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Talanx sees YOY drop in Q2 net income

Talanx AG reported second-quarter consolidated group net income after noncontrolling interests of €219 million under International Financial Reporting Standards, down from €225 million in the year-ago period.

Gross written premiums rose year over year to €8.20 billion from €7.80 billion. Net premiums earned came in at €7.45 billion, up from €6.75 billion.

Return on equity was 10.1%, compared to 9.8% a year earlier.

Net investment income dipped year over year to €944 million from €1.07 billion.

For the first half, the group posted consolidated group net income after noncontrolling interests of €437 million, down from the year-ago €463 million.

The group-wide combined ratio over the first six months improved to 96.7% from 97.0%.

In the industrial lines division, first-half gross written premiums rose 3.7% year over year to €2.9 billion, but the underwriting result resulted in a loss of 28 million, compared to a year-ago gain of 32 million, and the combined ratio deteriorated to 102.3% from 97.2%, primarily due to the higher property claims in the current financial year, mainly in the German fire line.

Talanx said it was "not satisfied" with the results in the industrial lines division's fire line in Germany, and that through its "20/20/20 Program" it plans to reduce the combined ratio in the affected 20% of the industrial lines portfolio to "well below" 100% by 2020. To that effect, the company will implement premium increases of 20% on average.

The adjustments to rates are already under way and about one third of the necessary price increases had been applied by mid-2018, the company said. Reduction in market share and giving up some business are also options Talanx may consider.

The Hanover, Germany-based company continues to expect group net income of about €850 million for 2018 and ROE of about 9.0%. It still expects an increase of more than 5% in gross premiums for 2018.

The comparative 2017 figures were adjusted in accordance with IAS 8, the group noted.