Talanx : Annual financial statements of Talanx Group for the financial year 2023

20

23

Group Annual Report

Financial year at a glance

PROFILE

The Talanx Group is a multi-brand provider in the insurance and financial services sector. The Group companies operate under a number of different brands. These include HDI, delivering insurance solutions to retail customers and industrial clients, Hannover Re, one of the world's leading reinsurers, the bancassurance specialists neue leben insurers, LifeStyle Protection and TARGO insurers as well as Ampega, a funds provider and asset manager. The Hannover-based Group is active in more than 175 countries.

INSURANCE REVENUE		OPERATING PROFIT (EBIT)
EUR billion	EUR billion
43.2	3.1
GROUP NET INCOME		PROPOSED DIVIDEND PER SHARE
EUR million	EUR
1,581	2.35
NET RETURN ON INVESTMENT		RETURN ON EQUITY
%	%

2.5 16.6

GROUP KEY FIGURES

		Unit		2023		2022 1
Insurance revenue		EUR million		43,237		39,645
Primary Insurance		EUR million		19,722		16,967
Property/casualty primary insurance		EUR million		17,346		14,794
Life primary insurance		EUR million		2,376		2,173
Reinsurance		EUR million		24,456		24,017
Property/casualty reinsurance		EUR million		16,824		16,265
Life/health reinsurance		EUR million		7,633		7,752
Insurance revenue by region
Germany		%		16		15
United Kingdom		%		10		11
Central and Eastern Europe (CEE), including Türkiye		%		9		8
Rest of Europe		%		13		12
USA		%		24		26
Rest of North America		%		4		4
Latin America		%		10		8
Asia and Australia		%		13		14
Africa		%		1		2
Insurance service result (net)		EUR million		3,234		2,454
Net investment income for own risk		EUR million		3,235		2,342
Net return on investment for own risk 2		%		2.5		1.7
Operating profit/loss (EBIT)		EUR million		3,068		2,815
Net income attributable to shareholders of Talanx AG		EUR million		1,581		706
Primary Insurance		EUR million		790		439
Reinsurance		EUR million		917		392
Return on equity 3		%		16.6		8.2
Earnings per share
Basic earnings per share		EUR		6.21		2.79
Diluted earnings per share		EUR		6.21		2.79
Combined ratio (net/gross) 4		%		94.3		95.2
Property/casualty primary insurance (net/gross) 4		%		93.4		95.2
Property/casualty reinsurance (net/net) 5		%		94.0		94.5
Total assets		EUR million		169,347		158,479
Equity attributable to shareholders of Talanx AG		EUR million		10,447		8,640
Contractual service margin		EUR million		10,720		9,592
Subordinated liabilities (hybrid capital)		EUR million		5,262		5,009
Investments for own risk		EUR million		135,390		127,345
Carrying amount per share at end of period		EUR		40.46		34.10
excluding goodwill		EUR		34.22		30.08
Share price at end of period		EUR		64.65		44.32
Number of shares outstanding		number		258,228,991		253,350,943
Employees		as at the reporting date		27,863		23,669

1. Adjusted in accordance with IFRS 9 and IFRS 17 in conjunction with IAS 8 and adjusted in accordance with IAS 8, see also the "Accounting policies" section of the Notes.
2. Ratio of net investment income for own risk to average investment portfolio for own risk.
3. Ratio of net income (after financing costs and taxes) excluding non-controlling interests to average equity excluding non-controlling interests.
4. 1- [insurance service result (net) divided by insurance revenue (gross)].
5. 1- [insurance service result (net) divided by (insurance revenue (gross) - reinsurance expenses)].
   Reinsurance expenses are made up of the "allocation of reinsurance premiums paid" and "changes in the non-performance risk of reinsurers" line items in the analysis by remaining coverage and incurred claims, see also Note 18 "Insurance contracts liabilities".

»Yet again, our 28,000 or so highly motivated and dedicated staff demonstrated this year that Talanx is on a sustainable and profitable growth path. We have reported record Group net income despite macroeconomic and geopolitical challenges. As a result, we are already clearly above our strategic earnings path for the period up to 2025.

