Ladies and gentlemen, thank you for standing by. I'm Stuart, your Chorus Call operator. Welcome, and thank you for joining the Talanx analyst conference call on the nine months 2020 results. Throughout the recorded presentation, all participants will be in a listen-only mode. Presentation will be followed by a question-and-answer session. If you have dialed in by telephone, you can press star followed by one on your telephone to register for a question. Question can also be raised using the chat box on the webcast page at any point during the session. Kindly add your name, function, and email to be identified. The Q&A session will begin with the questions asked by telephone. I would now like to turn the conference over to Carsten Werle, Head of IR. Please go ahead.
Yeah. Good morning from Hannover. This is the nine month 2020 Talanx results call. I'm here together with our CFO, Jan Wicke, who will lead you through the numbers. Of course, Jan will also be very happy to answer your questions after that. You can find, as you know it, all the documents on our webpage, and a replay of today's webcast will be available from a few hours after the event. With these introductory remarks, I'd like to pass the hand over to Jan. The floor is yours.
Well, thank you, Carsten. Good morning, everyone, and thanks for dialing in. Before I talk about the results, a few remarks. First of all, given that we are in the middle of the second coronavirus wave, I hope you're all still fine and healthy and/or have recovered fully if you were sick. Second, I'm very pleased to have the opportunity to represent the figures today to you, as they are quite good, at least from my point of view, and I'm looking forward to continuing the dialogue with you. Third, please note that in response to some feedback we've received, we have prepared and published a new little one-page document for you, which I hope will make your lives easier, where you can find all the numbers you need to fill your Excel sheets. You can find it on the Investor Relations page.
We have sent it to you this morning, I think, in addition too. Before I start with the results, the final remark, I will not present all the slides we have in the presentation. I will focus on a few one, but if you have questions to the other slides, do not hesitate to ask me the questions. If we turn to page two, there we have our key messages. We expect that our annual results will be clearly above EUR 600 million, and we intend to pay a dividend of EUR 1.50. Why is that? Operationally, we believe after nine months, we have relatively good figures. We are growing 5.2% compared to previous year. Currency adjusted, it's even 7.2%. The growth is driven by our reinsurance and Industrial Lines business, whereas we have a decline in the retail segments. Corona has hit our results.
EUR 356 million is the net income impact, which we estimate for the first nine months. If you were to exclude this corona impact from our figures, we would have to report a combined ratio of 97.6%, which is pretty good and which underlines the operational performance of our business. Our group net income amounts to EUR 520 million after nine months, which is 30% below last year's figures, with a group return on equity of 6.8%. Given that we have just 50 days left in this year, we are happy to provide you with an outlook for 2020, which is clearly above EUR 600 million. Also, we would like to give you a guidance for 2021, which is that we want to achieve a result in between EUR 800 million and EUR 900 million.
I will dig into our considerations with regards to the outlook and the guidance, in my presentation. In particular, our thoughts about investment income in the future as well as our thoughts about the Corona claims. We also confirm our midterm target, which is an earnings per share growth of 5% annually, starting from 2018 to 2022. 2018 was corrected as a result to EUR 850 million, as a normalized result. The starting point is higher than the year-end reported figure. We also want to achieve a return on equity more than 800 basis points above risk-free. Finally, we want to share our success with our shareholders, we are to propose a dividend of EUR 1.50 per share for 2020, which is a dividend yield, if you take €30 as a current share price of 5%.
Let me now dig a little bit more into our figures. If we could turn to page four, please. First of all, you see we are growing. After nine months, we have EUR 32 billion in premium, which is 5% growth, and the growth is driven by P&C reinsurance and Industrial Lines. Together, EUR 2 billion more in premiums, which is not bad. This is more than offsetting the decline of EUR 772 million in Retail Germany and Retail International. The second on this P&L slide I would like to draw your attention to is the net investment income. It's down 3%, and this reflects already two things. One is some write off at the beginning of the year due to the corona effects, which were in particular seen in the first quarter. Second, a lower interest rate environment. It's not only the Eurozone.
German Bunds, they are down 39 basis points. The first nine months, it's also the U.S. You're aware of it. The 10-year Treasuries, they are down 111 basis points. Please note that we have a lot of business outside Germany. We are, in fact, impacted by this interest rate environment.[Non-English content]. On the next page, there you see the third quarter results. In the third quarter, we are able to achieve EUR 194 million net income after minorities, which was also driven by one-off at equity effect, which we have seen in the reinsurance. To page six, I would like to use this waterfall chart to explain to you in more detail how Corona has impacted you and how we are accounting for it.
