unicredit keplercheuvreux german corporate conference4 unicredit keplercheuvreux german corporate...

Dr. Immo Querner, CFOFrankfurt, 22 January 2014

UniCredit KeplerCheuvreuxGerman Corporate Conference

UniCredit KeplerCheuvreux German Corporate Conference, Frankfurt, 22 January 20142

Talanx - Key Investment Highlights

Commitment to continuously fulfill a „AA“ capital requirement by Standard & Poor‘s

Focus on long-term increase in value by sustainable and profitable growth

Global insurance group with leading market positions and strong German roots

Target to further improve net income result in 2014

Dedication to pay-out 35-45% of IFRS earnings to shareholders

Dedication to focus on insurance rather than market risks

Leading and successful B2B insurer


Appendix

II Outlook and targets

I Talanx in a nutshell


Talanx in a nutshell – A global insurance player

Countries with local presence

Location overview in Primary and in Reinsurance

Global networks in Industrial Lines and Reinsurance. Leading positions in retail target markets

2000 9M 2013

Branch / office location Primary Insurance Branch / office location Reinsurance

GWP split (Primary/Reinsurance): 44% / 56%Employees (Germany/abroad): 4,539 / 1,511

GWP split (Primary/Reinsurance): 51% / 49%Employees (Germany/abroad): 11,012 / 10,341


Talanx in a nutshell – Among the leading European insurance groups

99.2

84.6

69.6

52.0

39.9

36.9

28.0

26.7

26.4

24.7

Allianz

Axa

Generali

Munich Re

Zurich

GPE Prudential

Aviva

CNP

Swiss Re

European insurers by global GWP (2012, €bn)German insurers by global GWP (2012, €bn)

Listed insurers

1

2

2

Third-largest German insurance group with leading p osition in Europe and strong roots in Germany

1 Cumulated individual financial statements 2 Gross premiums earnedSource: SNL Financial, annual reports

Top 10 European insurersTop 10 German insurers

99.2

52.0

26.7

11.9

9.3

6.9

5.6

5.5

4.2

4.0

Allianz

Munich Re

R+V

Debeka

Vk Bayern

Signal Iduna

HUK

Gothaer

W&W


Talanx in a nutshell - Shareholders and divisions

Industrial Lines Retail Germany Retail International Reinsurance

Life/HealthNon-Life

V.a.G.Free float

6.5 %79.0 %14.5 %1

� Lead insurer of choice

� Extremely strong home market position, i.e. lead mandates with most German DAX companies and strong position with German Mittelstand

� Bluechip client base in Europe

� Highly effective network of distribution partners

� Market leader in bancassurance

� Market leader in employee affinity business

� Leading provider of corporate pension solutions

� Hannover Re – world #3 reinsurer by GWP4

� Well diversified between life/non-life and geographically

� Consistently amongst sector leaders on profitability5

� Superior underwriting know-how

� Focused exposure to CEE and LatAm (#2 insurer in Poland2, #6 in Brazilian motor3)

� Attractive rates of organic growth

� Experienced underwriter in motor

� Focused M&A track record

1 including employee shares2 Combined ranking based on 2012 data of Polish regulator as per local GAAP 3 According to Siscorp based on local GAAP4 Based on A.M. Best ranking (September 2012)5 Based on S&P ranking by average RoE 2002-2010 and also number 1 by average RoE as per KPMG 2012

Integrated insurance group with leading market posi tions in all segments


Talanx in a nutshell – Strategic group pillars

Profit target

� RoE1>∅ TOP20 European insurers

� RoE1≥risk-free interest rate2

+750bps

Capital management

� Fulfill S&P “AA”capital requirement

� Efficient use of available financing instruments

Risk management

� Generate positive annual earnings with a probability of 90%

� Sufficient capital to withstand at least an aggregated 3,000-year shock

� Investment risk ≤50%

Growth target

� 50% of primary GWP from foreign operations

� Selective profitable growth in Retail Germany and Reinsurance

Human resource policy

� Continuous development and promotion of own workforce

� Individual responsibility and entrepreneurial spirit

Focus of the Group is on long-term increase in value by sustainable and profitable gro wth

and vigorous implementation of our B2B-expertise

Group and divisional strategies define goals and ac tions to be taken

1 In accordance with IFRS2 Risk-free rate is defined as the 5-year rolling average of the 10-year German government bond yield


Talanx in a nutshell – Target achievement after 9M 2013

10.0%9.8%10.0%

4.5%

11.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2009 2010 2011 2012 9M 2013

0

100

200

300

400

500

600

700

2009 2010 2011 2012 9M 2013

in mn €

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2009 2010 2011 2012 9M 2013

in €bn

3.7%4.2% 4.0%

4.3%4.0%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

2009 2010 2011 2012 9M 2013

2013 Outlook Rol > 3.5%

2013 Outlook RoE ≥ 750 bps + risk-free1 2013 Outlook Net income ~€700m; pay-out ratio 35-45%

2013 Outlook GWP growth ≥4%

+12.6%

+7.7%+3.6%+9.3%

+10.1%

Return on Investment GWP growth

Return on Equity Net income and Payout

pay-outratio2012 42.1%(€1.05 p.s.)

