted for currency effects)1) |
0.7 | –2.0 | +2.7 pt. |
| EBIT margin 1) financial solutions | 27.4 | 19.7 | +7.7 pt. |
| EBIT margin 1) longevity solutions | 1.9 | 2.4 | –0.5 pt. |
| EBIT margin 1) mortality/morbidity | 0.3 | 4.3 | –4.0 pt. |
1) Operating profit (EBIT)/net premiums earned.
Compared to the first two quarters of 2017, business performance in the Life/Health Reinsurance segment in the third quarter was varied. Both positive and negative effects impacted business development and thus earnings.
Our business in most European markets developed as expected. In Germany, there was great interest in reinsurance solutions for optimising the capital situation within the framework of Solvency II. We are having extensive discussions with our customers in order to be able to offer them individual solvency relief solutions within the framework of the international expertise of our network.
We are satisfied with our business development in Latin American countries, including Mexico. In addition to expanding our existing business, we were able to underwrite promising new business. In Argentina in particular, the opening of the reinsurance market on 1July 2017 led to noticeable activity during the reporting period. The opening of the market allows local primary insurers to transfer up to 50% of their business to permitted reinsurers. This figure will be gradually increased to as much as 75% by 2019.
Once again, our financial solutions business in the USA developed positively and made a solid contribution to earnings. However, we are less satisfied with the development of our mortality business in the USA, where in particular the business we took over in 2009 continues to display higher than expected mortality rates. The situation has been further exacerbated by a one-off effect in the amount of approximately USD 50 million due to the withdrawal of a reinsurance treaty. This withdrawal was carried out by mutual agreement with our customer within the framework of our portfolio management activities. This means that while our business performance will be negatively affected in the current quarter, we will also be able to avoid further losses over the long term.
Gross premium income in the Life/Health Reinsurance segment stood at EUR 5.3 billion as at 30 September 2017, which corresponds to the result achieved over the same period in the prior year (EUR 5.3 billion). Growth would have amounted to 0.7% when adjusted for currency effects. Net premiums earned totalled EUR 4.8 (4.8) billion. At constant exchange rates, the increase would have amounted to 0.3%. Retention remained unchanged year-on-year (91.5%).
Net investment income amounted to EUR 433 (494) million in the reporting period. This decline was expected given the fact that interest rates remain low. Income from assets under own management accounted for EUR 266 (263) million. Accordingly, funds withheld by our cedants achieved income of EUR 167 (231) million.
As a result of these developments, the operating profit (EBIT) for the Life/Health Reinsurance segment totalled EUR 194 (282) million. The individual EBIT margins for the reporting categories were as follows: At 0.3%, the mortality and morbidity business remained below the target value of 6%. On the other hand, the target value of 2% for the financial solutions business was significantly exceeded, at 27.4%. At 1.9%, the margin result for the longevity category was only slightly lower than the target of 2%.
The Group net income in the Reinsurance Division fell to EUR 271 (404) million in the reporting period. This also led to a decline in return on equity of 4.5 percentage points to 8.7% (13.2%).
Group assets under own management remain steady at the previous year's level
The operating profit in the Corporate Operations segment declined in the first nine months of 2017 to EUR 8 (26) million. The previous year's figure had been boosted by the sale of the 25.1% stake in C-QUADRAT Investment AG, with the share sale generating profit after taxes according to IFRSs of around EUR 26 million. The Group net income attributable to shareholders of Talanx AG for this segment amounted to EUR –41 (–43) million in the first nine months of 2017.
The total investment portfolio shrank by 0.8% over the course of the first three quarters of 2017 and amounted to EUR 117.9 (118.9) billion. The portfolio of assets under own management remained unchanged year-on-year at EUR 107.2 billion (EUR 107.2 billion), while the funds withheld by ceding companies fell by 8.8% to EUR 9.7 (10.6) billion.
Fixed-income investments were again the most significant asset class at the end of the third quarter of 2017. Most reinvestments were made in this class, reflecting the existing investment structure. This asset class contributed EUR 0.6 (0.7) billion to earnings in the third quarter, which was reinvested as far as possible in the year under review.
The equity allocation ratio after derivatives (equity ratio) was 1.0% (1.5%) at the end of the quarter.
| 30.9.2017 | 31.12.2016 | |||
|---|---|---|---|---|
| Investment property | 2,540 | 2% | 2,480 | 2% |
| Shares in affiliated companies and participating interests | 152 | <1% | 139 | <1% |
| Investments in associates and joint ventures | 282 | <1% | 290 | <1% |
| Loans and receivables | ||||
| Loans incl. mortgage loans | 500 | <1% | 567 | 1% |
| Loans and receivables due from government or quasi-governmental entities, together with fixed-income securities |
28,769 | 27% | 28,858 | 27% |
| Financial assets held to maturity | 538 | 1% | 744 | 1% |
| Financial assets available for sale | ||||
| Fixed-income securities | 65,865 | 61% | 65,435 | 61% |
| Variable-yield securities | 1,755 | 2% | 2,615 | 2% |
| Financial assets at fair value through profit or loss | ||||
| Financial assets classified at fair value through profit or loss | ||||
| Fixed-income securities | 1,111 | 1% | 1,087 | 1% |
| Variable-yield securities | 68 | <1% | 19 | <1% |
| Financial assets held for trading | ||||
| Fixed-income securities | — | <1% | 3 | <1% |
| Variable-yield securities | 126 | <1% | 174 | <1% |
| Derivatives1) | 120 | <1% | 69 | <1% |
| Other investments | 5,346 | 5% | 4,694 | 4% |
| Assets under own management | 107,172 | 100% | 107,174 | 100% |
As at the reporting date, the portfolio of fixed-income investments (excluding mortgage and policy loans) remained virtually unchanged year-on-year at EUR 96.3 (96.1) billion. At 82% (81%) of total investments, this asset class continues to represent the most significant share of our investments by volume. Fixed-income investments were primarily divided into the investment categories of "Loans and receivables" and "Financial assets available for sale".
"Fixed-income securities available for sale", whose volatility impacts equity, increased further by EUR 0.5 billion to EUR 65.9 (65.4) billion, or 68% (68%) of total investments in the fixed income portfolio. German covered bonds (Pfandbriefe) and corporate bonds accounted for the majority of these investments. Valuation reserves – i.e. the balance of unrealised gains and losses – have declined from EUR 3.8 billion to EUR 3.2 billion since the end of 2016 due to the further increase in interest rates for long terms.
In the "Loans and receivables" category, investments were primarily held in government securities or securities with a similar level of security. Pfandbriefe still represent the largest item in the portfolio. Total holdings in fixed-income securities within the category "Loans and receivables" amounted to EUR 29.3 (29.4) billion at the end of the quarter and thus represent 30% (31%) of total holdings in the asset class of fixed-income investments. Off-balance-sheet valuation reserves of "Loans and receivables" (including mortgage and policy loans) decreased from EUR 4.9 billion to EUR 3.9 billion.
Investments in fixed-income securities continue to focus in 2017 on government bonds with good ratings or securities from issuers with a similar credit quality. At the reporting date, holdings of AAA-rated bonds amounted to EUR 40.1 (39.0) billion. This represents 41% (40%) of the total portfolio of fixed-income securities and loans.
The Group pursues a conservative investment policy. As a result, 76% (76%) of instruments in the fixed-income securities asset category have a minimum A rating.
The Group has only a small portfolio of investments in government bonds from countries with a rating lower than A–. These holdings have a fair value of EUR 4.5 (4.4) billion.
As far as matching currency cover is concerned, US dollardenominated investments continue to account for the largest share – 19% (20%) – of the Talanx Group's foreign currency portfolio. Sizeable positions are also held in pound sterling, Polish zloty and Australian dollars, totalling 7% (7%) of all investments. The total share of assets under own management in foreign currencies was 31% (31%) as at the reporting date.
Net unrealised gains and losses on equity holdings within the Group (excluding "Other investments") fell by EUR 103 million to EUR 148 (251) million following the realisations of gains mentioned above.
Investment property totalled EUR 2.5 (2.5) billion at the reporting date. An additional EUR 805 (830) million is held in real estate funds, which are recognised as "Financial assets available for sale".
Depreciation of EUR 38 (33) million was recognised on investment property in the reporting period. There were no impairment losses. Depreciation on real estate funds stood at EUR 19 (4) million. These impairments were not offset by any reversals of impairment losses.
The real estate ratio including investments in real estate funds was unchanged at 3%.