In total, you see that the EBIT was impacted by corona for EUR 842 million. This translates after minorities, taxes, and interest to EUR 356 million bottom line effect for us. The coronavirus has four different impacts, which I want to dig into a little bit more in detail. First of all, we have EUR 104 million EBIT impact due to lower premiums. What is that for? In Industrial Lines business as well as in Retail Germany, we have a lot of contracts with small and medium-price enterprises and large corporates, where the premium is directly linked to the revenues of the company. If there is a lockdown, and due to the lockdown, significantly reduced premium, there is an impact not only on the top line, but also on the bottom line. What you see here is, with this EUR 104, is the bottom line effect.
We already have taken into account that if we are receiving less premiums, we also have less claims, and so on. This is already accounted for in this EUR 104. The second negative impact by corona are the corona claims itself. We have more than EUR 1 billion corona related claims, of which 32% were absorbed by the otherwise unused large loss budget. Quite a huge number, and I will explain this corona claims in more details later. In order to give you a certain kind of guidance, how we expect these claims to be in the future as well. We have another negative impact of EUR 170 million of corona-related decline in net investment income. Please note that we here just have accounted for extraordinary write-offs. We haven't accounted for the lower interest rate environment in this column.
Finally, we have offsetting effects, which we have estimated of EUR 156 million, and which mainly result from a lower than expected motor claims in our international business and in our German business. Because of the lockdown, we have lower claims frequencies. We have a little bit higher claims cost. Yeah. In some countries where there's usually traffic jam, now the people tend to do speeding, and therefore the average claims costs are going up. Overall, we have a significant impact of the lockdown on the motor claims, and EUR 160, 50 million is what we estimate. Finally, on this page six, we have also shown some other effect realized net gains, which are above the average, which are mainly due to funding the ZZR. Also one-offs due to at equity consolidation effects, which has supported the result.
On the next page, on page seven, you can see a breakdown of these claims on the different segments. I don't want to dig into that one further. On page eight, you also have it, how the corona claims were accounted for in the third quarter. Where I want to go to is now to page 10, please. I want to dig into the corona claims in more detail and also provide you with some guidance how we see the business going forward. The line of business, which was affected most by corona so far was business interruption and closure, where we have to have claims of about EUR 325 million, more than two-thirds related to reinsurance.
Going forward, we expect not too many new claims to come due to the fact that the wording has changed in this line of business, and there are tighter pandemic clauses now in the contract. If somebody has had a claim, we have asked them to renew the contract with new wordings. There are two things to mention. There will be some claims already also in 2021, due to the fact that up to now, not all contracts are already changed on the new wordings. There will a certain time lag, so that we will have some business interruption and business closure claims also in 2021. Second, there is some uncertainty with regard to the court rulings in various jurisdictions. This will mainly affect reinsurance given that Hannover Re is paying for the claims of the primary insurers who are in court in several jurisdictions.
We have currently booked already very cautious reserves. If you are at court, you never know. There are some uncertainty. The second line which is affected is event protection. Pretty clear the events cannot happen due to corona. We have accounted already for EUR 186 million. We expect only a little impact into the next year as new contracts have very tight pandemic clauses. There are some, but very little multi-year contracts within our portfolio. Some events which are not yet cancelled can be cancelled in the next year. We will have some claims with regard to that one too. The highest uncertainty with regard to the future is, from our point of view, credit insurance. It heavily depends on the future economic development and how much bankruptcies there will be.
It's hard to make a fair judgment on that one, because in many jurisdictions, the notifications of financial distress has been turned aside, so that the normal identification methods and the normal indicators which you have in advance to look at are not very valid currently. We have already booked for EUR 191 million here. The IBNR ratio is above 90% in this volume. We haven't seen so many really reported claims, but we expect more to come. There is, from our point, the highest uncertainty. The lowest uncertainty to estimate, what we see currently is life reinsurance. In life reinsurance, we have two claims pattern. One is excess mortality in the U.S., and the other is the Australian disability insurance income insurance, which we have. For the latter one, we have already reserved very conservatively.
For the excess mortality, I have to comment here, we are just allowed to book for the deaths which have already incurred. We cannot do a booking in advance, despite the fact that we expect excess mortality in the U.S. to last at least till the third quarter in 2021. If you compare the numbers which you see here, and with the numbers in the second quarter, which was just 63, if I recall it correctly, you see quite an increase in life reinsurance, and we expect further increases, first of all, till year-end, and second also in 2021 with regard to life reinsurance. Finally, we have some other claims which also are related to corona. This is not very homogeneous claims. I just want to give you an example, what kind of claims are in that.
A lot of them are quite close to business interruption and business closure. Maybe we will reallocate some of them to this line of business at year-end. To give you an example, if you have perishable goods or other crops that have to be destroyed because they cannot be transported in time to the customer due to the lockdown. We insure such things, and we had to pay for it. This accounted up to EUR 198 million. In total, we have corona claims for more than EUR 1 billion in the first nine months, which is quite a huge amount. Next to the corona claims, I really want to draw your attention to the fact, but you are aware of it, I know, that also the investment income is affected by lower interest rates.
Which we also have taken into account for both for our outlook as well as for our guidance. Coming back to the claims, I would like to go to page 11. I would like to put these Corona claims into the context of large losses. What you can see here on the page is our large loss budget in the P&C line. It is without Life & Health Reinsurance. Please keep that in mind. That would be another EUR 159 million. What you can see is we have this EUR 1.6 billion after nine months. If you see full year figures there in comparison, we have already reached the highest level what we have ever seen. If you compare that to our large loss budget, which would have been after nine months, roughly slightly above EUR 1 billion. We have 175%, 157% usage of the large loss budget.
You can see, yes, we are used to large losses, but this year with corona, it's a particular significant one. What you can see also is that the losses related to Nat Cat and man-made are really okay. Let me dig into that one a little bit further on the next page. What we've seen with regard to the Nat Cat exposures this year, that we had a large number of Nat Cat claims. The average costs were rather low. We are, with regard to Nat Cat, rather happy with the results. On the other hand, the higher frequency gives us or support the thesis of the climate change. We have to expect for more claims in the future with regard to Nat Cat business. We have to take that into account. If you would then go to page 14, please.
I would like to give you an overview on the various segments of the Talanx Group. First of all, overall, the combined ratio is 100.7%. Without corona, it would have been 97.6%. I already mentioned that. I just want to highlight on this page two things. The most affected segment by corona is the Industrial Lines business, 104.8% combined ratio compared with 98.3%. If you were to exclude corona, strong performance, I will dig into that one a little bit later. We have the opposite effect with Retail International, where corona has led to a better combined ratio of outstanding 94.8%. Without corona, it would have been 96.3%, which is still a very strong operational performance. Let me now dig into the segment a little bit deeper. If you were to go to page 18 and to start with Industrial Lines.
First of all, we are really pleased to see continued growth here. The biggest contribution, again, is coming from our specialty business. Also, the restructuring is well ahead of plan in fire. The combined ratio, excluding corona for the first nine months was 99.9%. We haven't made it to be 99.9%, we are pretty much where we said we would be for the full year in 2020. This is around 100%. We are very happy with that one. Going forward, I want to draw your attention to two facts. First of all, we have understood, and I've understood in various discussions with some of you, that you didn't like the volatility in the Industrial Lines segment in the past. If results should become better than expected, we would invest in stabilizing future results, building volatility business. Second, the investment income.
Industrial Lines business, due to its international business as well, is well affected by the lower interest rate environment. This will also be kept in mind when you are to estimate the future results. We expect in return on investment to be 2.2% for the full year in 2020, and some downward pressure also for the next year. If you go to Retail Germany on page 19. Please keep in mind that I was the head of Retail Germany, and therefore, everything what I tell you might sound a little bit more positive than somebody else would present it. I'm kidding. First of all, we have a decrease in premium in both, in P&C and life. This is not good, but it's due to the lockdown. More than 50% of the premiums of Retail Germany are derived from Bancassurance.
The lockdown has led to that the bank shops had to be closed, and this obviously had a negative impact on the figures. The EBIT figures are quite strong, and without corona, it's fair to say that there would be a fair chance already to reach the EUR 240 million EBIT in this year. If you go to the next page, to the P&C results, there we see a combined ratio after nine months of 95.8% already, including the corona impact. Please keep in mind that Retail Germany has quite some business interruption claims. The overall result is pretty good. Without corona, it would have been below 95% for nine months. If you go to the life segment. The premium development, again, here is with regards to the Bancassurance, is significantly lower.
Also, we have been quite hesitant to write a single premium business due to the lower interest rate environment. This has also impacted our gross written premiums here. The net investment income here is up, and this is due to the fact that we have to fund the ZZR. This is the only reason. It's nothing what you can see in the bottom line of the life result, which was a bit just below last year's figures due to one-off effect, which we had in 2019. If you go to Retail International. First of all, what you can see, the gross written premiums are down 11%. I think this needs explanation, because this 11%, nine months premiums decline, is related what has been a significant deterioration in local currency, in particular in Brazil, Turkey, those above 40%, and in Mexico, above 20%.