A promise is a promise.«

Torsten Leue

(Chairman of the Board

of Management)

Contents

1

2

3

4

		PAG E
Letter to our shareholders­		2
Board of Management		4
Supervisory Board		5
Supervisory Board ­Committees		6
Report of the Supervisory­ Board		7
Talanx shares		12
Remuneration report		18
Combined management report­
Fundamental information about the Group	42
Report on economic position		50
Other reports and declarations		82
Consolidated­ financial statements
Consolidated balance sheet		146
Consolidated statement of income		148
Consolidated statement of comprehensive­	income	149
Consolidated statement of changes in equity	150
Consolidated cash flow statement		154
Notes		155
Independent Auditor's report		330
Independent Auditors' limited assurance
engagement on non-financial reporting		336
Responsibility statement		338
Contact information		339
Financial calendar2024		339

The XHTML file of this annual report to be submitted to the Federal Gazette has been optimised for screen display.

Guideline on Alternative Performance Measures - for further information on the calculation and definition of specific alternative performance measures please refer to https://www.talanx.com/en/ investor_relations/reporting/ key_figures/alternative_performance_ measures_(apm)

2 Talanx Group		Annual Report 2023		Letter to the shareholders

Letter to our share­ holders

2023 was a highly successful year for your Talanx Group - one in which we again showed substantial resilience against a backdrop of worsening geopolitical crises and high inflation, but lower large

losses­ . Our strategy paid off and we actually exceeded our ambitious targets in this challenging market environment. Insurance revenue rose by nearly double digits to EUR 43.2 billion, fuelling a further rise in our market share. What is more, our record Group net income of EUR 1,581 ­million very clearly surpassed our original target for 2023 of EUR 1.4 billion, and almost reached our strategic target for 2025. Our return on equity climbed to a high 16.6 percent.

We want you to share in this positive performance. As a result, the Board of Management and Supervisory Board will be proposing a substantial 35-cent dividend increase at the Annual General Meeting, to EUR 2.35. This is the second-highest rise in the dividend since your Talanx Group went public, following the 40-cent increase last year. It means we have lifted the dividend by 75 cents - almost 50 percent - from EUR 1.60 in the last two financial years.

Our consistent implementation of our ambitious strategy continued to pay off for you in the last financial year. Talanx's shares generated a high total shareholder return in a volatile capital market environ- ment, producing a dividend return of 4.4 percent and climbing ­almost 50 percent in price. This means that our shares outperformed our peer indices - the DAX, MDAX and STOXX Europe 600 Insurance.

The hard work and enthusiasm of each and every one of our 28,000 or so highly motivated, dedicated members of staff helped us exceed our ambitious targets and live up to the Talanx Purpose - "Together we take care of the unexpected and foster entrepreneurship" - with confidence every day. On behalf of all my colleagues on the Board of Management, I would like to thank all our employees wholeheartedly

for their outstanding efforts. I am looking forward to continuing our extremely successful work together.

Gratifyingly, all divisions contributed to our record Group net income by lifting their earnings. Primary insurance now accounts for 46 percent of our total net income. We defended our cost leadership in the areas of industrial insurance, reinsurance and the international retail business. More than 80 percent of our insurance revenue comes from our B2B business.

»We actually exceeded our ambitious targets in this challenging market environment.«

Our Industrial Lines insurer, HDI Global, turned in a strong perfor- mance, and is now a core mainstay of our Group again. Its operating profit rose to EUR 446 million on the back of lower large losses and balanced risk selection. At 91.5 percent, the combined ratio reached our strategic target of less than 93 percent ahead of schedule. The

division's­ strategy of offering a mix of profitable underwriting and excellent service as a global industrial insurer is working. Industrial Lines' forward-looking vision of being a "transformation partner" for our corporate customers underscores its aim of helping them with insurance solutions and services in areas such as climate- and ­energy-related issues, mobility, technology and digital transformation.

Torsten Leue, Chairman of the Board of Management

	Annual Report 2023		Talanx Group 3

Our Retail Germany Division increased its share of our record Group net income compared to 2022 despite significant claims inflation and falling interest rates. Operating profit amounted to EUR 260 million and the combined ratio to 97.5 percent. Insurance revenue in the Property/Casualty segment rose to EUR 1.764 billion, while operating profit dropped to EUR 49 million due to the impact of persistent inflation -fuelled price rises on the claims we settled. By contrast, operating profit in the Life Insurance segment rose to EUR 211 million on the back of our biometric products, with insurance revenue remaining stable at EUR 1,793 mil-

lion. The continued very high resilience of our life in­ surance solvency ratio is also gratifying, as is the extremely good reception that customers gave our innovative product solutions in our new business.

