Mr Leue, the coronavirus pandemic swept away lots of the old certainties within the space of just a few weeks. When did you realise that this virus was going to change the world?
My wife comes from northern Italy and this was one of the first regions outside China that were severely affected by the coronavirus. The large number of stories that I heard from there made a huge impact on me. It was clear to me that something was coming that would affect us much, much more than anything most of us had ever experienced before.
What consequences has the coronavirus had for the insurance industry?
Many consequences. First of all, the insured claims volume triggered by the coronavirus is estimated at 50 to 100 billion euros across the world. This is huge. Furthermore, the coronavirus is a historic event that will accelerate trends that have been building momentum for a long time, for example ongoing digitalisation and hence the hybridisation of customer behaviour and the world of work. The virus is demonstrating in a very extreme form what we have been saying for some time. The world is VUCA. You really can’t get more VUCA than this [editorial note: The acronym stands for the concepts of volatility, uncertainty, complexity and ambiguity].
What does this mean for us?
We need to be even faster on our feet at adjusting to changed framework conditions. This conduct will take us to the “New Normal”. The pandemic is setting back anyone who has neglected an agile mindset and the digital transformation in the past. The efforts we have
made over recent months are now helping us in the crisis.
In April, Talanx withdrew its profit target for this year. At the end of the third quarter, the large-scale claims amounted to around 1.6 billion euros and this was significantly above the planned budget. How hard is the coronavirus hitting the Group?
2020 is an exceptional and historic year for the sector and for us – significant and game-changing. We are entering this upcoming accelerated transformation process from a very robust position with a record result from last year, a sound nine-month result in this year and a solvency ratio of 187 percent. This means that the strategy we defined in 2018 is paying off big time. If the coronavirus hadn’t occurred, we would have been in an excellent position in relation to Group net income.
The pandemic will change the world for ever.
Let’s take a closer look. Talanx has launched three growth initiatives: HDI Global Specialty in Industrial Lines, the commercial business in Retail Germany and reinsurance at Group level. How is the Group doing on these fronts?
We got off to a very good start. Out of the contribution to the operating result of 100 million euros that we planned up to 2022, almost half of this sum had already been achieved in 2019. Let’s go through the figures: In business with special risks, we grew by 31 percent in the first joint year of 2019, and in the first six months of this year by 53 percent. And the key factor is that this represents profitable growth. Over the past two years, we underwent double the growth in the commercial market compared with the market as a whole. And this was also profitable growth. In this area, we want to evolve into one of Germany’s leading commercial insurers. And while we’re on the topic of reinsurance, we made a good start and another fillip was an improvement in the rating. This gives us additional room for manoeuvre with our sights on potential borrowing.
Looking at current events, is it necessary to modify our strategy?
No, quite the contrary. Ultimately, you can see this from the result. 2019 was our record year in this area and 2020 has been satisfactory so far without taking into account the burdens due to the coronavirus. Specifically because the digital transformation is firmly anchored in our strategy, we have the opportunity to emerge stronger from the crisis. We are benefitting from the fact that we have clearly defined a large number of issues over recent months: Our strategy, in other words our “What”. The way in which we cooperate with each other, our agile mindset, our culture with the entrepreneurial local decentralised approach combined with the rules of transparency and consequence – i.e. the “How”. And naturally our Purpose, our “Why”: “Together we take care of the unexpected and foster entrepreneurship.” Particularly in these times, it is good to have this triad as a compass.
Can you provide an example for this?
Particularly in times of uncertainty, people as human beings seek direction. If I know why I’m doing something, what I’m pleased to be working towards every day, then I can get through this crisis with a much more positive mindset and be more self-assured. We experienced this phenomenon during lockdown. Suddenly, more than 20,000 employees across the world had to switch to mobile working from one day to the next. Our employees and executives have been outstanding at achieving this switch. Rapid action, continuous adjustment to the new situation, great mutual cooperation among colleagues – our agility and our Purpose are manifestly evident every day. Meeting the challenge of operational stability during lockdown was the absolutely essential duty for us all. We now come to the creative freestyle bit: Rolling out our New Normal.
New Normal in figures
What will this look like?
Nobody can really say precisely. The challenge is defining the multifaceted topics that are subsumed under the concept for us as the Talanx Group. For me, the New Normal is all about: New Leadership and New Work.
Could you explain this, please.