It's mainly currency related, this decrease in premium. In the non-life business, which is 70% in that segment. If you account for in local currency, we are able to show a growth, a small growth, which is driven by Warta and Turkey. Life premiums are down, 17% also in local currency. This is particular driven by Italy, where we have reduced our life business intentionally. The EBIT figures are quite strong. We have a slight decrease, which is limited by 3%. I have to add here, Retail International, due to the lower motor claims, have been a very favorable overall situation here, and so we expect a rather good result in the current year. With regard to the outlook, please keep in mind that this decrease in the currency will also translate into lower EBIT figures going forward. Let's turn to page 23, please.
Reinsurance. As the most of you have heard, the Hannover Re call already. I just want to highlight a few things. Hannover Re is growing, is providing for a return on equity of 8.7%, and we are really proud to be the majority owners of Hannover Re. We really like the performance of the team from Jean-Jacques. That's really great. I would like to go directly to page number 28, please. On page number 28, this is solvency development. We are reporting a Solvency II capital adequacy ratio of 187%, which is in the upper range of our target range between 150% and 200%. This reflects the development of the ratio also in the reinsurance, as it was already reported by Hannover Re, which was down from 225- 222. This is also seen in our figures.
If we go to the details here, then I would draw your attention to four effects. First, corona claims are reducing the own funds. This is the obvious one. Second, we are growing and faster than our peers. If you are growing faster, you need more solvency capital. This is the second reason for this development. Third, we have a lower interest rate environment, as the Solvency II balance sheet is a market value balance sheet. If you discount the values there with a discount rate close to zero, little things in the future lead to higher changes in your market value balance sheet. This leads to higher volatility. Therefore, due to a lower interest rate environment, you will see higher risk capital requirements.
Finally, I want to draw your attention to the fact that we are quite conservative here with regards to the life reinsurance. We do not only have booked, in the technical provisions, the numbers from IFRS. Other than IFRS, we have already provisioned for the expected higher mortality in the next year, and a small triple-digit number is at an additional reserve included in our solvency statement already. All in all, it's a conservative representation of what we see. Finally, let's go to the outlook. First of all, we are quite happy with the development, what we've seen so far, if we reflect for the context of corona, in which we have to provide for the results. We want to share the success also with our shareholders. The expected dividend is EUR 1.50.
We will propose that to our AGM and have to negotiate it also with the BaFin. Given our good solvent situation, we are quite confident that we can deliver on this EUR 1.50. The group net income for 2020 should be clearly above EUR 600 million. This already takes into account that we will have some lower investment income as well as additional claims to happen in the fourth quarter. For 2021, we want to achieve between EUR 800 million and EUR 900 million as a result. I think I've highlighted a few of our thoughts with regard to that result. Overall, we want to continue to grow, which is a challenge.
We are quite confident that in particular in reinsurance and Industrial Lines business, we can grow further, and we expect the overall growth of the group to be around 5% next year, which is a strong number. Finally, at midterms, if you go to the midterm expectations, we confirm our midterm target matrix, which Torsten Leue, as he took over as the CEO, has set out. The target will be to provide for a return on equity of 800 basis points above risk-free rate. We want to grow our earnings per share on average 5% every year. We are very confident that we can deliver in 2022 on that one. Having said so, I would like to come to an end. Overall, after nine months, we have to note that our results were quite significantly affected by corona.
If we exclude this impact, we are quite proud on the achieved results after nine months. EUR 520 million is not a bad number. Going forward, we want to provide you with the guidance for the full year and give an outlook for 2021. Now I'm happy to answer your questions. Stuart, I think it's your turn now.
Okay. Ladies and gentlemen, we will now begin the question and answer session. If you have dialed in by telephone, please press star followed by one on your telephone to register for a question. If you wish to remove yourself from the question queue, press star followed by two. Questions can also be raised using the chat box on the webcast page at any point during the session. Kindly add your name, function, and email to be identified. The Q&A session will begin with the questions asked by telephone first. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may now press star followed by one on your telephone or type a question using the chat box on the webcast. One moment for the first question, please. The first question is from Michael Haid from Commerzbank. Please go ahead.
Good morning. Thank you very much. I have two questions, both on Retail International. Can you talk a little bit about the outlook for your Retail International operations? You mentioned LatAm currencies are currently are hit by a fixed devaluation. Possibly also, we should expect economic slowdowns. Turkey is also difficult, but your combined ratios were better than expected. What are your expectations for 2021? Second question, also Retail International, Italy. Italy is a strong contributor to Retail International. You further expanded there by M&A, yet it is not defined as a core business within the Retail International segment. What is your strategy for Italy? Also, can you tell us what type of life insurance products you sold in Italy? If I understood correctly, you reduced that in the third quarter.
Yeah. Sure. Michael, thank you for your question. First, with regards to the outlook of Retail International, in particular, the currency affected businesses, which is in LatAm and Turkey, Brazil, Mexico, Chile and Turkey. With regard to that one, we expect the very good operational performance to continue. We also want to grow in local currencies despite the economic downturn. We have to account for the lower results in EUR, calculated in EUR. Our asset liability management, we hedge assets and liability, but we do not hedge for future gains, future profits. This is what we have to take into account. If you go to the operational results a little bit deeper, you will easily find out if you go for Brazil, for instance, that the investment income in the int markets is really down, except for Turkey, where it's still quite up.
It is down as the central banks in those countries try to follow the path of the big central banks like Fed and ECB, and have lowered the interest rates significantly. We will have an impact with regard to the results also not only by currency, but also by lower investment income. This is that. Do we continue to the strategy in those segments that we want to grow in the LatAm countries as well as in Eastern Europe and in Turkey? Yes, we will continue. We expect these markets to be hit more by this development, but to recover sooner. This is our overall long-term expectation. Obviously, it's driven by the overall economic development. Second question was with regard to Italy and our strategy. We've bought now a pure P&C play, and we did it on purpose.
This investment should yield with more than 10%. It's above what we want to achieve and it's euro denominated. For Italy, we do not have, at least so far, any currency issues. It will help us to reduce dependency of the business model on life. With regard to the life, we have reduced single premium business, which is quite close to saving plans. Yeah. This what we have reduced significantly and this is something, given that this is capital intense, which we'll reduce even further going forward. Michael, I hope this answers your questions.
Yes. Thank you very much.
Thank you, Michael. We take the next one, please.
Next question is from the line of Paris Hadjiantonis from Exane BNP Paribas. Please go ahead.
Hi, good morning from my side as well. Firstly, let me start with the dividend and your aim to keep it flat year-on-year. The questions I have firstly relate to the central liquidity. It's a number that you have been guiding us to before. Where does it stand now? Also relating to the dividends, obviously we know that a big part of your dividend is coming from Hannover Re. Hannover Re was a bit unclear on whether or not they will be paying a special this year. Even if we actually don't see a special from Hannover Re, can you confirm that you are still in a position to pay the EUR 150 dividend this year? On outlook, for 2021, I'm trying to understand what kind of assumption you have in there already relating to coronavirus claims.
Your outlook of EUR 800 million-EUR 900 million for 2021 is below market expectations. I'm trying to understand, what is conservatism and what is actually coronavirus impact for 2021. There's a comment, in your press release saying that for 2022, you are still expecting that the 5% EPS growth per annum from a 2018 base stands. Which seems a bit weird to me because that leads me to a quite high number for 2022. Can you basically explain what that comment is about? I'm sorry to drag on, just a small third question. The Industrial Lines combined ratio, which on an underlying basis, looks strong. Are there any frequency benefits in there? Lower claims from certain lines that might actually benefit from coronavirus. Thank you.
Thank you, Paris, for your question. Let me start with the first question, whether the dividend payment is safe. I wouldn't have set out the expectation of EUR 1.50 if I wouldn't be very confident that we are able to pay it. One thing, it's quite difficult because the local statutory result is related to the year-end close. We will explain that further, also the development of the so-called cash pool, after the year-end figures in more detail, because it depends also on the developments in the fourth quarter. We are very confident that we are able to deliver EUR 1.50, and if Hannover Re is just focusing on their regular dividend, not on the special dividend, we are also ready to stick to our dividend policy, which is that we want to have at least the dividend of the previous year.
Having said that, let's go a little bit to the outlook questions. 2021, the EUR 800 million-EUR 900 million, you would have liked to have more explanation on our thoughts. We have included in our thoughts both corona claims and a lower investment income. With regard to corona claims, I would not go into every detail here. The most certain corona claims, which is to be expected, is Life & Health Reinsurance, and the most uncertain is the credit insurance business. We have set some estimates on all those lines. With that one, we expect significantly less corona impact in 2021 compared to 2020. Significant less, but still some impact in the figures. With regard to 2022, huge numbers. The starting point in 2018 is EUR 850 million.
You have to calculate an annual growth rate on this EUR 850 million, to come to our 2022 target. This is what you have to do. Finally, Industrial Lines combined ratio. Did we have some positive impacts due to lower frequency, corona impacted? Yes, we did have, but, if you recall the number premium impact. We had this particular in those lines where the company can reduce the premiums if the revenues of the companies are lower. In those lines, we also had lower claims, and we have accounted for it in the column what you can see. You can see it overall on page six and Industrial Lines in particular on page seven. The nine months aggregated figures. This is accounted for in the premium impact. Because this is related to insurance contracts, which are revenue related.