HDI International again proved to be a profitable growth driver for our Group. Insurance revenue climbed by a double-digit33 percent - or 41 percent after

adjustment­for currency

effects­ - to more than EUR 7 billion. Operating profit rose to EUR 507 million. Our

successful­ cycle and inflation management resulted in a combined ratio of 95 percent. HDI International's acquisition of Liberty Insur-

ance Inc. in Brazil, Chile, Colombia­ and Ecuador will make it the second -largest provider of property/casualty­ insurance solutions in Latin America, measured in terms of insurance revenue. The purchase continues our success story on the continent,­ as well as further diversifying the Talanx Group's operations.

Our Reinsurance Division continued successfully expanding its market position in a challenging environment. Insurance revenue rose slightly to EUR 24.5 billion, while operating profit was EUR 2.0 billion.

We are continuously enhancing the Group's sustainability goals and targets with the aim of supporting industry, businesses and society in their sustainable transformation. Our asset management port­ folios and our insurance business will reach net zero emissions by 2050. Key milestones on this journey are to fully exit thermal coal infrastructure by 2038 in our insurance business, and to achieve a 30 percent reduction in the carbon intensity of our liquid assets

under own management by 2025. Our operating establishments throughout the world will be operating at net zero emissions (includ- ing offsetting of remaining emissions) by 2030. A number of ratings confirmed our focused sustainability strategy - for example, we again improved our CDP rating to A- in the reporting period.

Our 2024 outlook for Group net income of more than EUR 1.7 billion means we will reach and exceed our strategic target for 2025 of

approximately­EUR 1.6 billion in Group net income a year ahead of schedule. We are now setting ourselves a new, ambitious target for your Talanx­ Group in 2025: EUR 1.9 bil- lion, or EUR 300 million more than originally planned. We are continuing to concentrate on a mix of targeted, customer-driven divisional strategies, strict capital management, a focused sustainability strategy and people management policies designed to combat the shortage of skilled professionals by positioning ­Talanx as a globally outward -looking and international Group.

Dear shareholders, we are facing the challenges of the future with a clear, systematic strategy based on our decentralised, entrepreneur-

ial culture of trust, and on living our Purpose: "Together we take care of the unexpected and foster entrepreneurship".

I would like to express my sincere thanks for your confidence in us and hope very much to continue our journey together with you.

.

4 Talanx Group		Annual Report 2023		Board of Management

Board of Management

Torsten Leue

Chairman

Hannover

Chairman of the Board of Management

HDI V. a. G., Hannover

Responsible on the Talanx Board of Management for:

• Auditing
• Best Practice Lab
• Communications
• Corporate Development
• Governance/Corporate Office
• Investor Relations
• Sustainability/ESG

Jean-Jacques Henchoz

Hannover

Chairman of the Board of Management Hannover Rück SE, Hannover

Responsible on the Talanx Board of Management for:

• Reinsurance Division

Dr Wilm Langenbach

Hannover

Chairman of the Board of Management HDI International AG, Hannover

Responsible on the Talanx Board of Management for:

• Retail International Division

Dr Edgar Puls

Hannover

Member of the Board of Management

HDI V. a. G., Hannover

Chairman of the Board of Management

HDI Global SE, Hannover

Responsible on the Talanx Board of Management for:

• Industrial Lines Division
• Reinsurance Captive Talanx AG

Caroline Schlienkamp

Gehrden

Speaker of the Board of Management HDI AG, Hannover

Responsible on the Talanx Board of Management for:

• Business Organisation (since 1 December 2023)
• Data Protection
• Facility Management
• People & Culture
• Legal/Compliance
• Procurement (Non-IT)

Jens Warkentin

Cologne

Chairman of the Board of Management HDI Deutschland AG, Hannover

Responsible on the Talanx Board of Management for:

• Retail Germany Division
• Brand Management
• Business Organisation (until 30 November 2023)
• Information Technology

Dr Jan Wicke

Hannover

Member of the Board of Management

HDI V. a. G., Hannover

Responsible on the Talanx Board of Management for:

• Accounting
• Collections
• Controlling
• Finance/Participating Interests/ Real Estate
• Investments
• IT Security (since 1 January 2023)
• Reinsurance Procurement
• Risk Management
• Taxes

