My currently only insurance company, Talanx, arrived with their Q3 report. The market response was this time not so good and in general the share price has been dropping during the quarter. I was not very happy with the last report and the same goes for this one.
The report in full you can find here (open the interim reports to find it), to read my latest summary then click on Talanx report Q2 2015 and to find out more regarding Talanx then go to analysis of Talanx 2015.
In a way maybe one should be happy because the sales are indeed increasing as can be seen below. For the running nine months we are currently up 12% in sales and that is a good value but the problem is what comes out from that increase? Unfortunately the answer to that question is that less is coming out because the earnings for me as a shareholder is below the line -8%. Ok, there was an impairment cost of around 140 millions etc. but still... when you increase your sales by 2.6 billion € then I want something to come out from that because when it does not then I get worried not only today but also in the future. The reason for this is that Talanx is so focused on increased market share and sales that we already NOW have zero gain from it and then I worry about the insurances that are made and what that will bring in the future... To have a combined ration above 100% is acceptable for one quarter but several?! No, that I do not find to be sustainable.
For the running year we are up at 1.93 € in earnings per share so I do not fear any dividend cuts but I also do not see that they will increase it. They need to keep their money in-house to stabilise things.
Conclusion: Talanx keep hunting sales and market shares at the same time as they are taking impairment costs (in Q2) and this gives poor performance as a result. I am a little bit worried for the future but I still see Talanx as being undervalued and for this reason I will remain as a shareholder in Talanx.
3 comments:
Maybe you should have a look at the german Wüstenrot stock
I already have looked at them and they can be found here:
Analysis of Wüstenrot
they look good but I find Talanx to be better and the fact that they own 50% of Hannover Rückversicherung is of high value to me.
Today there was a press release from Talanx saying that they have received a reward for the financial ingenuity of putting together a deal concerning over 500 Million in Bonds and concerned institutional investors.
Seems to me as if Talanx Asset managers are stepping into new fields of businesses that are far from the insurance business... I am not so certain that I like this progress.
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