Talanx reports strong 1Q Ebit, up 35% YoY
The Talanx Group grew its insurance revenue and Group net income in the first three months of 2023. Insurance revenue in the first quarter of 2023 was EUR 10.7 billion, up from 10.1 billion one year ago. Growth was driven by primary insurance (+14.2%). Group net income increased by a significant double-digit 31% to EUR 423 million compared to the prior-year quarter, exceeding Analyst expectations by 14%. The first quarter 2023 was dominated by a strong insurance service result, which benefited from lower large losses, and from unwinding and discounting effects caused by the new accounting standard. Primary insurance contributed 42.7% to Group net income and Reinsurance 57.3%.
The return on equity for the first quarter was 18.8 percent, clearly above the strategic target of more than 10 percent. Total large losses in Primary Insurance were EUR 54 million, while the figure for Reinsurance was EUR 334 million. The largest single loss in the Group as a whole was the earthquake in Türkiye and Syria (EUR 249 million). The overall combined ratio for the Group improved to 93.5% from 95.8% a year ago. The Solvency 2 ratio as at 31 March 2023 was 212 percent, an improvement of 300 basis points.
Valuation: Talanx currently trades at 8.25x P/E 24E, below its 5-year historical average of 8.41x and below the MSCI EUROPE Insurance Index (9.4x). On a 2024E P/B basis, the stock is trading at 1.25x, above its 5-year average of 0.88x and below the MSCI EUROPE Insurance Index (1.5x). On a P/S 24E basis, the stock is trading at 0.25x, above its 5-year average of 0.21x and below the MSCI EUROPE Insurance Index (0.69x).
We confirm our buy recommendation.
Management Outlook
Talanx is fully on track to meet annual targets with strong quarterly results. The Group continues to expect Group net income of EUR 1.4 billion for the full year.
Financials
| Fiscal year 2023* | Fiscal year 2024* | Fiscal year 2025* | |
|---|---|---|---|
| Revenue in mn | 56,442 | 48,286 | 46,130 |
| Revenue growth (%) | 6.7 | -14.5 | -4.5 |
| Net Income in mn | 1,391 | 1,489 | 1,638 |
| Adjusted EPS | 5.48 | 5.88 | 6.42 |
| Profit margin (%) | 2.5 | 3.1 | 3.6 |
| Return on equity (%) | 17.5 | 16.3 | 15.9 |
| P/E ratio (x) | 8.8 | 8.2 | 7.5 |
| P/S ratio (x) | 0.2 | 0.3 | 0.3 |
| P/B ratio (x) | 1.4 | 1.2 | 1.1 |
| Dividend Yield (%) | 4.6 | 5.0 | 5.4 |
Stock and Price Data
| Country | Market Cap in bn | ISIN | Sector | Price | Small Cap |
|---|---|---|---|---|---|
| Germany | EUR 12.2 | DE000TLX1005 | Financials | EUR 48.18 | No |
Performance
Performance in %
| Since inception* | YTD | Last 6 months |
|---|---|---|
| 64.90 | 13.7 | 29.2 |
VP Bank Sustainability Score
Good
VP Bank Sustainability Score
4
ESG Score
3
ESG-Momentum
2
Business practices
5
Business activity
3
SDG/Impact ScoreVP Bank AG
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Selected Information ©2023 MSCI ESG Research LLC. Reproduced by permission.
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VP Bank Sustainability Score: Our overall score expresses a comprehensive assessment of a company's sustainability. It is composed of the ESG rating, momentum, business practices and activities. The scale ranges from “insufficient”, "below average", “average”, “good”, "very good" to "excellent". |
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ESG rating: The ESG rating reflects how sustainable a company is in terms of environmental, social and governance criteria. The indicators may vary depending on the industry. The scale ranges from -1 ("insufficient") to 5 ("excellent"). |
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Momentum: The momentum indicator measures the extent to which the ESG rating of a company has changed. The scale ranges from 1 ("below average") to 5 ("excellent"). |
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Business practices: The business practices of a company are analysed and checked whether it is in breach of international standards. Exemplary companies receive a high score, while misdemeanours lead to a low score depending on the severity of the breach. Serious violations lead to exclusion. The scale ranges from -1 ("questionable") to 5 ("exemplary"). |
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Business activities: This value scores the business areas in which a company is active. Activities which we consider "critical" are excluded, while borderline and questionable areas receive a deduction. Activities that are not "critical" receive a positive assessment. The scale ranges from -1 ("insufficient") to 5 ("excellent"). |
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SDG and Impact Score: This value compares a company's products and activities or dedicated impact solutions with the UN's 17 Sustainable Development Goals (SDGs) and measures the extent to which they contribute to or contradict the achievement of the goals. The scale ranges from 1 ("below average") to 5 ("excellent"). |
A detailed explanation of our methodology can be found here: www.vpbank.com/sustainabilityscore
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