Paris, I hope I've answered your questions, or do you want to have further explanation?
No, you have answered the question. Just a small follow-up on the 2022 essentially outlook. The 5% growth rate brings me to a number which is above EUR 1 billion. You are essentially saying that this is what I should be expecting for 2022, all other things being equal, right?
Right.
Thanks.
Thank you very much, Paris. We could take the next question, please.
Okay. As a reminder, for those of you who would like to ask a telephone question, please press star followed by one on your telephone keypad. If you'd like to ask a question over the webcast, there is a chat box at the bottom where you can submit your questions in writing. The next question is from the line of Vikram Gandhi from Societe Generale. Please go ahead.
Good morning, everybody. It's Vik from Soc Gen. I hope you can hear me all right. I've got three questions. Firstly, can I just ask where the group is with respect to all the midterm targets, i.e. the segmental ROEs, efforts towards increasing the capital upstream, improving remittance ratios, and all of that stuff. I'm aware you are asking us to be patient on the group cash pool, and wait until the FY 2020 results, it would be helpful if you can comment on the rest. Secondly, going back to Retail International, I hear what you say in terms of the Forex translation impact. Would be great if you can share your thoughts, with respect to the business prospects, since it appears that the segment might be facing several headwinds, including the Forex translation. There could be a collapse in demand.
I remember from the past, there has also a transactional impact from Forex where you earn premiums in local currency, but the claims have to be translated from US dollar or euro because of the imported spare parts. It appears as though there are a lot of headwinds for Retail International. Finally, now that we are towards the end of the 2020 program for Industrial Lines, what's next for the segment? That a comment there would be very helpful. Thank you.
Okay. First you wanted me to dig into the midterm targets with regard to dividend. I just want to confirm again that we are quite confident that we can deliver on that one, and that we also can deliver with regard to the midterm cash pool target. Second, the midterm targets also reflect our return on equity ambition, and it's quite sure for the current year. We do not fulfill the return on equity targets for the current year. Given that we have this huge Corona impact for the next year, we should be able to deliver on that one already, so on the return on equity target. With regard to Retail International Business, you highlighted a few points quite right. If we go to Brazil or Mexico, there is an economic downturn, which is much heavier than here in Germany or in some other European states.
We also expect the economies to recover in those countries faster than in other markets. You have to keep in mind those, and you're absolutely right. New car sales, which is quite important for new business, is down in some of the markets up to 30%. It's quite significant that we have a negative impact on demand. If you then look already at the current growth figures in local currencies, you see that the operational performance of our colleagues in Retail International is quite strong. Yet there's headwinds. Second, with regard to claims, you mentioned the issue with the spare parts of the cars. You're pretty right there. This needs to be reflected in the insurance prices because claims costs are rising. One funny remark to that one when I spoke with my colleagues in Brazil.
There's another one which nobody had on this agenda. Due to the lockdown, there's so much less traffic in Brazil. As a result, the people are speeding more and the average claim costs are higher. If everybody has to slow down, you have just small Casco claims. Now the Casco claims are higher on average, due to higher speed of driving. I was quite surprised to listen to that one. Finally, with regard to the headwinds, with regard to demand and claims, what you have already mentioned. I just want to draw your attention. If you go to some of the markets, the investment income it's the number one headwind, what we see in those markets, due to the fact that also in those markets, except for in Turkey also, but not to such an amount, the interest rates have gone down.
Vik, did I answer your question adequately?
Okay. Vik, are you still with us?
Yes. Sorry, I was on mute. That's really helpful. There was a third one with respect to the Industrial Lines.
Oh, yeah.
What's next that we should expect?
We want to grow profitable, and we see a hardening of the market. The first priority is profitability. And the second one is growth. In this order, we want to grow the business, in particular in specialty business. This is what's on the agenda. Also, with regard to rate changes, they have quite some tasks to take into account, in particular in the long-tail business, also the lower interest rates, which require higher rates in order to compensate for the lower investment income. The initial targets of the 2020 Program were lifted upwards in order to compensate for the interest rate development.
Okay. That's very helpful. Thank you.
Thank you very much, Vic. The next question, please.
The next telephone question is from the line of Thomas Fossard from HSBC. Please go ahead.
Good morning, everyone. Good morning, Jan. A couple of questions on my side, which would be relating to the Industrial Lines. First of all, on the rate momentum, can you put some numbers behind how much you managed to get higher price increase in your book on a nine-month basis year to date? Potentially, what are your expectations for 2021? How maybe compared to the claims inflation you're seeing in your books, just to better understand how you're benefiting from the better pricing environment so far into the year. Second question would be related to the specialty business. Looking at your slide and hearing your comments, it seems to be that you're very happy with the development in the specialty lines. Here also, could you put some numbers behind in terms of premium growth and what is the combined ratio you achieved so far?
