Our first full year as a listed company has gone very well for all of us. Talanx’s performance was outstanding, and we are also pleased with the increase in our share price. We have achieved this result despite the sovereign debt crisis in parts of Europe and the devastating weather events in Central Europe. Group net income rose to EUR 762 million, while gross written premium also reached a record level of EUR 28.1 billion. Results like these do not get generated automatically, but are achieved through the hard work of every one of our employees; I would like to thank them sincerely for their performance and commitment.
2013 was dominated by an exceptional accumulation of natural disasters in Central Europe. Floods in Germany, Austria and Poland caused around EUR 16 billion in economic losses. This led to a net burden of EUR 176 million at Talanx, of which EUR 83 million was in the primary insurance segments. Hailstorm “Andreas”, which swept over large parts of Germany in July, also caused a substantial net burden of around EUR 156 million. Other major losses also occurred, placing a total burden of EUR 838 million on our result.
Like all major investors, we naturally face a particularly large challenge from continuing low interest rates. The sovereign debt crisis in Europe is not yet completely over. However, we have seen progress in some southern European countries. Although yields on government bonds have risen slightly outside Europe, achieving adequate returns on investment remains very difficult. We are responding to the capital market environment by adding alternative long-term investments such as infrastructure projects, but without reaching our risk limit. We will nevertheless, like other major investors, have to deal with falling returns on investment in the near future. Once again, we face the challenge of compensating for a decline in investment income with an improvement in the underwriting result. We managed this very well in 2013, and our divisions have geared their plans towards this again for the next year.
The last year has also shown us that it was the right decision to pursue the internationalisation of Talanx Group. The Group’s international focus helped us to handle the accumulation of weather events in Germany last year. Regions outside Central Europe were largely spared storms and other freak weather events, enabling us to increase our profit with the contribution from these countries.
However, internationalisation has not just helped us with the diversification of the technical account. Latin America and Central and Eastern Europe have made a significant contribution to Talanx’s growth in retail business, while the Industrial Lines Division has increasingly expanded abroad. Development in Germany was stable, enabling us to grow substantially and achieve our targets for 2013.
On the whole, the impetus for growth will continue to come from abroad in future. The growing economies of emerging countries are playing an increasingly important part in retail business. Growth in the Industrial Lines Division is coming from countries outside Europe, where our Reinsurance Division also forsees good opportunities.
The focus in Germany remains on growth in income. The Retail Germany Division has improved its profitability and slightly increased its premium volume. As well as the expansion of business with third party liability, accident and other types of non-life insurance, long-term growth opportunities here inevitably lie in pensions, owing to demographic changes. Whether it’s private or company pensions, the age pyramid in Germany and the reduction in statutory pension benefits make additional private cover essential. This is why we believe there is a future in life insurance business, including financial protection against occupational disability and other biometric risks.
2013 was a year of consolidation. Talanx successfully integrated its acquisitions in Mexico and Poland into the Group. The integration of the two Polish companies WARTA and TU Europa was completed exceptionally quickly. The branches that the Industrial Lines Division opened in Canada, Singapore and Bahrain in 2012 expanded their activities. In this respect, we met all of our integration targets.
In economic terms, we improved important key figures at Group level in the financial year. Operating profit (EBIT) grew by 2% year-on-year to EUR 1.8 billion, while Group net income after taxes and minority interests rose significantly to EUR 762 million, partly owing to one-off effects. This represented an increase of 22%. Income from the sale of shares in Swiss Life contributed to this, as did one-off tax effects. The return on equity for 2013 was 10.6%, exceeding our minimum target of 9.8%.
Our majority shareholder, HDI V. a. G., increased Talanx’s free float by 3.3 percentage points to 14.5% (including the issuing of employee shares) through an equity placement last year, thereby strengthening the position of Talanx shares on Germany’s MDAX stock exchange index. HDI V. a. G. now holds 79.0% of shares in Talanx.
We want our shareholders to share in our good performance. The Board of Management and Supervisory Board will propose to the General Meeting that a dividend of EUR 1.20 per share be paid. This represents an increase of EUR 0.15 per share in the dividend and a dividend yield of 4.9% based on the year-end price. We want to continue paying an attractive dividend based on the company’s performance in future.
Talanx AG is now in its third year on the stock market. We will have to prove ourselves on the capital market once again in 2014, but we are happy to rise to this challenge. I would like to extend heartfelt thanks to you for the confidence you have shown in Talanx. My colleagues on the Board of Management and I, together with our employees, will do everything we can to continue the Talanx Group’s success in the long term and to justify your confidence in us. We look forward to meeting many of you in person at our Annual General Meeting on 8 May 2014. We also hope you will remain favourably disposed towards us.
Herbert K. Haas