Talanx SWOT and PESTLE Analysis

Strength

This section is available only in the 'Complete Report' on purchase.

Weakness

This section is available only in the 'Complete Report' on purchase.

Opportunity

This section is available only in the 'Complete Report' on purchase.

Threat

1. High competition from national and international players: Some of the biggest insurance companies all over the world are AXA, Allianz, China Life Insurance Company, Tata AIG. These company are some of the many competitors of the Talanx group. They offer products and services that are more or less similar to that provided by the different brands under the Group. Some companies may also come up in the near future that would be direct competitors of the Talanx Group brands. The financial service provider brand of the Talanx group, Ampega has competitors like HSBC IB, JP Morgan, Morgan Stanley which provide multiple financial products and services and are pioneers in their respective domain. Therefore the Talanx Group has to come up with innovative solutions and products to keep its competitors at bay and retain market share. In the European Market, the share of the Talanx group by GWP (Gross Written Premium) is 6.02% and that of the market leaders Allianz and AXA are 21.7 and 16.74 respectively. In the German market, Talanx stands third with respect to GWP. Its market share stands at 21.69 %.

2. Terrorism, natural calamities and disaster: Some of the biggest nightmares of the insurance sector companies are calamities and disasters. Every year many countries lose billions of dollars due to hurricanes, earthquakes, floods and tsunamis. These loses are mostly borne by the insurance companies. Most of the remunerations goes to the industries and companies that get their property insured by the like of Talanx Group brands. Paying for such high scale damages affect the operational income of the insurance companies drastically. In the 2017 alone the Talanx Group lost millions of euros due do calamities and disasters. Although the losses were absorbed by the risk management system and positive gain was registered by the Group, but the risk of major unforeseen losses always looms over the company as most of the disasters are unpredictable. Now-a days, rise in terror attacks are also causing major losses to insurance companies.
Three category 4+ hurricanes along with Californian wildfires and Mexican earthquakes led to largest ever insured losses of around 135 billion US dollars in fiscal 2017. The impact was largely concentrated in North America which accounted for 93% of the total losses. 2017 was a year of two halves in terms of the loss burden. The months leading to the end of August were calm. The impact of large losses was so small that Talanx Group presented the half-year results at the start of August and increased its forecast for Group net income from around EUR 800 million to around EUR 850 million Yet, just one month later, “Harvey,” “Irma” and “Maria” had torn through the Caribbean en route to the southern US states and Mexico had been rocked by two earthquakes, causing devastating damage in the areas hit. Overall, the impact of large losses increased to EUR 1.6 billion, with the natural disasters in August and September incurring EUR 1.1 billion of that total.

3. Political Instability: Political stability, an external economic factor, is very important for any company of any sector to conduct business in any country. Countries like Kenya, Iraq, and Syria are some of the countries with high political turmoil and thus are unfit for any company to enter. Talanx operates in hundred and fifty countries but most of its operations lies in Europe and its neighboring countries. In the United Kingdom, the current Brexit scenario, will lead to a change in the current financial management risk framework which may or may not be advantageous to the division of the company operating the UK.

Political

This section is available only in the 'Complete Report' on purchase.

Economic

1. Emerging global issues of personal data privacy: Consumer privacy is an emerging global issue for which insurers need to be prepared or risk suffering serious consequences. According to the European Union Charter, all EU citizens have the right to protection of their personal data. The European Union’s General Data Protection Regulation (GDPR) implies for not just EU residents but also anyone physically in the European Union at the time of a transaction are covered by the law. In the United States, California adopted a similar law in June 2018—the California Consumer Privacy Act of 2018. Consumer rights specifically enumerated in the law include various disclosure rights and the option to remove personal data permanently from public access. According to Talanx Privacy policies if the customers have questions or suggestions on data and would like to assert their rights of information and rectification, they can directly contact the company. Moreover, under certain circumstances, one can demand that processing of his or her data be restricted, eras and the data provided can be made available in a structured, conventional and machine-readable format.

2. Merger and acquisitions leading to sector consolidation: The insurance industry, in the face of stiff competition has seen a lot of sector consolidation in current times with entities merging or partnering to multiply individual strengths and merge synergies. The marriage between unrelenting market pressure to achieve sustainable growth, a lingering abundance of capital and capacity, improving global economies, and an upturn in interest rates signifies that insurers should be geared for an up-swing in M&A in 2019. Mid -2018 acquisitions of Validus for $5.5 billion and XL Group for $15.3 billion by AIG and AXA respectively consolidates this trend. Talanx Group has always used inorganic growth structure to venture into foreign markets and sector consolidation. With the take-over of the Gerling companies in 2005, which focused on stand personal lines and industrial insurance, the Talanx Group achieved a further objective: to be a balanced, internationally operating group. The Group further strengthened its international line-up by purchasing numerous companies abroad, e.g. the acquisition of the Turkish insurer Ihlas Sigorta A. S. in 2006. In 2004 Talanx Group acquired the Polish property/casualty insurer Tryg Polska which helped it become one of the largest market player in Poland. Similarly, The Talanx Group has acquired many companies through mergers and acquisitions to get a foot-hold in a target country and also achieve sector consolidation.

3. Increase in global growth: The Talanx Group witnessed a high growth in the year 2017 and anticipated it to continue in the year 2018 as both industrial nations and emerging markets grew with a sustainable dynamic consumption trend. The rise in investment will also be a growth driver. The strong performance of exports, which supports increase in investment and reduction in inflation, paints a positive scenario for the company. Political uncertainty may be a risk factor but the overall outlook for the divisions in the Europe looks positive. Apart from Europe, stable growth in the United States also has certain positive implications for the Group. The Group also expects accelerating growth from the emerging markets as those markets are export oriented; with the recovery in commodities prices and positive external economic environment.

Social

This section is available only in the 'Complete Report' on purchase.

Technological

This section is available only in the 'Complete Report' on purchase.

Legal

This section is available only in the 'Complete Report' on purchase.

Environmental

This section is available only in the 'Complete Report' on purchase.