The third and last question would be related to the negative premium impact in Industrial Lines. Seems to be that in Q3, it was relatively limited. Do we have to conclude from that, what you book already in H1 in terms of negative premium is your best guess estimate and you don't expect any more negative reserve coming for the remainder of the year? What about 2021 in terms of volumes or demand for Industrial Lines? Thank you.
Okay. Thank you for your question, Thomas. I try to answer as good as I can. Before I do that, your first question was with regard to the price momentum. Let me highlight first a general thought of the economics of rate changes. It makes a huge difference if you have long-tail business versus short-tail business, and if you discuss necessary rate changes to the interest rate environment. A rate change of 5%-10% in the short tail business is fine, yeah, it can be not enough in the long tail business. I just want to highlight this as a starting point because the average rate increase says not too much before I come now to the answer of the question.
Carsten just provided me with the Marsh Global Insurance Market Index, which shows that in continental Europe, we have an average price increase in between 10% and 15%. In our figures, we have started with restructuring in the Industrial Lines business a little bit earlier. We have seen more price increases already in the last renewal. This year, our renewal figures do not show the same growth figures like peers who have started later. This is what I can say in general terms, we are happy with it. Overall, Edgar Puls and his team have clearly outperformed the rate increase changes, which we have tracked down line by line. We are very happy with the performance of Edgar's team here. This is what I can say with regard to price changes. Sorry for that, I cannot dig into that one further.
Second, specialty business. We are growing there. All in all, I would expect an overall growth after nine months is very, very, very strong 35 percentage points. This is driven by two things. We have allocated some business from Industrial Lines to specialty. We have to say that, so it's slightly overstated. It's also driven not only by new contracts, but by also by rate increases in some lines of business, which have been quite huge. We are happy with it, and we want to further grow this business, not at such a rate. Another 35% are not expected next year, but we are to grow this business with double-digit figure also next year. With regard, you would have liked to have an outlook on the premiums of Industrial Lines going forward.
I would expect Industrial Lines to grow clearly above 5% in 2021. Where reinsurance and Industrial Lines should grow above 5%, whereas in local currency, the retail business is expected, in particular, due to the impact of HDI International, of the Retail International business, to be below 5%. Less an impact in Germany, but in Retail International, due to the currencies we already mentioned. I hope, Thomas, this answers your question.
Yes. Thank you, Jan. Thank you.
Thank you very much, Thomas. Next question, please.
Okay. We have a follow-up question from the line of Vikram Gandhi from Societe Generale. Please go ahead.
Hi. Sorry, it's me again. I've just got a couple of quick follow-ups. Firstly, on Retail Germany. I think in your opening remarks, you said that we could perhaps be in the striking distance of the EUR 240 million EBIT this year itself, versus close to EUR 170 at the nine month stage. I just wondered, what's the big driver of the significant growth in 4 Q that you are implying when you say that? Secondly, going back to your answer to Paris on the 2020 outlook or target and the 5% EPS guidance, can you share which segment, in your view, should help you get there with respect to what you expect for 2021, i.e., going all the way from a base of EUR 850 to, let's say, upwards of EUR 1 billion, close to EUR 1,030 million for 2022. What should be the biggest driver there?
Thank you.
First of all, to Retail and Retail Germany, in order to avoid misunderstandings, I just have said, if there were no Corona claims during the course of the year, I would actually expected the segment to be able to deliver the EUR 240 already this year. Retail Germany has Corona claims, in particular in business closure, quite a huge number, and this is why they were not going to achieve this already this year. There might be another driver if they are to invest a little bit in some distribution partners. There might be another negative impact going forward. Overall, the operational development of Retail Germany is very pleasing, which you can see at the combined ratio. If you see the combined ratio, which was set out initially for 2022, I think it was already, it was 95%, or 2021.
2021, 95%, they would be able to achieve this already this year. This is with regard to Retail Germany. Second, the drivers of our future earnings per share growth. This is, first of all, profitable growth. Yeah. We want to grow our business profitably, and therefore, both wholesale segments, like reinsurance and Industrial Lines, should contribute to further strengthening our bottom line results. That's what we want to do.
Okay, perfect. Thanks for the clarification. Thank you.
Stuart signaled there are some more follow-up questions.
We have a follow-up question from the line of Thomas Fossard from HSBC. Please go ahead.