The requirements are becoming significantly more complex for us all, but most importantly for our executives. I draw a distinction here between efficiency and effectiveness. You can organise efficiency even in a situation like the current one. And we’re succeeding in doing that very good at the moment. However, we mustn’t allow the problems of tomorrow to be masked by the mantle of efficiency. This is because effectiveness, in other words developing something creative or innovative, cannot be achieved by entirely virtual means. This is an area where the teams need to find their efficient and effective pathways.
In the previous issue, we surveyed readers of The Difference and 92 percent of them believe that the Talanx Group will have to change as a result of the coronavirus pandemic. Do you think they are right?
Yes. I’m firmly convinced that this is the case. The coronavirus has initiated massive acceleration in all spheres, particularly in the area of digitalisation. And we are already getting a sense that hybridisation of customer needs is taking place. We have got to further enhance our agile mindset so that we can adjust to lots of new situations and quickly respond to the opportunities as they present themselves. Our culture is based on trust and consequence and we need more “sense and respond” and less “predict and control”. Long and rigid 5-year plans are absolutely no use in a VUCA world.
The coronavirus pandemic has turned universal mobile working into a large-scale experiment on ourselves. What’s your take on this: Is it a success?
In principle, the answer is yes. A lot of what we understand by “New Work” has become a reality as a result of the coronavirus and it’s happened at a speed that was previously inconceivable. Ultimately, it is always possible to achieve far more than one would have imagined. We know from current surveys carried out, for example among colleagues in Germany, that most of them see mobile working rather positively. However, personal contacts in the office environment are a factor that is painfully missed in the crisis mode. We need to show good leadership in this situation and ensure that we retain our social cohesion and our spontaneous creativity and innovative power – in other words, our effectiveness. I believe that executives bear a special responsibility when it comes to New Leadership.
What is the scope of their responsibility?
Alongside the purely organisational responsibilities, providing effective leadership for teams above all means strengthening team spirit. Face-to-face contact is undoubtedly important here. Or are you able to imagine successful football teams without the trainer as a leader on the touchline? Someone who directs tactics and substitutions from home using videoconferencing. Ultimately, it is the outcome that really counts, and this can be identified culturally with reference to the Organisational Health Check among other factors.
The Organisational Health Check (OHC) is a reflection of our culture, our “How”. The second OHC has just been completed. What is your assessment of the results?
This year, we had a participation of 88 percent worldwide and a significantly higher overall score than in the previous year. This is a sensational result, also in comparison with the competition, and it demonstrates that we are on the right track. And this is what it’s all about now. The segments are currently working on appropriate initiatives and measures that will allow us to continuously improve our performance even more, so that we can once again outperform the encouraging result next year.
What is work at Talanx going to look like in the near future?
We have launched the “NewWork@HDI” project in Germany as part of working on the New Normal, and the proposals are now on the table. The fact is that the vast majority of employees would like to work mobile for two to three days each week. We now have to work with our social partners to identify a pathway as quickly as possible. This roadmap will be supported by a transparent and strategic management ethos based on a culture of trust and the modified worlds of work to which we are now committing massive investments.
“A team is not a group of people who work together. A team is a group of people who trust each other.”
What is the situation in other countries where the Talanx Group is operating?
Our decentralised, entrepreneurial approach means that the concrete arrangements for the New Normal have to be worked out by each individual company. As far as I’m concerned, the most important thing is for everybody to have a common cultural understanding. In other words, we make the necessary arrangements in an atmosphere of trust, transparency and consequence. Undoubtedly, if we carry out a comparison, we will see a lot of outstanding initiatives. We also need to be transparent about highlighting these for the entire Talanx family.
New Work is an investment in technology, office space and in our employees. What is the objective?
For us to continue to be successful in the future. This is because success is always much more fun than failure. We will be able to achieve this aim with motivated employees who have better abilities and skills than the employees of the competition. Our decentralised approach is an extremely attractive structure for people with an entrepreneurial mindset who want to take responsibility.
If we look to the future: What opportunities can you see?
The coronavirus has created a deep-seated crisis and this will increase the pressure on consolidation over the medium term. We want to take advantage of this situation, for example by making acquisitions. Our divisions now need to define strategies that will enable us to emerge successfully from the coronavirus crisis. In general terms, whoever as an insurer fails to keep the promise to make payment will lose the trust of the customers. We will be well advised to be guided by our Purpose. Secondly, the competition will be won by the quick-footed entrepreneurs who are able to adapt to changed situations rather than by the big boys. We need to speed up. Our customers expect this from us. And thirdly, lots of people are finding out the benefits of having a strong partner at their sides in what is in some cases an existential crisis. We are working in a people business. Every one of us makes a difference. This “Together” will carry us through the crisis. I am confident that we are going to make good use of the opportunities.