The acceptance of risks in return for payment constitutes the core of our business, and a highly developed level of risk awareness is vital to our success if we are to consistently maximize our opportunities. With its various Group segments the Talanx Group offers an extensive range of products encompassing not only insurance but also financial and other services. Talanx AG and its subsidiaries consequently employ a diverse range of methods and tools for risk monitoring and controlling.

Our decision-making processes and monitoring mechanisms not only satisfy the comprehensive requirements placed on reporting and information systems by the Insurance Supervisory Act, they also extend to the compilation and examination of the annual and consolidated financial statements, the internal control system and the use of powerful planning and controlling tools.

In accordance with an approach geared to ensuring comparatively extensive individual responsibility and decentralization, the subsidiaries each maintain their own risk management systems; for they are best able to assess and quantify their risks and implement timely risk controlling measures. Group Risk Management nevertheless defines guidelines for the structuring of local risk management systems – thereby assuring a consistent minimum standard across the Group that may be aggregated – and determines the risk situation of the Talanx Group as a whole from the local risks with the aid of an internal risk model. This internal risk capital model enables us to precisely quantify the risks. As we transition to an internal, stochastic Solvency II-compliant system approved by regulators, it is currently still based in key respects on a refined so-called GDV (German Insurance Association) standard model and is used for the analysis and measurement of individual risks as well as of the Group’s overall risk position. The purpose of the risk quantification is to calculate the risk capital on the basis of a 99.5% Value at Risk. The time horizon considered under the model is a calendar year. The risk model makes allowance for correlations between Group companies and risk categories. A stochastic risk capital model is currently under development that will facilitate the Talanx-wide use of internal models. The Federal Financial Supervisory Authority (BaFin) has begun to examine this model.

As far as capital resources are concerned, we strive for a capital adequacy ratio in our internal risk capital model that gives us a sizeable safety cushion. As a collateral condition to regulatory overfulfillment of capital adequacy, Talanx pursues a target rating corresponding to the Standard & Poor’s category of “AA”.

Group Risk Management holds quarterly meetings with the responsible risk officers at the subsidiaries in order to remain constantly updated on the risk situation at the subsidiaries. The responsible risk officers at the subsidiaries report material changes in the risk position to Group Risk Management on an ad hoc basis. Regular reporting on both current business developments and on risk management ensures that the Board of Management of Talanx AG is kept constantly updated on risks and can intervene as necessary; the Supervisory Board is also kept regularly informed of the risk situation.

The Risk Committee of the Talanx Group monitors the capitalization and risk profile of the entire Group and ensures that the relationship between these two parameters is appropriate and in accordance with the risk strategy. The Risk Committee is also tasked with ensuring that comprehensive risk awareness is firmly anchored in the Talanx Group.

The potential implications of risks are not only documented but also incorporated into the annual planning of the Group companies, thereby making it possible to allow for the risks of future development and accommodate appropriate countermeasures in a timely manner. The plans drawn up by all Group companies and for the Group as a whole are discussed and approved by the Board of Management of Talanx AG.