Talanx (ETR:TLX) reported what Chief Financial Officer Jan called the strongest first-quarter result in the company’s history, with net income rising 28% year over year to EUR 774 million in the first quarter of 2026.
Jan said the insurer also posted a return on equity of 22.3%, which he described as a record level for Talanx. The result was driven by a stronger technical result, higher investment income and benign large-loss development, he said during the company’s results call from Hannover.
Insurance revenue declined 2% in euro terms, but rose 3% on a currency-adjusted basis. Jan said primary insurance revenue increased 5% on a currency-adjusted basis, while reinsurance revenue grew 1%.
“All segments have contributed to rising net income,” Jan said, adding that each segment delivered “very, very decent” returns on equity.
Primary Insurance and Reinsurance Both Lift Earnings
Talanx said primary insurance net income rose 13%, while reinsurance net income increased 50%. Jan noted that the reinsurance comparison benefited from normalization after Hannover Re was affected last year by California wildfires.
The company’s earnings mix remained balanced, with 47% of group profit coming from reinsurance and 53% from primary insurance. Jan also highlighted Talanx’s geographic diversification, saying only 14% of top-line revenue came from Germany, with 86% generated outside the country.
In Corporate & Specialty, insurance revenue declined 3% in euro terms but was up 0.3% on a currency-adjusted basis. Net income in the segment rose 8% to EUR 152 million. Jan said the gain reflected a strong technical result, with a combined ratio of 91%, as well as improved investment income.
Retail International remained a key growth driver. Insurance revenue increased 8% in euro terms and 12% on a currency-adjusted basis, while net income rose 10% to roughly EUR 190 million. The segment’s combined ratio was below 92%, and return on equity reached 21.2%. Jan said that excluding the one-time effect from the buyout of minorities in Poland, return on equity would still have been about 20%.
Retail Germany, the company’s smallest segment, accounted for 8% of group net income. Insurance revenue fell to EUR 791 million from EUR 812 million, reflecting the end of the Targobank cooperation. Jan said EUR 61 million of the decline was related to Targobank, meaning the rest of the business grew by roughly 5%. Net income rose, supported by efficiency measures and improved results from life entities in a higher interest rate environment.
Large Losses Below Budget, Creating Buffer
Jan said large-loss development was “really benign” in the first quarter. Large losses equaled 2.9% of net earned premiums, compared with a 10-year average of about 4.5%.
Talanx booked EUR 676 million in large-loss burden, in line with its practice of booking the higher of reported claims or budgeted claims. Because reported large losses were below the budget, Jan said the company had a buffer of roughly EUR 390 million for the remaining quarters of the year.
He said the combination of strong technical performance, unused large-loss budget and rising investment income gave management “a lot of comfort” around its full-year targets.
Reserve Strength and Solvency Improve
Talanx also reported the results of an external review of its claims reserves by Willis Towers Watson. Jan said the review covered about 94% of claims reserves and found that Talanx’s booked reserves were EUR 5.9 billion above Willis Towers Watson’s best estimate. That represented an increase of more than EUR 1.2 billion from the previous year.
“Talanx has the strongest balance sheet ever,” Jan said, adding that resiliency had increased in both primary insurance and reinsurance.
The group’s solvency ratio rose to 249% at the end of the first quarter from 243% at year-end. Jan attributed the increase mainly to profits that raised own funds. Net asset value increased by about EUR 840 million in the quarter, bringing equity to roughly EUR 14 billion. Including contractual service margin and risk adjustment, adjusted for taxes and minorities, Jan said extended net asset value totaled EUR 22.5 billion.
The investment portfolio remained conservative, with 83% of assets invested in fixed income and 93% of that fixed-income portfolio rated investment grade. Investment income rose 11%, while return on investment increased to 3.8%. The finance and investment result, which includes the unwinding of discounting on claims reserves, rose 17%.
Mexico Expansion and M&A Discipline
Jan discussed Talanx’s strategic alliance with Afirme in Mexico, which includes a 20-year bancassurance distribution agreement and the acquisition of Afirme’s insurance operations. Talanx plans to combine those operations with its own business to generate synergies.
He said the transaction is expected to lift Talanx’s position in the Mexican property and casualty market to No. 6. Closing is expected in nine to 12 months, with no impact on 2026 results. Jan said restructuring efforts are expected in 2027, and additional details will be provided at closing.
During the Q&A session, Jan said Talanx remains open to further consolidation in Mexico if opportunities arise, but the first priority is combining the Afirme business and exploiting the market’s growth potential.
Guidance Reaffirmed, Dividend Expected Above EUR 4
Talanx reaffirmed its outlook for 2026, including currency-adjusted mid-single-digit revenue growth and group net income of around EUR 2.7 billion. Jan said the revenue target would be “a little bit more challenging,” but management remains confident following April renewals and continued growth in Retail International.
Achieving EUR 2.7 billion in net income would translate into a return on equity of around 19%, Jan said. He also noted that it would mean Talanx fulfills its three-year strategic plan one year early, exceeding the prior target of EUR 2.5 billion by 2027.
On shareholder returns, Jan said Talanx continues to expect double-digit dividend growth and plans to pay a dividend “clearly above EUR 4” for full-year 2026, payable in 2027. In response to analyst questions, he said the company would make its final dividend decision after seeing full-year results, while sticking to its dividend policy and guidance.
Jan closed the call by saying Talanx is “super confident” in delivering both net income growth and dividend growth, supported by technical performance, higher investment income and favorable first-quarter large-loss development.
About Talanx (ETR:TLX)
Talanx AG provides insurance and reinsurance products and services worldwide. It offers life, casualty, liability, motor, aviation, legal protection, fire, burglary and theft, water damage, plate glass, windstorm, comprehensive householders, comprehensive home-owners, hail, livestock, engineering, omnium, marine, business interruption, travel assistance, aviation and space liability, financial lines, and other property insurance, as well as coverage for fire and fire loss of profits insurance. The company also provides bancassurance products; unit-linked life insurance, annuity and risk insurance, and long term and occupational disability insurance products; and personal accident insurance.
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