OREANDA-NEWS. The  Talanx Group posted a pleasing business performance in the first quarter of 2015. Group net income improved by 16.2 percent year-on-year to EUR 251 (216) million. The Group lifted gross premiums by 12.2 percent to EUR 9.4 (8.4) billion (6.8 percent after adjustment for exchange rates) in the first quarter, which was driven by the expansion of its international business and the depreciation of the euro. The domestic business also recorded higher premium income in the first quarter.

“Our pleasing business performance in the first quarter of 2015 is a clear sign that our diversification and internationalisation strategy is bearing fruit. In light of this, we are confirming our target of generating Group net profit of at least EUR 700 million in 2015”, said Herbert K. Haas, Chief Executive Officer of Talanx AG. “The persistent low interest rate environment and competitive markets for industrial insurance and reinsurance continue to pose significant challenges. Nevertheless, we are confident of successfully overcoming them.”

The Group recorded catastrophe losses of EUR 156 (41) million in the period under review, higher than in the prior-year quarter. The first quarter was dominated by major losses from storm “Niklas”, the crash of Germanwings flight 4U9525 and several fire losses in the Industrial Lines Division. Major losses of EUR 94 (10) million were attributable to primary insurance, while the figure for reinsurance was EUR 62 (31) million. However, at EUR 156 million, losses were within the Group’s forecast major loss budget of approximately EUR 230 million.

The higher losses saw the combined ratio rise to 96.5 (94.3) percent. The underwriting result for the Group as a whole widened to EUR –389 (–370) million. Overall, this was once again dominated by the participation of German life insurance customers in investment income, which reduces the underwriting result under IFRSs. Net investment income remained unchanged at EUR 1.0 (1.0) billion. Write-downs on Heta Asset Resolution bonds reduced Group net income by approximately EUR 4 million in the first quarter of 2015.

A significant improvement in net foreign exchange gains had a positive impact on operating profit (EBIT). This rose by 16.1 percent to EUR 643 (554) million due in particular to the good results posted by Life/Health Reinsurance.

Group net income improved by 16.2 percent to EUR 251 (216) million. Earnings per share amounted to EUR 0.99 (0.86) in the first quarter.

The solvency ratio in accordance with Solvency I was 243 percent as at 31 March 2015 (31 December 2014: 228 percent).

Talanx also published its risk management reports at the same time as the quarterly results. The Group’s economic solvency ratio as at 31 December 2014 for the internal model developed according to the future Solvency II regime is 194 (333) percent. Talanx achieved this figure despite changes to the model made necessary by stricter regulatory requirements and despite the continuing low interest rate environment. Including hybrid capital and surplus participation funds, the ratio was 271 percent. These results underline Talanx’s solid capitalisation. The Group is on track to implement the internal model for Solvency II in good time for the 1 January 2016 deadline and to submit a corresponding application to BaFin in June.