In the reporting period, Talanx again expanded its direct investments in infrastructure. The portfolio comprises both equity and external funding investments in wind farms, electricity networks, water companies, solar parks and public-private partnership (PPP) projects in Germany and the rest of Europe. Talanx currently has nearly EUR 1.7 (1.5) billion invested in total. We are aiming for an investment volume in the amount of about EUR 2 billion by the end of 2017.
| EUR million | ||
|---|---|---|
| 9M 2017 | 9M 2016 | |
| Ordinary investment income | 2,518 | 2,441 |
| of which current income from interest |
2,025 | 2,055 |
| of which gain/loss on investments in associates |
13 | 5 |
| Realised net gains on disposal of investments |
890 | 547 |
| Write-downs/reversals of write-downs of investments |
–137 | —138 |
| Unrealised net gains/losses on investments |
45 | 59 |
| Other investment expenses | –171 | —174 |
| Income from assets under own management |
3,145 | 2,735 |
| Net interest income from funds withheld and contract deposits |
168 | 239 |
| Net income from investment contracts | –2 | 7 |
| Total | 3,311 | 2,981 |
Ordinary investment income totalled EUR 2,518 million at the end of the quarter, an increase of EUR 77 million year-on-year. This development is due in part to high income from private equity and real estate, which more than offset the lower return on our fixed-income securities. Falling interest rates on the capital markets led to an average coupon in the fixed-income securities portfolio of 3.0%, down on the previous year's value of 3.2%.
Overall, total realised net gains on the disposal of investments in the first three quarters of the financial year were above the previous year's figure, ultimately amounting to EUR 890 (547) million. The positive net gains resulted from regular portfolio turnover in all segments, as well as from the requirement to realise unrealised gains in order to finance the additional interest reserve for life insurance and occupational pension plans required by the HGB. The year-on-year increase was largely due to the liquidation of the portfolio of listed equities held in the Hannover Re Group at the end of the third quarter.
Net impairment losses in the reporting period were ultimately unchanged on the previous year at EUR 137 (138) million in total, net of reversals of impairment losses.
1) After elimination of intra-Group transactions between the segments.
Despite the lower return on our fixed-income securities, we achieved an investment income of EUR 3,311 (2,981) million thanks to higher ordinary income from real estate and private equity as well as higher realised gains. This resulted in an annualised net return on investment of 3.9% (3.5%).
| Changes in equity | ||||
|---|---|---|---|---|
| EUR million | ||||
| 30.9.2017 | 31.12.2016 | Change | +/–% | |
| Subscribed capital | 316 | 316 | — | — |
| Capital reserve | 1,373 | 1,373 | — | — |
| Retained earnings | 6,771 | 6,668 | 103 | +1.5 |
| Accumulated other comprehensive income and other reserves | 257 | 721 | –464 | –64.4 |
| Group equity | 8,717 | 9,078 | –361 | –4.0 |
| Non-controlling interests | 5,202 | 5,610 | –408 | –7.3 |
| Total | 13,919 | 14,688 | –769 | –5.2 |
The marked reduction in accumulated other comprehensive income and other reserves compared with 31 December 2016 by EUR 464 million to EUR 257 million (–64.4%) and the dividend payment of EUR 341 (329) million to shareholders of Talanx AG in May of the reporting period were not fully absorbed by the net income for the reporting period, EUR 444 (636*) of which is attributable to our shareholders and was allocated in full to retained earnings, leading to a slight reduction of EUR 361 million (–4.0%) in the Group's equity.
The decline in other reserves of EUR 464 million is due in particular to the negative development of unrealised gains on investments of EUR –548 million (down by 16.7%) and the accumulated loss arising from currency translation of EUR –409 million (down by 220.0%), which could only be partially compensated for by the positive development of policyholder participations/shadow accounting (up by EUR 523 million). While the unrealised gains on investments fell from EUR 3,278 million to EUR 2,730 million in line with the further increase in interest rates for long terms since the end of 2016, the exchange rate development, in particular the fall in the US dollar and Brazilian real against the euro, transformed the accumulated result of the currency translation into a loss of EUR 223 million (gains of EUR 186 million).
Equity by division1) including non-controlling interests
| EUR million | ||
|---|---|---|
| 30.9.2017 | 31.12.2016 | |
| Industrial Lines | 2,152 | 2,189 |
| of which non-controlling interests | — | — |
| Retail Germany | 2,579 | 2,558 |
| of which non-controlling interests | 52 | 51 |
| Retail International | 2,314 | 2,263 |
| of which non-controlling interests | 214 | 206 |
| Reinsurance | 8,880 | 9,702 |
| of which non-controlling interests | 4,937 | 5,354 |
| Corporate Operations | –2,022 | –2,041 |
| of which non-controlling interests | — | — |
| Consolidation | 16 | 17 |
| of which non-controlling interests | –1 | –1 |
| Total equity | 13,919 | 14,688 |
| Group equity | 8,717 | 9,078 |
| Non-controlling interests in equity | 5,202 | 5,610 |
1) Equity per division is defined as the difference between the assets and liabilities of each division.
We are making the following assumptions:
than originally expected
We provide forecast figures at year-end for the key figures at the Talanx Group and its divisions that the Group uses to control its business operations. After the first nine months of financial year 2017, we continue to expect a rise in gross premiums of over 4% for the whole of the year, which can be attributed to the positive development in the Property/Casualty Reinsurance segment in particular. In the 2016 Annual Report, we expected an increase in premiums of more than 1%. In light of the high large-loss burden from natural catastrophes in the third quarter, we are now expecting a Group net income for the whole of 2017 of around EUR 650 million, which remains lower than our forecast of EUR 850 million in the second half of the year. In line with this, the return on equity is expected to be around 7.5%. This forecast is based on the assumption that the large-loss burden in the fourth quarter will not exceed the large loss budgeted for each quarter.
Together with the 9M results, Talanx is also publishing its outlook for financial year 2018. We are expecting a continued premium growth of at least 2% and a Group net income of around EUR 850 million. This should correspond to a return on equity of about 9%.
* Adjusted in accordance with IFRS 3.45 within the valuation period; see our comments in the half-yearly interim report.
| % | ||||
|---|---|---|---|---|
| Outlook for 2017 on the basis of 9M 2017 |
Outlook for 2017 on the basis of 6M 2017 |
Outlook for 2017 on the basis of Q1 2017 |
Forecast for 2017 from the 2016 Annual Report |
|
| Gross premium growth (adjusted for currency effects) |
>4 | > 4 | > 1 | > 1 |
| Group net income in EUR million |
~650 | ~850 | approx. 800 |
approx. 800 |
| Net return on investment |
≥ 3 | ≥ 3 | ≥ 3 | ≥ 3 |
| Payout rate | 35–45 | 35–45 | 35–45 | 35–45 |
| Return on equity | ~7,5 | ~ 9 | > 8 | > 8 |
In the forecast for 2017 in the 2016 Annual Report, we expected a combined ratio of around 96%, an EBIT margin of around 10% and a return on equity of 7% to 8% in the Industrial Lines Division. In light of the high large-loss burden in the third quarter, due in particular to hurricanes "Harvey", "Irma" and "Maria", the earthquake in Mexico and a continued unusual accumulation of burdens, primarily from foreign property insurance business, we are now expecting a combined ratio of around 104% and an EBIT margin of around 5%. As a result, we are expecting a return on equity of around 4%.
Management metrics for the Industrial Lines Division %
| Outlook for 2017 on the basis of 9M 2017 |
Outlook for 2017 on the basis of 6M 2017 |
Outlook for 2017 on the basis of Q1 2017 |
Forecast for 2017 from the 2016 Annual Report |
|
|---|---|---|---|---|
| Gross premium growth (adjusted for currency effects) |
≥ 2 | ≥ 2 | ≥ 2 | ≥ 2 |
| Retention | > 53 | > 53 | > 53 | > 53 |
| Combined ratio (net) | ~104 | ~96 | ~96 | ~96 |
| EBIT margin | ~5 | ~10 | ~10 | ~10 |
| Return on equity | ~4 | 7–8 | 7–8 | 7–8 |
In the forecast for 2017 in the 2016 Annual Report, we expected a slight decline in gross premiums of 1% to 2% in the Property/ Casualty Insurance segment in the Retail Germany Division. As in the first half of the year, we are now expecting gross premiums to at least hold steady for the whole of 2017 due to the increase in new business acquired during the year. Based on the combined ratio, which developed better than expected during the course of the year, we are now expecting this year-end key figure to be around 102%, including KuRS programme expenses.
Management metrics for the Retail Germany Division – Property/Casualty Insurance segment
| % | ||||
|---|---|---|---|---|
| Outlook for 2017 on the basis of 9M 2017 |
Outlook for 2017 on the basis of 6M 2017 |
Outlook for 2017 on the basis of Q1 2017 |
Forecast for 2017 from the 2016 Annual Report |
|
| Gross premium growth |
≥ 0 | ≥ 0 | –1 to –2 | –1 to –2 |
| Combined ratio (net) | ~102 | ~103 | ~103 | ~103 |
| EBIT margin | 1–2 | 1–2 | 1–2 | 1–2 |
| % | ||||
|---|---|---|---|---|
| Outlook for 2017 on the basis of 9M 2017 |
Outlook for 2017 on the basis of 6M 2017 |
Outlook for 2017 on the basis of Q1 2017 |
Forecast for 2017 from the 2016 Annual Report |
|
| Gross premium growth |
0 | 0 | 0 | 0 |
| EBIT margin | 2–3 | 2–3 | 2–3 | 2–3 |
Return on equity management metric for the
| % | ||||
|---|---|---|---|---|
| Outlook for 2017 on the basis of 9M 2017 |
Outlook for 2017 on the basis of 6M 2017 |
Outlook for 2017 on the basis of Q1 2017 |
Forecast for 2017 from the 2016 Annual Report |
|
| Gross premium growth (adjusted for currency effects) |
~10 | ~10 | ~10 | ~10 |
| Growth in value of new business (life) 1) |
5–10 | 5–10 | 5–10 | 5–10 |
| Combined ratio (net, property/ casualty insurance) |
~96 | ~96 | ~96 | ~96 |
| EBIT margin | 5–6 | 5–6 | 5–6 | 5–6 |
| Return on equity | 6–7 | 6–7 | 6–7 | 6–7 |
Management metrics for the Retail International Division
1) Excluding non-controlling interests.
In the forecast for 2017 in the 2016 Annual Report, we expected a slight rise in gross premiums in the Property/Casualty Reinsurance segment. As in the first half of the year, we are now anticipating growth of more than 5% in gross premiums for the whole of 2017 due to increased demand for solvency-easing reinsurance solutions both in Europe and North America, high-volume transactions in insurance-linked securities (ILS) and a satisfactory treaty renewal for the North American market. In light of the situation with regard to large losses in the third quarter, we are expecting a significantly lower underwriting result for Property/Casualty Reinsurance in the whole of 2017 compared with the previous year, meaning the combined ratio target of under 96% may be exceeded. However, we are expecting to achieve an EBIT margin for Property/Casualty Reinsurance of at least 10%, provided the large losses in the fourth quarter remain within the expected range.
Management metrics for the Property/ Casualty Reinsurance segment
| % | ||||
|---|---|---|---|---|
| Outlook for 2017 on the basis of 9M 2017 |
Outlook for 2017 on the basis of 6M 2017 |
Outlook for 2017 on the basis of Q1 2017 |
Forecast for 2017 from the 2016 Annual Report |
|
| Gross premium growth (adjusted for currency effects) |
> 5 | > 5 | slight growth |
slight growth |
| Combined ratio (net) | > 96 | < 96 | < 96 | < 96 |
| EBIT margin | ≥ 10 | ≥ 10 | ≥ 10 | ≥ 10 |
| % | ||||
|---|---|---|---|---|
| Outlook for 2017 on the basis of 9M 2017 |
Outlook for 2017 on the basis of 6M 2017 |
Outlook for 2017 on the basis of Q1 2017 |
Forecast for 2017 from the 2016 Annual Report |
|
| Gross premium growth (adjusted for currency effects) |
moderate growth |
moderate growth |
moderate growth |
moderate growth |
| Value of new business 1) in EUR million |
> 110 | > 110 | > 110 | > 110 |
| EBIT margin financial solutions |
≥ 2 | ≥ 2 | ≥ 2 | ≥ 2 |
| EBIT margin longevity solutions |
≥ 2 | ≥ 2 | ≥ 2 | ≥ 2 |
| EBIT margin mortality/morbidity |
≥ 6 | ≥ 6 | ≥ 6 | ≥ 6 |
Reinsurance Division overall
In our forecast for 2017 in the 2016 Annual Report, we expected a return on equity of around 11% in the Reinsurance Division. In light of the situation with regard to large losses in the third quarter and the significantly lower underwriting result in Property/Casualty Reinsurance, we are now expecting a return on equity of 9% to 10%.
Return on equity management metric for the Reinsurance Division
| overall | ||||
|---|---|---|---|---|
| % | ||||
| Forecast | ||||
| Outlook | Outlook | Outlook | for 2017 | |
| for 2017 | for 2017 | for 2017 | from the | |
| on the | on the | on the | 2016 | |
| basis of | basis of | basis of | Annual | |
| 9M 2017 | 6M 2017 | Q1 2017 | Report | |
| Return on equity | 9–10 | ~11 | ~11 | ~11 |
Talanx Group. Quarterly statement as at 30 September 2017 19
| 30.9.2017 | 31.12.20161) | ||||
|---|---|---|---|---|---|
| A. Intangible assets | |||||
| a. Goodwill |
1,049 | 1,039 | |||
| b. Other intangible assets |
976 | 903 | |||
| 2,025 | 1,942 | ||||
| B. | Investments | ||||
| a. Investment property |
2,540 | 2,480 | |||
| b. Shares in affiliated companies and participating interests |
152 | 139 | |||
| c. Investments in associates and joint ventures | 282 | 290 | |||
| d. Loans and receivables | 29,269 | 29,425 | |||
| e. Other financial instruments |
|||||
| i. Held to maturity |
538 | 744 | |||
| ii. Available for sale |
67,620 | 68,050 | |||
| iii. At fair value through profit or loss |
1,425 | 1,352 | |||
| f. | Other investments | 5,346 | 4,694 | ||
| Assets under own management | 107,172 | 107,174 | |||
| g. Investments under investment contracts | 1,101 | 1,091 | |||
| h. Funds withheld by ceding companies | 9,653 | 10,590 | |||
| Investments | 117,926 | 118,855 | |||
| C. Investments for the benefit of life insurance policyholders who bear the investment risk | 11,064 | 10,583 | |||
| D. Reinsurance recoverables on technical provisions | 8,190 | 7,958 | |||
| E. | Accounts receivable on insurance business | 6,712 | 6,192 | ||
| F. | Deferred acquisition costs | 5,244 | 5,306 | ||
| G. Cash at banks, cheques and cash-in-hand | 3,000 | 2,589 | |||
| H. Deferred tax assets | 606 | 577 | |||
| I. | Other assets | 2,802 | 2,620 | ||
| J. | Non-current assets and assets of disposal groups classified as held for sale | — | 15 | ||
| Total assets | 157,569 | 156,637 |
| 30.9.2017 | 31.12.20161) | ||||
|---|---|---|---|---|---|
| A. Equity | |||||
| a. | Subscribed capital | 316 | 316 | ||
| Nominal value: 316 (previous year: 316) Contingent capital: 158 (previous year: 104) |
|||||
| b. | Reserves | 8,401 | 8,762 | ||
| Equity excluding non-controlling interests | 8,717 | 9,078 | |||
| c. Non-controlling interests | 5,202 | 5,610 | |||
| Total equity | 13,919 | 14,688 | |||
| B. | Subordinated liabilities | 1,984 | 1,983 | ||
| C. Technical provisions | |||||
| a. | Unearned premium reserve | 8,680 | 7,624 | ||
| b. | Benefit reserve | 54,570 | 54,824 | ||
| c. | Loss and loss adjustment expense reserve | 42,819 | 41,873 | ||
| d. Provision for premium refunds | 5,762 | 5,765 | |||
| e. | Other technical provisions | 418 | 409 | ||
| 112,249 | 110,495 | ||||
| D. Technical provisions for life insurance policies where the investment risk is borne by the policyholders |
11,064 | 10,583 | |||
| E. | Other provisions | ||||
| a. | Provisions for pensions and other post-employment benefits | 2,093 | 2,183 | ||
| b. | Provisions for taxes | 781 | 833 | ||
| c. | Miscellaneous other provisions | 792 | 940 | ||
| 3,666 | 3,956 | ||||
| F. | Liabilities | ||||
| a. | Notes payable and loans | 1,440 | 1,505 | ||
| b. | Funds withheld under reinsurance treaties | 4,632 | 5,129 | ||
| c. | Other liabilities | 6,520 | 6,150 | ||
| 12,592 | 12,784 | ||||
| G. Deferred tax liabilities | 2,095 | 2,148 | |||
| Total liabilities/provisions | 143,650 | 141,949 | |||
| EUR million | ||||
|---|---|---|---|---|
| 9M 2017 | 9M 20161) | Q3 2017 | Q3 20161) | |
| 1. Gross written premiums including premiums from unit-linked life and annuity insurance | 25,239 | 23,749 | 7,686 | 7,322 |
| 2. Savings elements of premiums from unit-linked life and annuity insurance | 857 | 896 | 264 | 282 |
| 3. Ceded written premiums | 2,927 | 2,807 | 789 | 735 |
| 4. Change in gross unearned premiums | –1,397 | –1,061 | 351 | 204 |
| 5. Change in ceded unearned premiums | –226 | –149 | 140 | 185 |
| Net premiums earned | 20,284 | 19,134 | 6,844 | 6,324 |
| 6. Claims and claims expenses (gross) | 19,608 | 17,279 | 7,497 | 5,648 |
| Reinsurers' share | 2,229 | 1,518 | 1,173 | 457 |
| Claims and claims expenses (net) | 17,379 | 15,761 | 6,324 | 5,191 |
| 7. Acquisition costs and administrative expenses (gross) | 5,406 | 4,869 | 1,806 | 1,611 |
| Reinsurers' share | 423 | 408 | 133 | 135 |
| Acquisition costs and administrative expenses (net) | 4,983 | 4,461 | 1,673 | 1,476 |
| 8. Other technical income | 43 | 36 | 10 | 14 |
| Other technical expenses | 85 | 116 | 37 | 55 |
| Other technical result | –42 | –80 | –27 | –41 |
| Net technical result | –2,120 | –1,168 | –1,180 | –384 |
| 9. a. Investment income |
3,639 | 3,220 | 1,316 | 1,061 |
| b. Investment expenses |
494 | 485 | 142 | 115 |
| Net income from assets under own management | 3,145 | 2,735 | 1,174 | 946 |
| Net income from investment contracts | –2 | 7 | — | 1 |
| Net interest income from funds withheld and contract deposits | 168 | 239 | 52 | 72 |
| Net investment income | 3,311 | 2,981 | 1,226 | 1,019 |
| of which share of profit or loss of equity-accounted associates and joint ventures | 13 | 5 | 6 | 2 |
| 10. a. Other income |
1,069 | 913 | 245 | 346 |
| b. Other expenses |
1,156 | 1,075 | 312 | 397 |
| Other income/expenses | –87 | –162 | –67 | –51 |
| Profit before goodwill impairments | 1,104 | 1,651 | –21 | 584 |
| 11. Goodwill impairments Operating profit (EBIT) |
— 1,104 |
— 1,651 |
— –21 |
— 584 |
| 12. Financing costs | 111 | 110 | 37 | 37 |
| 13. Taxes on income | 191 | 448 | –76 | 145 |
| Net income | 802 | 1,093 | 18 | 402 |
| of which attributable to non-controlling interests | 358 | 457 | 37 | 169 |
| of which attributable to shareholders of Talanx AG | 444 | 636 | –19 | 233 |
| Earnings per share | ||||
| Basic earnings per share (EUR) | 1.75 | 2.51 | –0.08 | 0.92 |
| Diluted earnings per share (EUR) | 1.75 | 2.51 | –0.08 | 0.92 |
1) Adjusted in accordance with IAS 8 or IFRS 3.45 within the valuation period; see our explanation in the half-yearly interim report.
| EUR million | ||||
|---|---|---|---|---|
| 9M 2017 | 9M 20161) | Q3 2017 | Q3 20161) | |
| Net income | 802 | 1,093 | 18 | 402 |
| Items that will not be reclassified to profit or loss | ||||
| Actuarial gains (losses) on pension provisions | ||||
| Gains (losses) recognised in other comprehensive income for the period | 72 | –430 | –14 | –28 |
| Tax income (expense) | –22 | 130 | 4 | 8 |
| 50 | –300 | –10 | –20 | |
| Changes in policyholder participation/shadow accounting | — | — | ||
| Gains (losses) recognised in other comprehensive income for the period | –3 | 18 | 1 | 1 |
| Tax income (expense) | — | — | — | — |
| –3 | 18 | 1 | 1 | |
| Total items that will not be reclassified to profit or loss, net of tax | 47 | –282 | –9 | –19 |
| Items that may be reclassified subsequently to profit or loss | ||||
| Unrealised gains and losses on investments | ||||
| Gains (losses) recognised in other comprehensive income for the period | –56 | 3,558 | 154 | 760 |
| Reclassified to profit or loss | –627 | –309 | –345 | –157 |
| Tax income (expense) | 37 | –472 | 1 | –90 |
| –646 | 2,777 | –190 | 513 | |
| Exchange differences on translating foreign operations | — | — | ||
| Gains (losses) recognised in other comprehensive income for the period | –788 | –172 | –228 | –32 |
| Reclassified to profit or loss | — | — | — | — |
| Tax income (expense) | 46 | 9 | 12 | 6 |
| –742 | –163 | –216 | –26 | |
| Changes in policyholder participation/shadow accounting | ||||
| Gains (losses) recognised in other comprehensive income for the period | 582 | –1,824 | –35 | –329 |
| Tax income (expense) | 1 | 35 | 12 | 11 |
| 583 | –1,789 | –23 | –318 | |
| Changes from cash flow hedges | ||||
| Gains (losses) recognised in other comprehensive income for the period | –19 | 188 | –5 | 14 |
| Reclassified to profit or loss | –70 | –10 | –3 | –4 |
| Tax income (expense) | 3 | –7 | — | –1 |
| –86 | 171 | –8 | 9 | |
| Changes from equity method measurement | ||||
| Gains (losses) recognised in other comprehensive income for the period | –7 | –3 | 4 | — |
| Reclassified to profit or loss | — | — | — | — |
| Tax income (expense) | — | — | — | — |
| Other changes | –7 | –3 | 4 | — |
| Gains (losses) recognised in other comprehensive income for the period | — | — | — | — |
| Reclassified to profit or loss | — | — | — | — |
| Tax income (expense) | — | — | — | — |
| — | — | — | — | |
| Total items that may be reclassified subsequently to profit or loss, net of tax | –898 | 993 | –433 | 178 |
| Other comprehensive income for the period, net of tax | –851 | 711 | –442 | 159 |
| Total comprehensive income for the period | –49 | 1,804 | –424 | 561 |
| of which attributable to non-controlling interests | –29 | 745 | –173 | 213 |
| of which attributable to shareholders of Talanx AG | –20 | 1,059 | –251 | 348 |
1) Adjusted in accordance with IFRS 3.45 within the valuation period; see our explanation in the half-yearly interim report.
EUR million 9M 2017 9M 20166) I. 1. Net income 802 1,093 I. 2. Changes in technical provisions 4,694 3,492 I. 3. Changes in deferred acquisition costs –66 –25 I. 4. Changes in funds withheld and in accounts receivable and payable –619 –9 I. 5. Changes in other receivables and liabilities 263 –74 I. 6. Changes in investments and liabilities under investment contracts 13 14 I. 7. Changes in financial assets held for trading –26 22 I. 8. Gains/losses on disposal of investments and property, plant and equipment –898 –553 I. 9. Change in technical provisions for life insurance policies where the investment risk is borne by the policyholders1) 469 121 I. 10. Other non-cash expenses and income (including income tax expense/income) 23 –286 I. Cash flows from operating activities 2), 5) 4,655 3,795 II. 1. Cash inflow from the sale of consolidated companies 2 3 II. 2. Cash outflow from the purchase of consolidated companies –91 58 II. 3. Cash inflow from the sale of real estate 108 5 II. 4. Cash outflow from the purchase of real estate –268 –158 II. 5. Cash inflow from the sale and maturity of financial instruments 18,774 17,707 II. 6. Cash outflow from the purchase of financial instruments –20,457 –20,081 II. 7. Changes in investments for the benefit of life insurance policyholders who bear the investment risk –469 –121 II. 8. Changes in other investments –816 563 II. 9. Cash outflows from the acquisition of tangible and intangible assets –82 –71 II. 10. Cash inflows from the sale of tangible and intangible assets 16 6 II. Cash flows from investing activities –3,283 –2,089 III. 1. Cash flows from investing activities — — III. 2. Cash outflow from capital reductions — — III. 3. Dividends paid –705 –678 III. 4. Net changes attributable to other financing activities –192 –108 III. Cash flows from financing activities 5) –897 –786 Net change in cash and cash equivalents (I.+II.+III.) 475 920 Cash and cash equivalents at the beginning of the reporting period 2,589 2,243 Effect of exchange rate changes on cash and cash equivalents –64 –2 Effect of changes in the basis of consolidation on cash and cash equivalents 3) — –2 Cash and cash equivalents at the end of the reporting period4) 3,000 3,159
1) As opposed to the previous year, item I. 9 "Change in technical provisions for life insurance policies where the investment risk is borne by the policyholders" is reported separately; in the same period of the previous year, the effects were reported in item I. 10 "Other non-cash expenses and income (including income tax expense/income)".
2) EUR 298 (363) million of "Income taxes paid" and EUR 255 (192) million of "Dividends received" and EUR 2,744 (2,727) million of "Interest received" are allocated to "Cash flows from operating activities". Dividends received also comprise dividend-equivalent distributions from investment funds and private equity companies. 3) This item relates primarily to changes in the basis of consolidation, excluding disposals and acquisitions.
4) "Cash and cash equivalents at the end of the reporting period" includes changes in the portfolio of disclosed disposal groups in the amount of EUR 0 (8) million. 5) EUR 352 (308) million of "Interest paid" is attributable to EUR 150 (148) million to "Cash flows from financing activities" and EUR 202 (160) million to "Cash flows from operating activities".
6) Adjusted in accordance with IAS 8 or IFRS 3.45 within the valuation period; see our explanation in the half-yearly interim report.
EUR million
| Assets | Industrial Lines | Retail Germany | ||
|---|---|---|---|---|
| 30.9.2017 | 31.12.2016 | 30.9.2017 | 31.12.2016 | |
| A. Intangible assets | ||||
| a. Goodwill |
153 | 153 | 248 | 248 |
| b. Other intangible assets |
8 | 8 | 520 | 520 |
| 161 | 161 | 768 | 768 | |
| B. Investments |
||||
| a. Investment property |
102 | 77 | 977 | 984 |
| b. Shares in affiliated companies and participating interests | 14 | 12 | 6 | 13 |
| c. Investments in associates and joint ventures | 139 | 150 | 54 | 53 |
| d. Loans and receivables | 1,048 | 1,054 | 25,172 | 25,092 |
| e. Other financial instruments |
||||
| i. Held to maturity | 73 | 77 | 168 | 170 |
| ii. Available for sale | 5,546 | 5,625 | 22,067 | 21,420 |
| iii. At fair value through profit or loss | 135 | 72 | 324 | 346 |
| f. Other investments |
879 | 684 | 1,541 | 1,532 |
| Assets under own management | 7,936 | 7,751 | 50,309 | 49,610 |
| g. Investments under investment contracts | — | — | — | — |
| h. Funds withheld by ceding companies | 19 | 20 | 4 | 3 |
| Investments | 7,955 | 7,771 | 50,313 | 49,613 |
| C. Investments for the benefit of life insurance policyholders | ||||
| who bear the investment risk | — | — | 10,188 | 9,727 |
| D. Reinsurance recoverables on technical provisions | 4,775 | 5,014 | 2,232 | 2,170 |
| E. Accounts receivable on insurance business |
1,451 | 1,259 | 349 | 331 |
| F. Deferred acquisition costs |
58 | 45 | 2,119 | 2,179 |
| G. Cash at banks, cheques and cash-in-hand | 395 | 478 | 856 | 633 |
| H. Deferred tax assets | 68 | 69 | 103 | 78 |
| I. Other assets |
719 | 387 | 852 | 1,226 |
| J. Non-current assets and assets of disposal groups classified as held for sale |
— | — | — | — |
| Total assets | 15,582 | 15,184 | 67,780 | 66,725 |
| 1) Adjusted in accordance with IAS 8. |
| Retail International | Reinsurance | Corporate Operations | Consolidation | Total | |||||
|---|---|---|---|---|---|---|---|---|---|
| 30.9.2017 | 31.12.2016 | 30.9.2017 | 31.12.20161) | 30.9.2017 | 31.12.2016 | 30.9.2017 | 31.12.2016 | 30.9.2017 | 31.12.20161) |
| 615 | 618 | 33 | 20 | — | — | — | — | 1,049 | 1,039 |
| 148 | 156 | 200 | 128 | 100 | 91 | — | — | 976 | 903 |
| 763 | 774 | 233 | 148 | 100 | 91 | — | — | 2,025 | 1,942 |
| 16 | 17 | 1,445 | 1,402 | — | — | — | — | 2,540 | 2,480 |
| — | — | 115 | 97 | 17 | 17 | — | — | 152 | 139 |
| — 638 |
— 700 |
116 2,395 |
114 2,564 |
— 16 |
— 15 |
–27 — |
–27 — |
282 29,269 |
290 29,425 |
| 234 | 305 | 353 | 485 | 2 | 2 | –292 | –295 | 538 | 744 |
| 7,867 | 7,373 | 31,971 | 33,478 | 169 | 154 | — | — | 67,620 | 68,050 |
| 670 | 636 | 296 | 298 | — | — | — | — | 1,425 | 1,352 |
| 376 | 327 | 3,321 | 3,235 | 465 | 261 | –1,236 | –1,345 | 5,346 | 4,694 |
| 9,801 | 9,358 | 40,012 | 41,673 | 669 | 449 | –1,555 | –1,667 | 107,172 | 107,174 |
| 1,101 | 1,091 | — | — | — | — | — | — | 1,101 | 1,091 |
| — | — | 10,972 | 11,844 | 1 | 1 | –1,343 | –1,278 | 9,653 | 10,590 |
| 10,902 | 10,449 | 50,984 | 53,517 | 670 | 450 | –2,898 | –2,945 | 117,926 | 118,855 |
| 10,583 | |||||||||
| 876 | 856 | — | — | — | — | — | — | 11,064 | |
| 788 | 832 | 3,230 | 2,843 | 1 | — | –2,836 | –2,901 | 8,190 | 7,958 |
| 1,117 | 1,142 | 3,952 | 3,678 | 6 | 2 | –163 | –220 | 6,712 | 6,192 |
| 583 | 589 | 2,251 | 2,264 | 1 | — | 232 | 229 | 5,244 | 5,306 |
| 666 | 455 | 831 | 814 | 252 | 209 | — | — | 3,000 | 2,589 |
| 53 | 59 | 134 | 127 | 248 | 244 | — | — | 606 | 577 |
| 417 | 471 | 1,400 | 1,286 | 351 | 738 | –937 | –1,488 | 2,802 | 2,620 |
| — | — | — | 15 | — | — | — | — | — | 15 |
| 16,165 | 15,627 | 63,015 | 64,692 | 1,629 | 1,734 | –6,602 | –7,325 | 157,569 | 156,637 |
EUR million
| Equity and liabilities | Industrial Lines | Retail Germany | ||
|---|---|---|---|---|
| 30.9.2017 | 31.12.2016 | 30.9.2017 | 31.12.2016 | |
| B. Subordinated liabilities |
200 | 200 | 162 | 161 |
| C. Technical provisions | ||||
| a. Unearned premium reserve |
1,349 | 1,094 | 1,466 | 1,160 |
| b. Benefit reserve |
— | — | 40,166 | 39,515 |
| c. Loss and loss adjustment expense reserve | 9,206 | 9,353 | 3,218 | 3,098 |
| d. Provision for premium refunds | 20 | 19 | 5,439 | 5,473 |
| e. Other technical provisions |
46 | 42 | 2 | 2 |
| 10,621 | 10,508 | 50,291 | 49,248 | |
| D. Technical provisions for life insurance policies where the investment risk is borne by the policyholders |
— | — | 10,188 | 9,727 |
| E. Other provisions |
||||
| a. Provisions for pensions and other post-employment benefits | 587 | 612 | 146 | 150 |
| b. Provisions for taxes |
80 | 97 | 127 | 118 |
| c. Miscellaneous other provisions |
72 | 84 | 318 | 372 |
| 739 | 793 | 591 | 640 | |
| F. Liabilities |
||||
| a. Notes payable and loans |
16 | 16 | 99 | 104 |
| b. Funds withheld under reinsurance treaties |
57 | 49 | 1,836 | 1,748 |
| c. Other liabilities |
1,633 | 1,257 | 1,768 | 2,251 |
| 1,706 | 1,322 | 3,703 | 4,103 | |
| G. Deferred tax liabilities | 164 | 172 | 266 | 288 |
| Total liabilities/provisions | 13,430 | 12,995 | 65,201 | 64,167 |
| Retail International | Reinsurance | Corporate Operations | Consolidation | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 30.9.2017 | 31.12.2016 | 30.9.2017 | 31.12.20162) | 30.9.2017 | 31.12.2016 | 30.9.2017 | 31.12.2016 | 30.9.2017 | 31.12.20162) | |
| 42 | 42 | 1,663 | 1,683 | 530 | 530 | –613 | –633 | 1,984 | 1,983 | |
| 2,275 | 2,199 | 3,757 | 3,341 | 6 | 1 | –173 | –171 | 8,680 | 7,624 | |
| 5,487 | 5,124 | 9,085 | 10,356 | — | — | –168 | –171 | 54,570 | 54,824 | |
| 2,675 | 2,592 | 28,899 | 28,130 | 43 | 41 | –1,222 | –1,341 | 42,819 | 41,873 | |
| 303 | 273 | — | — | — | — | — | — | 5,762 | 5,765 | |
| 10 | 10 | 369 | 362 | — | — | –9 | –7 | 418 | 409 | |
| 10,750 | 10,198 | 42,110 | 42,189 | 49 | 42 | –1,572 | –1,690 | 112,249 | 110,495 | |
| 876 | 856 | — | — | — | — | — | — | 11,064 | 10,583 | |
| — | ||||||||||
| 21 | 21 | 175 | 181 | 1,164 | 1,219 | — | — | 2,093 | 2,183 | |
| 120 | 109 | 337 | 409 | 117 | 100 | — | — | 781 | 833 | |
| 98 | 100 | 163 | 199 | 142 | 185 | –1 | — | 792 | 940 | |
| 239 | 230 | 675 | 789 | 1,423 | 1,504 | –1 | — | 3,666 | 3,956 | |
| 20 | 21 | 723 | 810 | 1,477 | 1,535 | –895 | –981 | 1,440 | 1,505 | |
| 159 | 163 | 5,068 | 5,532 | –1 | — | –2,487 | –2,363 | 4,632 | 5,129 | |
| 1,667 | 1,752 | 2,353 | 2,425 | 170 | 161 | –1,071 | –1,696 | 6,520 | 6,150 | |
| 1,846 | 1,936 | 8,144 | 8,767 | 1,646 | 1,696 | –4,453 | –5,040 | 12,592 | 12,784 | |
| 98 | 102 | 1,543 | 1,562 | 3 | 3 | 21 | 21 | 2,095 | 2,148 | |
| 13,851 | 13,364 | 54,135 | 54,990 | 3,651 | 3,775 | –6,618 | –7,342 | 143,650 | 141,949 | |
| Equity 1) | 13,919 | 14,688 |
Total equity and liabilities 157,569 156,637
1) Equity attributable to Group shareholders and non-controlling interests.
