German insurer Talanx eyes forex headwind challenge in 2016




Sharp swings in foreign exchange rates could weigh on results at German insurer
Talanx’s international retail business this year, the division it is counting on for near-term growth, according to board member Torsten Leue.
“Foreign exchange swings in many emerging markets were stronger than expected over the last three to four years,” said Leue, who is responsible for Talanx’s growing motor, property-casualty and life insurance business with international retail and corporate customers.
“That weighed on our results in 2015 and the effect certainly won’t be neutral in 2016 either,” Leue said in an interview. “We’re feeling the headwinds.”
The Retail International business division, whose main focus is Poland, Turkey, Brazil and Mexico, is nevertheless on track towards its goal of raising premiums by at least 10 percent on average over the medium term, excluding
currency effects, Leue said.
“We don’t think we’ll have to unveil huge surprises due to currency swings, our business model is too stable for that.”
Retail International, which reported a 4 percent rise in premiums to 4.6 billion euros ($5.2 billion) last year, has been a bright spot for Germany’s third largest insurance company, which is struggling to correct losses at its larger, domestic operations.
The insurer also owns a controlling stake in the world’s third biggest reinsurance company, Hannover Re.
Talanx set out a goal to earn at least half of its insurance premiums from business outside Germany by 2018, a target it is approaching more rapidly than expected not least because sales in its home market are shrinking.
In 2015, 47 percent of its 15.5 billion euros in insurance premiums came from foreign sources. Leue’s Retail International segment contributed 30 percent, while a further 17 percent came from international business in Industrial Lines insurance.
“We are likely to reach our (50 percent) goal more quickly than we thought; we’re thinking about a new target but we haven’t decided yet,” Leue said.
Opportunities emerg quickly in developing country insurance markets, with changes in currency valuation and macroeconomic policies compounded by regulatory moves in tax or motor insurance rules, for example.
“Bouts of volatility are increasing in our regions but we’re prepared and will have to offset it with technical underwriting,” Leue said, adding that there were no plans to quit countries where his
division is active.

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