Strategy

The paramount strategic objective of the Talanx Group is the ongoing refinement of an ownership structure that safeguards on a lasting basis the independence of the Group and its focus on a shareholder value orientation. This is driven by the firm conviction that only on this basis can company policy be geared to reliable continuity, above-average profitable growth and hence long-term value enhancement. This is done with the intention of living up to the interests of both shareholders and – so to speak as a prerequisite – policyholders and staff in a balanced manner and generating the greatest possible benefit for these groups. This is accomplished by way of a strong Talanx Group that is continuously able to provide the best possible insurance protection by consistently safeguarding and optimizing its equity base and capital allocation. As a binding guiding principle, this strategic objective forms the basis from which all other company goals are derived.

Profit target

The Talanx Group strives for continual, above-average value enhancement of the invested capital. We seek to rank among the five most profitable of Europe’s 20 largest insurance groups – measured by our sustained return on equity under IFRS. Our Group’s minimum target in relation to profitability: a return on equity 750 basis points in excess of the average risk-free market interest rate for 10-year German government bonds over the past five years.

On the Group level we ensure that all company-specific profit targets at least satisfy the defined target return on equity.

Capital management

The capital management of the Talanx Group is geared to an optimized risk-adequate capital structure in order to reinforce the Group’s financial strength.

This is achieved in two ways: firstly, we minimize the cost of capital by using appropriate equity substitutes and financing instruments; secondly, we align our equity resources such that they at least meet the standards of Standard & Poor’s capital model for an “AA” rating. In accordance with the profit target, equity resources above and beyond this requirement are established to enhance our independence from the international insurance markets and hence promote the optimal provision of insurance capacity and protection.

Capital resources are allocated to those areas that promise the highest risk-adjusted post-tax profit over the medium term. In this context we make allowance for the desired portfolio diversification and, in particular, the regulatory framework. Measurement is based on the expected contribution to value added, derived from the coordinated business plans.

Growth target

In order to preserve and further improve our competitiveness, we strive for profit-oriented growth within the Talanx Group while preserving the optimal segmental and regional diversification of the portfolio. This is achieved organically, by way of strategic and complementary acquisitions as well as through cooperations – with a preferred concentration on the segments of Property/Casualty Primary Insurance, Life Primary Insurance and Life/Health Reinsurance.

The growth strategy pursued by Talanx is geared to diversification of the portfolio with a view to optimizing the risk-adjusted return generated by the Group.

Along with segment-oriented diversification, our stated strategic objective is more extensive regional risk spreading within the individual primary insurance segments. The Talanx Group additionally targets complementary acquisitions outside Europe in selected growth markets. In the medium term, it is envisaged that the proportion of gross premium generated in Germany from primary insurance business should not amount to more than half the total gross premium income from primary insurance. In view of the different risk profiles of our various divisions, we set ourselves exclusively profit targets in volatile segments. In less risk-exposed segments we define both profit and growth targets.