EUR million
| Industrial Lines | Retail Germany | |||
|---|---|---|---|---|
| 9M 2017 | 9M 2016 | 9M 2017 | 9M 2016 | |
| 1. Gross written premiums including premiums from unit-linked life and annuity insurance |
3,536 | 3,390 | 4,681 | 4,775 |
| of which attributable to other divisions/segments |
46 | 45 | 45 | 22 |
| with third parties | 3,490 | 3,345 | 4,636 | 4,753 |
| 2. Savings elements of premiums from unit-linked life and annuity insurance | — | — | 649 | 686 |
| 3. Ceded written premiums | 1,611 | 1,596 | 195 | 183 |
| 4. Change in gross unearned premiums | –308 | –278 | –306 | –299 |
| 5. Change in ceded unearned premiums | –147 | –114 | –11 | 1 |
| Net premiums earned | 1,764 | 1,630 | 3,542 | 3,606 |
| 6. Claims and claims expenses (gross) | 2,481 | 2,045 | 3,943 | 4,030 |
| Reinsurers' share | 931 | 820 | 60 | 60 |
| Claims and claims expenses (net) | 1,550 | 1,225 | 3,883 | 3,970 |
| 7. Acquisition costs and administrative expenses (gross) | 656 | 630 | 1,026 | 919 |
| Reinsurers' share | 267 | 264 | 69 | 64 |
| Acquisition costs and administrative expenses (net) | 389 | 366 | 957 | 855 |
| 8. Other technical income | 6 | 6 | 16 | 12 |
| Other technical expenses | 10 | 12 | 26 | 32 |
| Other technical result | –4 | –6 | –10 | –20 |
| Net technical result | –179 | 33 | –1,308 | –1,239 |
| 9. a. Investment income |
245 | 213 | 1,713 | 1,589 |
| b. Investment expenses |
42 | 48 | 233 | 175 |
| Net income from assets under own management | 203 | 165 | 1,480 | 1,414 |
| Net income from investment contracts | — | — | — | — |
| Net interest income from funds withheld and contract deposits | — | — | –11 | –11 |
| Net investment income | 203 | 165 | 1,469 | 1,403 |
| of which share of profit or loss of equity-accounted associates and joint ventures |
1 | 3 | 2 | 5 |
| 10. a. Other income |
106 | 94 | 144 | 126 |
| b. Other expenses |
105 | 88 | 189 | 220 |
| Other income/expenses | 1 | 6 | –45 | –94 |
| Profit before goodwill impairments | 25 | 204 | 116 | 70 |
| 11. Goodwill impairments | — | — | — | — |
| Operating profit (EBIT) | 25 | 204 | 116 | 70 |
| 12. Financing costs | 6 | 6 | 7 | 7 |
| 13. Taxes on income | 5 | 66 | 14 | 18 |
| Net income | 14 | 132 | 95 | 45 |
| of which attributable to non-controlling interests | — | — | 5 | 6 |
| of which attributable to shareholders of Talanx AG | 14 | 132 | 90 | 39 |
1) With the exception of the Retail Germany Division and the Reinsurance Division, the statements of income of the other divisions are the same as those of
the reportable segments.
2) Adjusted in accordance with IFRS 3.45 within the valuation period; see our explanation in the half-yearly interim report.
| Retail International | Reinsurance | Corporate Operations | Consolidation | Total | |||||
|---|---|---|---|---|---|---|---|---|---|
| 9M 2017 | 9M 2016 | 9M 2017 | 9M 20162),3) | 9M 2017 | 9M 2016 | 9M 2017 | 9M 2016 | 9M 2017 | 9M 20162),3) |
| 4,065 | 3,669 | 13,484 | 12,455 | 27 | 25 | –554 | –565 | 25,239 | 23,749 |
| — | — | 436 | 473 | 27 | 24 | –554 | –565 | — | –1 |
| 4,065 | 3,669 | 13,048 | 11,982 | — | 1 | — | — | 25,239 | 23,750 |
| 208 | 210 | — | — | — | — | — | — | 857 | 896 |
| 331 | 313 | 1,335 | 1,291 | 7 | 8 | –552 | –584 | 2,927 | 2,807 |
| –127 | –55 | –666 | –451 | –5 | –4 | 15 | 26 | –1,397 | –1,061 |
| –23 | –8 | –58 | –53 | –2 | –2 | 15 | 27 | –226 | –149 |
| 3,422 | 3,099 | 11,541 | 10,766 | 17 | 15 | –2 | 18 | 20,284 | 19,134 |
| 2,742 | 2,491 | 10,740 | 8,995 | 9 | 8 | –307 | –290 | 19,608 | 17,279 |
| 191 | 149 | 1,365 | 786 | — | — | –318 | –297 | 2,229 | 1,518 |
| 2,551 | 2,342 | 9,375 | 8,209 | 9 | 8 | 11 | 7 | 17,379 | 15,761 |
| 873 | 789 | 3,004 | 2,696 | 3 | 3 | –156 | –168 | 5,406 | |
| 61 | 58 | 173 | 181 | — | — | –147 | –159 | 423 | 4,869 408 |
| 812 | 731 | 2,831 | 2,515 | 3 | 3 | –9 | –9 | 4,983 | 4,461 |
| 20 | 17 | 1 | 1 | — | — | — | — | 43 | |
| 48 | 46 | 5 | 6 | — | — | –4 | 20 | 85 | |
| –28 | –29 | –4 | –5 | — | — | 4 | –20 | –42 | |
| 31 | –3 | –669 | 37 | 5 | 4 | — | — | –2,120 | |
| 304 46 |
294 57 |
1,408 190 |
1,129 222 |
10 64 |
37 65 |
–41 –81 |
–42 –82 |
3,639 494 |
|
| 258 | 237 | 1,218 | 907 | –54 | –28 | 40 | 40 | 3,145 | |
| –2 | 7 | — | — | — | — | — | — | –2 | |
| –1 | — | 180 | 250 | — | — | — | — | 168 | |
| 255 | 244 | 1,398 | 1,157 | –54 | –28 | 40 | 40 | 3,311 | 2,981 |
| — | — | 10 | 3 | — | — | — | –6 | 13 | |
| 78 | 68 | 716 | 577 | 544 | 570 | –519 | –522 | 1,069 | |
| 185 | 146 | 639 | 570 | 487 | 520 | –449 | –469 | 1,156 | |
| –107 | –78 | 77 | 7 | 57 | 50 | –70 | –53 | –87 | |
| 179 | 163 | 806 | 1,201 | 8 | 26 | –30 | –13 | 1,104 | |
| — | — | — | — | — | — | — | — | — | |
| 179 | 163 | 806 | 1,201 | 8 | 26 | –30 | –13 | 1,104 | 1,651 |
| 4 | 3 | 60 | 57 | 64 | 64 | –30 | –27 | 111 | |
| 46 | 46 | 141 | 306 | –15 | 5 | — | 7 | 191 | |
| 129 | 114 | 605 | 838 | –41 | –43 | — | 7 | 802 | 1,093 |
| 19 | 17 | 334 | 434 | — | — | — | — | 358 | |
| 110 | 97 | 271 | 404 | –41 | –43 | — | 7 | 444 | |
EUR million
| Industrial Lines | Retail Germany | |||
|---|---|---|---|---|
| Q3 2017 | Q3 2016 | Q3 2017 | Q3 2016 | |
| 1. Gross written premiums including premiums from unit-linked life and annuity insurance |
741 | 684 | 1,371 | 1,429 |
| of which attributable to other divisions/segments |
9 | 6 | 11 | 10 |
| with third parties | 732 | 678 | 1,360 | 1,419 |
| 2. Savings elements of premiums from unit-linked life and annuity insurance | — | — | 204 | 222 |
| 3. Ceded written premiums | 335 | 317 | 58 | 55 |
| 4. Change in gross unearned premiums | 355 | 369 | 48 | 8 |
| 5. Change in ceded unearned premiums | 157 | 189 | 4 | 8 |
| Net premiums earned | 604 | 547 | 1,153 | 1,152 |
| 6. Claims and claims expenses (gross) | 974 | 672 | 1,241 | 1,312 |
| Reinsurers' share | 304 | 266 | 17 | 23 |
| Claims and claims expenses (net) | 670 | 406 | 1,224 | 1,289 |
| 7. Acquisition costs and administrative expenses (gross) | 219 | 207 | 340 | 305 |
| Reinsurers' share | 76 | 76 | 30 | 28 |
| Acquisition costs and administrative expenses (net) | 143 | 131 | 310 | 277 |
| 8. Other technical income | 2 | 1 | 3 | 5 |
| Other technical expenses | 4 | 3 | 20 | 18 |
| Other technical result | –2 | –2 | –17 | –13 |
| Net technical result | –211 | 8 | –398 | –427 |
| 9. a. Investment income |
84 | 64 | 544 | 526 |
| b. Investment expenses |
18 | 8 | 66 | 57 |
| Net income from assets under own management | 66 | 56 | 478 | 469 |