Yeah. Just coming back to the Industrial Lines. Sorry about that, the 97% combined ratio, medium target, which is in place for quite some times. How soon do you think that it would be realized in the environment that you are foreseeing for 2021 and beyond? Thank you.
Well, thank you, Thomas, for this question, because this gives me an opportunity to draw your attention to one thing. We have set our targets for Industrial Lines internally, obviously, and you're pretty right what you've mentioned. If the overall results in the group tend to be better than what we have forecasted or given you as a guidance, we will invest in certain kind of volatility buffers in the Industrial Lines business. We have understood well from discussions with you and with others that you didn't like the volatility which you've seen in the results in the past in Industrial Lines. You shouldn't expect in the very short term, not too much swings upwards, because if we have a very positive development and we already see some very positive development, we will rather invest in, let me call it, a volatility buffer. Yeah.
In order to do expectation management there. Technically, we have a very close eye on profitability in that line. Given that the market is hardening, it's now the right time to do so.
Questions, Thomas?
Yep. Perfect. Thank you.
Thank you very much. Next one, please.
Okay. We have also another follow-up question from the line of Paris Hadjiantonis from Exane BNP Paribas. Please go ahead.
Yeah. Thank you. I think you just kind of answered my question, which was for you to comment on the Industrial Lines and the opening remarks around building buffers. Basically, I wanted to ask you about your expectations about reinsurance costs going forward. Obviously, the insurance prices are going up so are prices in the wider commercial primary space. What do you expect in terms of the insurance costs going forward? When you are talking about managing volatility, I think this is what you just answered. Do you refer more towards building internal buffers that can be used to manage volatility rather than restructuring your insurance coverage, or is it both? Thank you.
Yeah. Very good question. It's de facto both, let's start with the reinsurance prices. Both reinsurance and primary insurance prices have to go up, to reflect for lower interest rates and the climate change consequences, for instance. Also for, if you go to fire and to the market prices, to compensate adequately for risk. There are quite some reasons for rate increases, not only in reinsurance but also in the primary insurance. With regard to reinsurance prices overall, yes, we expect them to rise. If we were to manage this is finally the conclusion, it really makes sense to have some volatility buffers on your own balance sheet, in order to buy a little bit less as reinsurance coverage. It's always a question of both. You're pretty right there. Does it answer your question?
It does. Thank you.
Thank you, Paris. I think we have another one.
Yes. One more follow-up question from the line of Michael Haid from Commerzbank. Please go ahead.
Thank you very much. Two questions. On the investment income, you mentioned pressure on the investment income to come from the lower rates you observe across many countries. Can you tell us, first of all, what the reinvestment rate for the third quarter was, and any thoughts on your investment strategy? Associated with that, the Solvency II ratio of 187%. How comfortable are you with that, and would you be willing to take some management actions, i.e., reduce even further investment risk to improve the solvency ratio? We have observed that from a large competitor of yours.
Very good question, Michael. First of all, the first nine months figures, and I do it out of my head, Carsten will correct me if I'm wrong, we were roughly about EUR 1.50 for the first nine months, the average reinvestment yield. The first one. Second, with regard to the solvency development. Our solvency is obviously depending on the growth, which we have in both reinsurance as well as in the primary insurance group, and we always have a look at it. The overall direction of Talanx is that we prefer to invest in insurance risk rather than in market risk will continue. Yeah, we are already there, where some competitors are going to. We believe that in particular, if the insurance market is hardening, which we see in the wholesale markets, this is the right way to go forward.
This is where we are already in. Yeah. It's quite normal that we reassess capital structure from time to time. What we will have to look at is how we allocate capital within the group. Some parts of the groups are growing much faster than other parts. This might cause then some action. I do not want to comment any further on that one, because it's normal course of business.
Do you have a figure for the reinvestment yield at the end of the third quarter, or for the third quarter stand alone?
For the third quarter.
Are you-
Yes. I do not have the number for the third quarter as a whole, but I know that in September, the reinvestment yield was even below 1%. For the month, September. I don't have it for the third quarter. I just received now from a report, so my 1.5% was right and below 1% for September is right as well.
That helps a lot. Thank you very much.
Thank you, Michael. Stuart, if you do not tell us that there are any more questions right now, I suppose we could close the call.
There are no further questions at this time. I would like to hand back to Dr. Jan Wicke for closing comments. Please go ahead.
Well, first of all, it was my first call on quarterly results with all of you. I liked it very much. I liked your questions. Thank you so much. I hope that we stay in touch, have a close and intense dialogue on Talanx results. Please, to all of us, stay healthy in the crisis, and I am looking forward to have then the year-end call with you. Bye.
Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining. Have a pleasant day. Goodbye.