485

216

515

630528

1 Risk-free rate is defined as the 5-year rolling average of the 10-year German government bond yield (ROE target 2013: 9.8%)

target ROE


Talanx in a nutshell - Industrial Lines

Key figures

Highlights

� A leading provider of industrial insurance capacity in Germany� Long standing and close relationships with European blue chips and major German “Mittelstand” companies� Highly experienced and long-term consistent management team� Lead insurer of choice and highly experienced leader of international programmes� Track record of 15 years successfully building an international network� Attractive cost structure� High profitability over the cycle

1 Based on total GWP adjusted for 50.2% share in Hannover Re2 Including income from interest on deposits

2012 geographic split (GWP)Share in 2012 group GWP 1

106.295.188.6104.1Combined ratio (net)2 in %

Key financials (€m) 2010 2011 2012 9M 2013

Gross written premium 3,076 3,138 3,572 3,128

Net premium earned 1,413 1,375 1,608 1,345

Net underwriting result (57) 155 79 (83)

Net investment income 231 204 247 167

Operating result (EBIT) 185 321 259 60

Return on Equity in % 8.8 12.4 8.5 2.5

Talanx is a leading European industrial lines insur er with global ambitions

Germany International

17%

83%

51%49%


Talanx in a nutshell - Retail Germany

2012 business mix (GWP)Share in 2012 group GWP 1

Key figures

Highlights

� Leading positions in German Life and P&C� Excellent customer access through innovative distribution strategy

– B2B focussed specialised distribution channels– Unrivalled client access in German bancassurance– Specialist know-how and market leader in employee affinity business– Superior access to leading brokers

101.6100.6101.6104.2Combined ratio (net)2 in %




Net underwriting result (1,631) (1,258) (1,423) (1,130)

Net investment income 1,577 1,530 1,621 1,319

Operating result (EBIT) (44) 110 98 111

Return on Equity in % -1.7 2.7 4.7 3.2

Strong German retail insurance business – more than 70% from B2B distribution channels

1 Based on total GWP adjusted for 50.2% share in Hannover Re2 Including interest income on funds withheld and contract deposits; net, property/casualty only

33% 78%22%

Life Non-life


Talanx in a nutshell - Retail International

Share in 2012 group GWP 1

Key figures

95.896.299.3105.2Combined ratio (net) in %




Net underwriting result (136) (42) 3 22

Net investment income 151 159 281 215

Operating result (EBIT) 273 54 107 157

Return on Equity in % -2.8 6.4 3.5 7.3

2012 business split (GWP)

2012 geographic split (GWP)

LatAm2

Western Europe2

CEE/CIS2

16%

71%

29%

Non-Life Life

43%

33%

24%

� In 2012 Retail International was active in 15 countries outside Germany with a focus on Latin America (LatAm) and CEE� P&C: strong growth with focus on growth driver motor insurance� Life: significant growth potential with focus on risk business� Strong growth pattern with organic GWP growth 2012 of 8% y/y in focus regions LatAm and CEE (LatAm: 14%; CEE: 5%)� Disciplined M&A track record� Export of the successful bancassurance model

Highlights

Focus on major growth markets in Latin America and CEE

1 Based on total GWP adjusted for 50.2% stake in Hannover Re2 CEE/CIS including Turkey and Russia; LatAm including Mexico; Western Europe including Italy, Austria, Liechtenstein and Luxembourg3 EBIT 2010 after income allowance from Talanx AG (before income allowance: EBIT 2010 = €-41m)


