Talanx Raises Dividend After Quarterly Profit Triples

Talanx AG, Germany’s third-biggest insurer, plans to raise the dividend after fourth-quarter profit tripled on higher industrial insurance earnings and lower taxes at its reinsurance unit.

Net income rose to 227 million euros ($313 million) from 76 million euros a year earlier, the Hanover, Germany-based insurer said in a statement today. Earnings beat the 182 million-euro average estimate of six analysts surveyed by Bloomberg. The shares rose as much as 2.5 percent.

Full-year profit climbed 22 percent to 762 million euros, exceeding Talanx’s goal of 700 million euros, set in August after the sale of Swiss Life Holding AG shares boosted earnings by about 100 million euros. Chief Executive Officer Herbert Haas is targeting profit of at least 700 million euros this year. Management proposed raising the dividend to 1.20 euros a share from 1.05 euros for 2012.

“We are confident that unless something extraordinary happens we can keep up the dividend continuity going forward,” Haas said at a press conference in Hanover today.

Talanx shares rose 1.8 percent to 25.45 euros in Frankfurt trading by 1:20 p.m. They gained 3.3 percent this year, compared with a 2.2 percent rise for Hannover Re and a drop of 1 percent for the Bloomberg Europe 500 Insurance Index.

Talanx, which sold shares in an initial public offering in 2012, owns 50.2 percent of Hannover Re, the world’s third-biggest reinsurer, led by CEO Ulrich Wallin.

Unit Breakdown

Fourth-quarter profit at the industrial division, which provides transport, liability and fire insurance for companies, rose to 74 million euros from 23 million euros a year earlier, helped by a positive run-off result from money set aside to cover claims.

Earnings at the German retail insurance unit rose 3 percent to 15 million euros in the quarter, while the reinsurance division saw profit rise 71 percent to 130 million euros.

Talanx said last week that management board member Heinz-Peter Ross, who heads its German retail operations, will leave the company by the end of June.

Last year’s natural disasters in central Europe, including floods and hailstorms in Germany, resulted in losses of 838 million euros. That marked an increase from 600 million euros in 2012 and exceeded the insurer’s annual claims budget of 705 million euros.

For 2014, Talanx raised its budget for large claims to 185 million euros from 80 million euros in primary insurance, and to 670 million euros from 625 million euros for its reinsurer Hannover Re.

Swiss Life

Talanx holds a 5 percent stake in Zurich-based insurer Swiss Life and 9.9 percent of financial-services broker MLP AG.

“For the time being, we are not looking to further reduce our stake in Swiss Life,” Haas said, adding that the same goes for the company’s holding in MLP.

Hannover Re dropped the most in eight months in Frankfurt trading on March 11 after fourth-quarter operating profit missed analysts’ estimates.

Talanx expects a claim of 32 million euros from Malaysian Air Flight 370, which vanished on March 8.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE