While Talanx Offers Cost Leadership, It Has Lacked Competitiveness in Pricing and Claims

At its core, Talanx is a business with a lower-cost position. That stems from its location in Hannover, Germany, which is a much cheaper place to live in comparison with the locations of other major insurers in major cities. That lower expense base has come at a price, and this has historically been visible in pricing and claims. Talanx seems almost the worst versus peers in both commercial insurance and reinsurance based on these indicators. The company has taken a number of actions that may lead to improvements, but we do not hold much confidence in the maintainability of these. Those actions include but are not limited to investment in a new piece of proprietary pricing technology that the firm has termed the Underwriting Workbench that helps underwriters run their insurance portfolios profitably. Here, individual underwriters are enabled to meet their key performance indicators, meaning the same for the industrial insurance division. However, we think Talanx seems to be lagging peers.