Talanx in a nutshell - Reinsurance

Key figures

Highlights

� Strong market positioning – Third-largest global reinsurer� Top rating (S&P: AA-; A.M. Best: A+) ensures attractive new business � Consistently among the most profitable reinsurers globally� Cost leader� Strong growth track record� Strong risk management both qualitative and quantitative� Conservative investment policy � Very good diversification (across business lines life / non-life as well as geographically)� Lower volatility due to improved diversification� Strong cash generation

n.m.n.m.n.m.95.095.8104.3Comb.Ratio2 in %

Key financials (€m)Non-life Life / health

2011 2012 9M 2013 2011 2012 9M 2013

Gross written premium 6,826 7,717 5,956 5,270 6,058 4,582

Net premium earned 5,961 6,854 5,093 4,789 5,426 4,024

Net investment income 845 945 600 513 685 460

Operating result (EBIT) 599 1,092 800 218 291 140

GWP development (total, €bn)Share in 2012 group GWP 1

11.4 12.113.8

2010 2011 2012

Hannover Re is one of the largest and most profitab le reinsurers globally

1 Based on total GWP adjusted for 50.2% share in Hannover Re2 Incl. expenses on funds withheld and contract deposits; net

34%

Reinsurance

14.816.614.2Return on Equity in %

9M 201320122011


Talanx in a nutshell – Sources for growth

� Growth through globalisation

� Increase retentionIndustrial Lines

� Elimination of cost disadvantages

� Intelligent products and B2B focusRetail Germany

� Focus on emerging markets (LatAM / CEE)

� Consolidation and integration of acquisitionsRetail International

� Efficient cycle management

� Expansion into emerging marketsReinsurance


Appendix




Outlook and targets – Outlook 20131

Targets are subject to no large losses exceeding bu dget ( cat ), no turbulences on capital markets ( capital ), and no material currency fluctuations ( currency )

Gross written premium 2 ≥ +4%

Return on investment > 3.5%

Group net income ~ €700m

Return on equity ~ 10%

Dividend payout ratio 35-45% target range

1 The outlook is based on a remaining large loss budget of ~€180m

2 On divisional level, Talanx expects gross written premium growth of ~+4-6% in Industrial Lines, a flat development in RetailGermany, ~+17-20% in Retail International, ~+3-5% in Non-Life Reinsurance and ~+5-7% in Life and Health Reinsurance

Talanx Group


Outlook and targets – Targets 20141

Talanx Group

Targets are subject to no large losses exceeding bu dget ( cat ), no turbulences on capital markets ( capital ), and no material currency fluctuations ( currency )

Gross written premium 2 +2-3%

Return on investment ~ 3.4%

Group net income ≥ €700m

Return on equity ~ 10%

Dividend payout ratio 35-45% target range

1 The targets are based on an increased large loss budget of €185m (from €80m) in Primary Insurance and €670m (from €625m) in Reinsurance

2 On divisional level, Talanx expects gross written premium growth of +3-5% in Industrial Lines, -(1-2)% in Retail Germany, +4-8%in Retail International and a low single-digit growth rate in Reinsurance


Outlook and targets – Mid-term target matrix

1 Risk-free rate is defined as the 5-year rolling average of the 10-year German government bond yield

2 Derived from actual asset duration. Currently ~ 6.5 years, therefore the minimum return is the 13-year average of 13-year German government bond yield. Annually rolling

Segments Key figures Strategic targets

GroupReturn on equity ≥ 750 bps above risk free1

Group net income growth ~ 10%

Dividend payout ratio 35 - 45%

Return on investment2 ≥ 3.5%

Industrial LinesGross premium growth3 3 - 5%

Combined ratio ≤ 96%

EBIT margin4 ≥ 10%

Retention rate 60 - 65%

Retail GermanyGross premium growth ≥ 0%

Combined ratio (non-life) ≤ 97%

New business margin (life) ≥ 2%

EBIT margin4 ≥ 4.5%

Retail InternationalGross premium growth3 ≥ 10%

Combined ratio (non-life) ≤ 96%

Value of New Business (VNB) growth 5 - 10%

EBIT margin4 ≥ 5%

Non-life reinsuranceGross premium growth 3 - 5%

Combined ratio ≤ 96%

EBIT margin4 ≥ 10%

Life & health reinsuranceGross premium growth3 5 - 7%

Value of New Business (VNB) growth ≥ 10%

EBIT margin4 financing and longevity business ≥ 2%

EBIT margin4 mortality and health business ≥ 6%

3 Organic growth only; currency neutral4 EBIT/net premium earned

Note: growth targets are on p.a. basis


Appendix




Appendix - 9M 2013 results at a glance

Summary of 9M 2013

Diversification helps to digest nat cat losses on Gr oup level

€m, IFRS 9M 2013 9M 2012 ChangeGross written premium 21,380 19,847 +8 %Net premium earned 17,103 15,851 +8 %

Net underwriting result (1,242) (1,147) (8) %

Net investment income 2,814 2,817 (0) %Operating result (EBIT) 1,362 1,313 +4 %Net income after minorities 528 550 (4) %

Key ratios 9M 2013 9M 2012 ChangeCombined ratio non-lifeinsurance and reinsurance

97.5% 97.1% 0.4 %pts

Return on investment1 4.0% 4.3% (0.3)%pts

Balance sheet 9M 2013 FY 2012 ChangeInvestments underown management

86,070 84,052 +2 %

Goodwill 1,102 1,152 (4) %

Total assets 133,119 130,350 +2 %

Technical provisions 91,992 89,484 +3 %

Total shareholders' equity 10,902 11,309 (4) %

Shareholders' equity 6,985 7,153 (2) %

Comments

� 8% y/y growth in gross written premium (currency-adjusted +10%, organically +5%) and similar growth pace in net premium earned

� Combined ratio rises by just 0.4%pts despite the significantly higher loss burden of €668m in 9M 2013 vs. €243m in 9m 2012

� Return on investment slightly down, but still at 4.0% level. Net investment income virtually unchanged y/y

� EBIT increases by 4% y/y

� 2013 net income includes positive “Swiss Life”effect (€96m in H1 2013). On the contrary, negative base effect, mainly from capitalisation of deferred tax assets in Q3 2012. 9M 2013 tax rate of 26.0% compares with 18.6% in 9M 2012

� Shareholders’ equity up again to €6,985m, or €27.65 per share. Solvency I ratio at 212% (FY2012: 225%, 6M 2013: 206%)1 Annualised

2012 numbers in this presentation adjusted on the basis of IAS8


Appendix - Germany suffers from an exceptional nat cat year 2013

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

year

Mean (2002-2012 losses):€ 922m p.a. =100%

61%

≥220%

174%

67% 69%59%

69%

214%

114%

53%

111% 109%

- Elbe Flood- Storms, e.g.

„Jeanett“

Losses from nat cat events in residential property ( Germany)

Storm „Kyrill“

- Flood- Hailstorm„Andreas“

(Jan – Sep)

Q1 Q2 Q3 Q4

According to German Insurance Association (GDV) rec ord €7bn losses from nat cat in 2013

Source: Industry numbers from GDV (German Insurance Association)


Appendix - Solvency capital position

� Talanx has extensive experience in innovative capital management

� As of 30 September 2013, available funds include €1.7bn of subordinated debt2

� Goodwill of €1.1 bn as of 30 September 2013 (relative to shareholders’ equity excl. minorities of €7.0bn)

(€bn)

Solid solvency and high-quality capital with relati vely low goodwill supporting optimal balance sheet strength

1 Talanx Group based on the solvency of HDI V.a.G. (HDI V.a.G. is the relevant legal entity for the calculation of group solvency from a regulatory perspective)2 €1.7bn of the Group’s total subordinated debt (€3.1bn) are eligible for Solvency I capital (after accounting for minority interest and capped by regulatory thresholds)

CommentsSolvency I capital position

Solvency I margin1

197% 202% 225% 212%

6.46.8

7.9

3.2 3.4 3.7

2010 2011 2012 30/09/13

Available funds Solvency capital requirements

8.4

3.7


Appendix - Rating overview

Standard & Poor’s A. M. Best

12/06/13 16/05/13

Grade Outlook Grade Outlook

Talanx Group1 A Stable

Talanx Primary Group2 A+ Stable

Hannover Re subgroup3 AA– Stable A+ Stable

rating of Talanx Primary GroupCurrent financial strength ratings

Financial strength underpinned by S&P and A.M. Best ratings

1 The designation used by A. M. Best for the Group is “Talanx AG and its leading non-life direct insurance operation and its leading life insurance operation”2 This rating applies to the core members of Talanx Primary Group (the subgroup of primary insurers in Talanx Group)3 This rating applies to Hannover Re and its major core companies. The Hannover Re subgroup corresponds to the Talanx Reinsurance segment4 Insurance Industry and Country Risk Assessment

Business Risk Profile

Strong

Financial Risk Profile

Very Strong

ERM

Strong

Management & Governance

Satisfactory

Capital & Earnings

Very Strong

IICRA 4)

Intermediate Risk

Risk Position

Intermediate Risk

Competitive Position

Strong

Risk Position

Strong

Liquidity

Exceptional

Anchor rating a+ Modifiers


Appendix - Focus on insurance risk

Market risk 3

Non-life risk 2

Further life risk

Operational riskOther risk

� Total market risk of 39%, of solvency capital requirements, which is comfortably below the 50% limit