| Net income from investment contracts | — | — | — | — |
| Net interest income from funds withheld and contract deposits | — | — | –4 | –3 |
| Net investment income | 66 | 56 | 474 | 466 |
| of which share of profit or loss of equity-accounted associates and joint ventures |
— | 1 | 1 | — |
| 10. a. Other income |
28 | 19 | 45 | 45 |
| b. Other expenses |
20 | 22 | 68 | 70 |
| Other income/expenses | 8 | –3 | –23 | –25 |
| Profit before goodwill impairments | –137 | 61 | 53 | 14 |
| 11. Goodwill impairments | — | — | — | — |
| Operating profit (EBIT) | –137 | 61 | 53 | 14 |
| 12. Financing costs | 2 | 2 | 2 | 2 |
| 13. Taxes on income | –41 | 18 | 10 | –5 |
| Net income | –98 | 41 | 41 | 17 |
| of which attributable to non-controlling interests | — | — | 1 | 2 |
| of which attributable to shareholders of Talanx AG | –98 | 41 | 40 | 15 |
1) With the exception of the Retail Germany Division and the Reinsurance Division, the statements of income of the other divisions are the same as those of
the reportable segments.
2) Adjusted in accordance with IFRS 3.45 within the valuation period; see our explanation in the half-yearly interim report.
| Retail International | Reinsurance | Corporate Operations | Consolidation | Total | |||||
|---|---|---|---|---|---|---|---|---|---|
| Q3 2017 | Q3 20162) | Q3 2017 | Q3 20162),3) | Q3 2017 | Q3 2016 | Q3 2017 | Q3 2016 | Q3 2017 | Q3 20162),3) |
| 1,237 — |
1,182 — |
4,486 129 |
4,172 129 |
4 4 |
3 3 |
–153 –153 |
–148 –148 |
7,686 — |
7,322 |
| 1,237 | 1,182 | 4,357 | 4,043 | — | — | — | — | 7,686 | 7,322 |
| 60 | 60 | — | — | — | — | — | — | 264 | 282 |
| 87 | 86 | 460 | 443 | 1 | 1 | –152 | –167 | 789 | 735 |
| –10 | –18 | –21 | –135 | 3 | 3 | –24 | –23 | 351 | 204 |
| 16 | 16 | –13 | –5 | 1 | 1 | –25 | –24 | 140 | 185 |
| 1,064 | 1,002 | 4,018 | 3,599 | 5 | 4 | — | 20 | 6,844 | 6,324 |
| 820 | 810 | 4,558 | 2,930 | 4 | 6 | –100 | –82 | 7,497 | 5,648 |
| 52 | 58 | 902 | 194 | — | — | –102 | –84 | 1,173 | 5,191 |
| 768 | 752 | 3,656 | 2,736 | 4 | 6 | 2 | 2 | 6,324 | |
| 289 | 270 | 1,010 | 886 | 1 | 1 | –53 | –58 | 1,806 | |
| 21 | 19 | 61 | 69 | — | — | –55 | –57 | 133 | |
| 268 | 251 | 949 | 817 | 1 | 1 | 2 | –1 | 1,673 | |
| 5 | 7 | — | 1 | — | — | — | — | 10 | |
| 16 | 16 | 2 | –1 | — | — | –5 | 19 | 37 | |
| –11 | –9 | –2 | 2 | — | — | 5 | –19 | –27 | |
| 17 | –10 | –589 | 48 | — | –3 | 1 | — | –1,180 | |
| 94 | 99 | 603 | 380 | 4 | 4 | –13 | –12 | 1,316 | |
| 11 | 10 | 52 | 49 | 22 | 20 | –27 | –29 | 142 | |
| 83 | 89 | 551 | 331 | –18 | –16 | 14 | 17 | 1,174 | |
| — | 1 | — | — | — | — | — | — | — | |
| –1 | 1 | 57 | 74 | — | — | — | — | 52 | |
| 82 | 91 | 608 | 405 | –18 | –16 | 14 | 17 | 1,226 | |
| — | — | 5 | 1 | — | — | — | — | 6 | |
| 13 | 14 | 158 | 249 | 176 | 199 | –175 | –180 | 245 | |
| 49 | 39 | 171 | 257 | 150 | 181 | –146 | –172 | 312 | |
| –36 | –25 | –13 | –8 | 26 | 18 | –29 | –8 | –67 | |
| 63 | 56 | 6 | 445 | 8 | –1 | –14 | 9 | –21 | |
| — | — | — | — | — | — | — | — | — | |
| 63 | 56 | 6 | 445 | 8 | –1 | –14 | 9 | –21 | |
| 1 | 2 | 20 | 19 | 22 | 21 | –10 | –9 | 37 | |
| 19 | 17 | –48 | 111 | –15 | –2 | –1 | 6 | –76 | |
| 43 | 37 | 34 | 315 | 1 | –20 | –3 | 12 | 18 | |
| 7 | 5 | 29 | 162 | — | — | — | — | 37 | |
| 36 | 32 | 5 | 153 | 1 | –20 | –3 | 12 | –19 | |
Condensed consolidated statement of income for the Retail Germany Division – reportable segments Property/Casualty and Life – as well as the Property/Casualty Reinsurance and Life/Health Reinsurance segments, for the period from 1 January to 30 September 2017 and 1 July to 30 September 2017
EUR million
| Retail Germany – Property/Casualty | Retail Germany – Life | |||||||
|---|---|---|---|---|---|---|---|---|
| 9M 2017 | 9M 2016 | Q3 2017 | Q3 2016 | 9M 2017 | 9M 2016 | Q3 2017 | Q3 2016 | |
| 1. Gross written premiums including premiums from unit-linked life and annuity insurance |
1,284 | 1,260 | 282 | 280 | 3,397 | 3,515 | 1,089 | 1,149 |
| of which attributable to other segments |
— | — | — | — | 45 | 22 | 11 | 10 |
| with third parties | 1,284 | 1,260 | 282 | 280 | 3,352 | 3,493 | 1,078 | 1,139 |
| 2. Savings elements of premiums from unit-linked life and annuity insurance |
— | — | — | — | 649 | 686 | 204 | 222 |
| 3. Ceded written premiums | 66 | 54 | 14 | 9 | 129 | 129 | 44 | 46 |
| 4. Change in ceded unearned premiums |
–181 | –164 | 97 | 93 | –125 | –135 | –49 | –85 |
| 5. Change in ceded unearned premiums |
–12 | –7 | 4 | 6 | 1 | 8 | — | 2 |
| Net premiums earned | 1,049 | 1,049 | 361 | 358 | 2,493 | 2,557 | 792 | 794 |
| 6. Claims and claims expenses (gross) |
683 | 720 | 231 | 242 | 3,260 | 3,310 | 1,010 | 1,070 |
| Reinsurers' share | 13 | 6 | 4 | 7 | 47 | 54 | 13 | 16 |
| Claims and claims expenses (net) | 670 | 714 | 227 | 235 | 3,213 | 3,256 | 997 | 1,054 |
| 7. Acquisition costs and administrative expenses (gross) |
388 | 378 | 128 | 127 | 638 | 541 | 212 | 178 |
| Reinsurers' share | 14 | 12 | 5 | 4 | 55 | 52 | 25 | 24 |
| Net acquisition and administrative costs |
374 | 366 | 123 | 123 | 583 | 489 | 187 | 154 |
| 8. Other technical income | 2 | 2 | 1 | — | 14 | 10 | 2 | 5 |
| Other technical expenses | 5 | 4 | 1 | 1 | 21 | 28 | 19 | 17 |
| Other technical result | –3 | –2 | — | –1 | –7 | –18 | –17 | –12 |
| Net technical result | 2 | –33 | 11 | –1 | –1,310 | –1,206 | –409 | –426 |
| 9. a. Investment income |
84 | 78 | 30 | 25 | 1,629 | 1,511 | 514 | 501 |
| b. Investment expenses | 13 | 9 | 3 | 3 | 220 | 166 | 63 | 54 |
| Net income from assets under own management |
71 | 69 | 27 | 22 | 1,409 | 1,345 | 451 | 447 |
| Net income from investment contracts |
— | — | — | — | — | — | — | — |
| Net interest income from funds withheld and contract deposits |
— | — | — | — | –11 | –11 | –4 | –3 |
| Net investment income | 71 | 69 | 27 | 22 | 1,398 | 1,334 | 447 | 444 |
| of which share of profit or loss of equity-accounted associates and joint ventures |
— | 1 | — | — | 2 | 4 | 1 | — |
| 10. a. Other income |
37 | 39 | 12 | 12 | 107 | 87 | 33 | 33 |
| b. Other expenses |
61 | 84 | 23 | 25 | 128 | 136 | 45 | 45 |
| Other income/expenses | –24 | –45 | –11 | –13 | –21 | –49 | –12 | –12 |
| Profit before goodwill impairments | 49 | –9 | 27 | 8 | 67 | 79 | 26 | 6 |
| 11. Goodwill impairments | — | — | — | — | — | — | — | — |
| Operating profit (EBIT) | 49 | –9 | 27 | 8 | 67 | 79 | 26 | 6 |
1) Adjusted in accordance with IFRS 3.45 within the valuation period; see our explanation in the half-yearly interim report.