Supervisory Board		Annual Report 2023		Talanx Group 5

Supervisory

Board

Herbert K. Haas	Rainer-KarlBock-Wehr *	Christoph Meister *
(since 8 May 2018)	(since 9 May 2019)	(since 8 May 2014)
Chairman	Cologne	Hannover
Burgwedel	Head of Competence Centre Commercial,	Member of the ver.di
Former Chairman of the Board	HDI AG	National Executive Board
of Management,
Talanx AG	Dr Joachim Brenk	Jutta Mück *
	(since 4 May 2023)	(since 17 June 2009)
Dr Thomas Lindner	Lübeck	Diemelstadt
(until 4 May 2023)	Chairman of the Board of Management,	Market Management & Distribution,
Deputy Chairman	L. Possehl & Co. mbH	HDI AG
Albstadt
Chairman of the Board of Directors,	Sebastian Gascard *	Dr Sandra Reich
Groz-Beckert KG	(since 9 May 2019)	(since 4 May 2023)
	Isernhagen	Gräfelfing
Ralf Rieger *	In-house Company Lawyer	Self-employed Business Consultant
(since 19 May 2006)	(Liability Underwriter),	L. Possehl & Co. mbH
Deputy Chairman	HDI AG
Raesfeld		Dr Erhard Schipporeit
Employee,	Dr Christof Günther	(until 4 May 2023)
HDI AG	(since 4 May 2023)	Hannover
	Merseburg	Self-employed Business Consultant
Angela Titzrath	Director,
(since 8 May 2018)	InfraLeuna GmbH	Prof. Dr Jens Schubert *
Deputy Chairwoman (since 4 May 2023)		(since 8 May 2014)
Hamburg	Jutta Hammer *	Potsdam
Chairwoman of the Board of Management,	(since 1 February 2011)	Trade Union secretary
Hamburger Hafen und Logistik AG	Bergisch Gladbach	ver.di National Administration
	Employee,	Apl. Professor,
Antonia Aschendorf	HDI AG	Leuphana Universität Lüneburg
(until 4 May 2023)
Hamburg	Dr Hermann Jung	Norbert Steiner
Lawyer,	(since 6 May 2013)	(since 6 May 2013)
Member of the Board of Management,	Heidenheim	Baunatal
APRAXA eG	Former Member of the Board of Directors,	Former Chairman of the Board
Director,	Voith GmbH	of Management,
2-Sigma GmbH		K+S AG
Director,	Dirk Lohmann	* Staff representative
legaltron Beteiligungsgesellschaft mbH	(since 6 May 2013)
	Forch, Switzerland
Benita Bierstedt *	Vice Chairman,	Details of memberships of statutory super­
(since 9 May 2019)	Schroders Capital ILS,	visory boards and comparable control boards
Hannover	Schroder Investment Management	at other domestic and foreign business enter-
Employee,	(Switzerland) AG	prises are contained in the annual report
E+S Rückversicherung AG		published by Talanx AG.

6 Talanx Group		Annual Report 2023		Supervisory Board Committees

Supervisory

Board

Committees

Composition as at 31 December 2023

Tasks of the committees

The Supervisory Board has formed four committees from among its ranks. The members of these committees support the work of the full Supervisory Board.

Finance and Audit Committee

Dr Hermann Jung, Chairman

Dr Christof Günther

Herbert K. Haas

Jutta Hammer

Ralf Rieger

Angela Titzrath

Personnel Committee

Herbert K. Haas, Chairman

Jutta Mück

Norbert Steiner

Angela Titzrath

Standing Committee

Herbert K. Haas, Chairman

Ralf Rieger

Prof. Dr Jens Schubert

Angela Titzrath

Nomination Committee

Herbert K. Haas, Chairman

Dr Joachim Brenk

Dirk Lohmann

You can find a detailed description of the committees' tasks in the "Supervisory Board" section of the corporate governance report.

Finance and Audit Committee

• Preparation of financial decisions for the full Supervisory Board
• Decisions in lieu of the full Supervisory Board on certain
  financial­ matters, including the establishment of companies, acquisition of participating interests and capital increases at subsidiaries within defined value limits

Personnel Committee

• Preparation of personnel matters for the full Supervisory Board
• Decisions in lieu of the full Supervisory Board on certain
  personnel­ matters for which the full Supervisory Board is not required to assume sole responsibility

Standing Committee

• Proposal for the appointment of a Board member if the
  necessary­ two-thirds majority is not achieved in the first ballot in accordance with section 31(3) of the German Co-determination Act (MitbestG)

Nomination Committee

• Proposal of suitable candidates for the Supervisory Board's nominations to the Annual General Meeting