� Risk capacity priority for insurance risk

� Non-life is the dominating insurance risk category, comprising premium and reserve risk, NatCat and counterparty default risk

� Equities ~1% of investments under own management (Q3 2013)

� GIIPS sovereign exposure 0.9% of total assets (Q3 2013)39%

39%

16%

5%1%

Talanx Group

Market risk sensitivity (limited to less than 50% o f solvency capital requirement) is deliberately low

1 Figures show approximate risk categorisation, in terms of solvency capital requirements,of the Talanx Group after minorities, after tax, post diversification effects as of 2012

2 Includes premium and reserve risk (non-life), net NatCat and counterparty default risk3 Refers to the combined effects from market developments on assets and liabilities

CommentsRisk components of Talanx Group 1


Appendix – B2B distribution as a key differentiator

Brokers

Bancassurance

Automotive

Retail International

Retail GermanyIndustrial Lines

Reinsurance

Employee affinity

business

Retail Industrial

Brazil

Core value proposition:

B2B competence

B2B2C

B2B2C

Superior service of corporate relationships lies at heart of our value proposition

1 Samples of clients/partners

Excellence in B2B2C channels 1Linkage between different Group segments


Appendix - HDI V.a.G. history and structure

HistoryOverview V.a.G.

� HDI V.a.G. is a mutual insurance company and majority-owner of the holding company Talanx AG

� The organisational setup reflects the historic roots of HDI, an association of important companies of the German industry that offers mutual insurance cover

� Approx. 0.8m members of HDI V.a.G.

� Alignment of interests of HDI V.a.G. and Talanx Group through

- Providing efficient and reliable insurance to mutual members at market rates, often syndicate-based

- Same decision makers: Mr Haas, Dr Hinsch, Dr Querner

- HDI V.a.G. has no other investments besides Talanx and is interested to further strengthen and enable Talanx to provide stable insurance capacity to industrial clients

- Talanx and HDI V.a.G. committed to capital market oriented dividend policy

Foundation as ‘Haftpflichtverband derdeutschen Eisen- und Stahlindustrie‘ in Frankfurt

Relocation to Hannover

Companies of all industry sectors are able to contract insurance with HDI V.a.G.

Foundation of Hannover Rück-versicherungs AG

Diversification into life insurance

IPO of Hannover Rückversicherung AG

Renaming of HDI Beteiligungs AG to Talanx AG

Start transfer of insurance business from HDI V.a.G. to individual entities

Acquisition of Gerling insurance group by Talanx AG

IPO of Talanx AG

1903

1919

1953

1966

1991

1994

1998

2001

2006

2012


Talanx Investor Relations

Contact

Talanx AGRiethorst 230659 [email protected]

Carsten Werle, CFAPhone: +49 511 3747 [email protected]

Marcus Sander, CFAPhone: +49 511 3747 [email protected]

Wiebke ErlerPhone: +49 511 3747 [email protected]

Financial Calendar

24 March 2014Annual Report 2013

08 May 2014Annual General Meeting

15 May 2014Interim Report Q1 2014

26/27 June 2014Capital Markets Day (Warsaw)

14 August 2014Interim Report 6M 2014

13 November 2014Interim Report 9M 2014


This presentation contains forward-looking statements which are based on certain assumptions, expectations and opinions of the management of Talanx AG (the "Company") or cited from third-party sources. These statements are, therefore, subject to certain known or unknown risks and uncertainties. A variety of factors, many of which are beyond the Company’s control, affect the Company’s business activities, business strategy, results, performance and achievements. Should one or more of these factors or risks or uncertainties materialize, actual results, performance or achievements of the Company may vary materially from those expressed or implied as being expected, anticipated, intended, planned, believed, sought, estimated or projected.in the relevant forward-looking statement.

The Company does not guarantee that the assumptions underlying such forward-looking statements are free from errors nor does the Company accept any responsibility for the the actual occurrence of the forecasted developments. The Company neither intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from those anticipated.

Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by the Company as being accurate.Presentations of the company usually contain supplemental financial measures (e.g., return on investment, return on equity, gross/net combined ratios, solvency ratios) which the Company believes to be useful performance measures but which are not recognised as measures under International Financial Reporting Standards, as adopted by the European Union ("IFRS"). Therefore, such measures should be viewed as supplemental to, but not as substitute for, balance sheet, statement of income or cash flow statement data determined in accordance with IFRS. Since not allcompanies define such measures in the same way, the respective measures may not be comparable to similarly-titled measures used by other companies. This presentation is dated as of 20 January 2014. Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. This material is being delivered in conjunction with an oral presentation by the Company and should not be taken out of context.

Disclaimer

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