| Life/Health Reinsurance | Property/Casualty Reinsurance | |||||
|---|---|---|---|---|---|---|
| Q3 2017 Q3 20162) |
9M 20162) | 9M 2017 | Q3 2016 | Q3 2017 | 9M 20161) | 9M 2017 |
| 1,714 | 5,334 | 5,284 | 2,494 | 2,772 | 7,121 | 8,200 |
| 37 | 109 | 109 | 91 | 92 | 364 | 327 |
| 1,677 | 5,225 | 5,175 | 2,403 | 2,680 | 6,757 | 7,873 |
| — | — | — | — | — | — | — |
| 151 | 455 | 452 | 289 | 309 | 836 | 883 |
| 14 | –38 | –44 | –124 | –35 | –413 | –622 |
| — | — | 1 | –5 | –13 | –53 | –59 |
| 1,577 | 4,841 | 4,787 | 2,086 | 2,441 | 5,925 | 6,754 |
| 1,540 | 4,598 | 4,610 | 1,482 | 3,018 | 4,397 | 6,130 |
| 122 | 403 | 400 | 72 | 780 | 383 | 965 |
| 1,418 | 4,195 | 4,210 | 1,410 | 2,238 | 4,014 | 5,165 |
| 305 | 920 | 973 | 614 | 705 | 1,776 | 2,031 |
| 14 | 43 | 37 | 46 | 47 | 138 | 136 |
| 291 | 877 | 936 | 568 | 658 | 1,638 | 1,895 |
| — | — | — | 1 | — | 1 | 1 |
| 2 | 6 | 4 | — | — | — | 1 |
| –2 –134 |
–6 –237 |
–4 –363 |
1 109 |
— –455 |
1 274 |
— –306 |
| 87 | 308 | 310 | 263 | 516 | 821 | 1,098 |
| — | 45 | 44 | 38 | 52 | 177 | 146 |
| 87 | 263 | 266 | 225 | 464 | 644 | 952 |
| — | — | — | — | — | — | — |
| 46 | 231 | 167 | 7 | 11 | 19 | 13 |
| 133 | 494 | 433 | 232 | 475 | 663 | 965 |
| — | — | — | 1 | 5 | 3 | 10 |
| 388 | 536 | 42 | 8 | 189 | 180 | |
| 150 | 60 | 207 | 227 | |||
| 111 | 363 | 412 | 46 | |||
| 39 | 25 | 124 | –4 | –52 | –18 | –47 |
| 38 | 282 | 194 | 337 | –32 | 919 | 612 |
| — | — | — | — | — | — | — |
This document is a quarterly statement in accordance with section 51a of the Exchange Rules for the Frankfurter Wertpapierbörse.
The consolidated balance sheet, the consolidated statement of income, the consolidated statement of comprehensive income and the consolidated cash flow statement were prepared in accordance with the International Financial Reporting Standards (IFRSs), as adopted by the European Union. The statement was prepared in compliance with the requirements of IAS 34 "Interim Financial Reporting". The same accounting policies were applied as for the consolidated financial statements as at 31 December 2016.
The interim financial statements were prepared in euros (EUR). The amounts shown have been rounded to millions of euros (EUR million). This may give rise to rounding differences in the tables presented in this report. As a rule, amounts in brackets refer to the previous year.
Prepared by the Board of Management and hence authorised for publication in Hannover on 2 November 2017.
Talanx AG's reporting currency is the euro (EUR).
exchange rates for our key foreign currencies
| EUR 1 corresponds to | (reporting date) | Balance sheet | Statement of income (average) |
|||
|---|---|---|---|---|---|---|
| 30.9.2017 | 31.12.2016 | 9M 2017 | 9M 2016 | |||
| AUD | Australia | 1.5074 | 1.4591 | 1.4588 | 1.4989 | |
| BRL | Brazil | 3.7621 | 3.4292 | 3.5493 | 3.9549 | |
| CAD | Canada | 1.4686 | 1.4191 | 1.4557 | 1.4710 | |
| CLP | Chile | 752.2400 | 704.3500 | 730.2010 | 755.2805 | |
| CNY | China | 7.8616 | 7.3206 | 7.5837 | 7.3160 | |
| GBP | United Kingdom | 0.8823 | 0.8553 | 0.8719 | 0.8003 | |
| MXN Mexico | 21.4449 | 21.7854 | 21.0945 | 20.2665 | ||
| PLN | Poland | 4.3139 | 4.4097 | 4.2708 | 4.3550 | |
| USD | USA | 1.1814 | 1.0540 | 1.1150 | 1.1120 | |
| ZAR | South Africa | 15.9366 | 14.4632 | 14.7791 | 16.6280 |
Hannover Rück SE completed its acquisition of UK-based Argenta Holdings Limited on 20 July 2017. The company has therefore been included in the consolidated financial statements for the third quarter on a provisional basis. The costs for the acquisition amounted to EUR 162 million. Net assets of EUR 133 million were acquired and a proportionate goodwill amounting to EUR 15 million was recognised in the balance sheet as part of the transaction.
With effect from 4 October 2017 (date of initial consolidation), Talanx Infrastructure France 2 GmbH (Retail Germany Division) acquired 100% of the shares in the wind farm company Le Louveng S.A. S., Lille, France. The total planned investment volume amounts to EUR 24 million.
Riethorst 2 30659 Hannover Germany Telephone +49 511 3747-0 Telefax +49 511 3747-2525 www.talanx.com
Andreas Krosta Telephone +49 511 3747-2020 Telefax +49 511 3747-2025 [email protected]
Carsten Werle Telephone +49 511 3747-2231 Telefax +49 511 3747-2286 [email protected]
This is a translation of the original German text; the German version shall be authoritative in case of any discrepancies in the translation.
Quarterly Statement online: www.talanx.com/investor-relations
@talanx @talanx_en
23 November 2017 Capital Markets Day
19 March 2018 Results Press Conference 2017
8 May 2018 Annual General Meeting
11 May 2018 Quarterly Statement as at 31 March 2018
13 August 2018 Interim Report as at 30 June 2018
12 November 2018 Quarterly Statement as at 30 September 2018
Talanx AG Riethorst 2 30659 Hannover Germany Telephone +49 511 3747-0 Telefax +49 511 3747-2525 www.talanx.com
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