Interim Report as at 30 June 2024

Markets, business climate and the industry environment

Global economic activity cooled further in the first half of 2024, partly due to ongoing geopolitical tensions, falling but still high inflation and the resulting restrictive monetary policy adopted by many ­central banks in recent years.

At +0.3% in the first quarter compared to the previous period, growth in the eurozone was stronger than it has been for a year and a half. Sentiment amongst companies and private households, as measured by surveys, gradually improved over the course of the first half of the year, although the business sentiment amongst industrial companies in particular (including export-orientated companies) remains subdued due to higher energy prices and weaker global trade. Thus, industrial output in May stood 2.9% lower than a year ago. In light of this, eurozone GDP grew by 0.3% in the second quarter compared to the previous quarter.

After the US economy exhibited a high level of resilience in 2023 in the face of an almost unprecedented cycle of interest rate hikes by the Fed (ten rate hikes since March 2022, from 0.25% to 5.50%), the impact of the restrictive monetary policy is now clearly visible. For example, GDP growth slowed from 1.2% in the third quarter of 2023 to 0.3% in the first quarter of 2024 compared to the previous period. In this con- text, consumer spending has particularly declined. The reason for this is the slow retuof the purchasing power lost in recent years, although inflation has now fallen to 3.0% after peaking at 9.1% two years ago. Against this backdrop, the US economy grew by 0.7% in the second quarter of this year, slightly more strongly than in the previous quarter.

After a quarter-on-quarter increase of 1.5% in the first quarter of this year, the Chinese economy only grew by 0.7% in the spring. In addition to weakening world trade and the global economy, this is particularly due to the unresolved upheavals in the domestic real estate sector, especially as the government's efforts to provide support in this area have been very modest.

After Latin America's economies grew by 1.6% in 2023 compared to the previous year, or roughly one percentage point slower than the average since the tuof the millennium, growth has recently picked up again somewhat. Many central banks in the region reacted to ­rising inflation in the wake of the COVID-19 pandemic earlier than the Fed and ECB and were already able to reverse course last year in favour of a somewhat looser monetary policy, which is giving the economies a boost.

The international capital markets generally performed well in this difficult environment in the first half of the year. The US S&P 500 performed the best of all equity markets, increasing by 14.5% (through 30 June 2024, all performance figures calculated in US dollars), benefiting significantly from the strong performance of individual technology companies in conjunction with the euphoria surrounding the topic of artificial intelligence. Shares from the industrialised countries (MSCI World: +10.8%) performed slightly worse than the S&P, while shares from the eurozone (Euro Stoxx: +2.5%) and Germany (DAX: +5.4%) lagged well behind. The same was true of the Asian equity markets (MSCI Asia ex Japan: +8.6%), Chinese equities (MSCI Chi- na: +3.5%) and Latin American equities in particular (MSCI Latin America: -18.2%). Hopes at the end of last year that the US Federal Reserve could cut interest rates earlier than previously expected pushed the yield on 10-year US government bonds down significantly over the course of the fourth quarter of 2023. Inflation, which subsequently proved to be more persistent, and the associated postponement of the decision to begin cutting interest rates in the United States caused yields to rise from 3.88% to 4.40% in the first half of 2024. Although the ECB initiated a turnaround in interest rate policy at the beginning of June by lowering the deposit rate from 4.00% to 3.75%, the yield on 10-year German government bonds also rose from 2.02% to 2.50% during this period.

At the beginning of 2024, the insurance industry was characterised by weak economic development and only slowly declining inflation. This had a particularly negative impact on the single premium business in life insurance and led to an overall decline in new business. In property/casualty insurance, on the other hand, downstream inflation -related increases led to solid growth in premium income.

Performance of the Group's Divisions

At a strategic level, Talanx divides its business into seven reportable segments: Industrial Lines, Retail Germany (divided into Property/ Casualty and Life Insurance), Retail International, Property/Casualty Reinsurance, Life/Health Reinsurance and Corporate Operations. There have been no changes since the Group reported on the structure and scope of business in the 2023 Talanx Group Annual Report.

Industrial Lines

• Double-digitgrowth in insurance revenue due to rate increases and new business
• Insurance service result improved due to continued decline in frequency losses
• Investment result significantly above prior-year level

KEY FIGURES FOR THE INDUSTRIAL LINES DIVISION

The Division pools global activities relating to industrial insurance within the Talanx Group and operates on the German market and in over 175 countries through its foreign branches, subsidiaries, affiliates and network partners.

Insurance revenue

Insurance revenue for the Division amounted to EUR 4.8 (4.2) billion as at 30 June 2024, a substantial increase of 13.7% (13.9% after adjustment for currency effects). The premium increases resulted primarily from growth in the property, specialty and liability business through rate increases and new business.

Insurance service result

At EUR 429 (292) million, the net insurance service result in the Division was up significantly on the previous year. The loss ratio improved to 75.0% (76.1%) due to a further decline in frequency losses. The expense ratio also decreased to 16.1% (17.0%). This resulted in an improved combined ratio of 91.1% (93.1%) for the Industrial Lines Division.

Net insurance financial and investment result (before currency effects)

At EUR 186 (108) million, the investment result was significantly higher than in the prior-year period due to an increased investment volume and higher current interest income.

The development of the net insurance financial result to EUR -118(-59) million was in line with expectations in the current interest rate environment. Other income/expenses declined to EUR -171(-155) million due to a growth-related increase in costs.

Operating profit and Group net income

As a result of the increased net insurance service result and net investment result, operating profit for the Division totalled EUR 305

1. million and was therefore significantly higher than in the prior-­ year period. Group net income amounted to EUR 223 (151) million.

Retail Germany Division as a whole

RETURN ON EQUITY FOR THE RETAIL GERMANY DIVISION AS A WHOLE

1 Adjusted in accordance with IAS 8.

After taking into account taxes on income, financing costs and ­minority interests, Group net income fell to EUR 82 (88) million, meaning that the retuon equity fell by 1.3 percentage points to 10.4%, taking into account an increase in average equity.

Interim Group Management Report

Retail International

• Insurance revenue +48.8% from organic growth and particularly from the first-time inclusion of the Liberty acquisitions
• Increase in Group net income of +59% due to insurance service performance (combined ratio of 92.4%)
• Improved retuon equity (14.7%) despite significant equity financing of the Liberty acquisitions

KEY FIGURES FOR THE RETAIL INTERNATIONAL DIVISION