Ladies and gentlemen, thank you for standing by. I'm Hailey, your chorus call operator. Welcome and thank you for joining the Talanx Analyst Conference Call on the six-month 2020 results. Throughout the recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you have dialed in via telephone, you can press star followed by one on your telephone to register for a question. Questions can also be raised by using the chat tool 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 via telephone. I would now like to turn the conference over to Carsten Werle, Head of Investor Relations. Please go ahead.
Yeah, thank you, Hailey. Good morning from Hanover. This is Talanx six-months 2020 results call. I'm here together with Dr. Immo Querner, our CFO, who will lead you through our half-year results. As you know it, he will also be prepared to answer your questions after his presentation. We are also happy that Jan Wicke is with us today, and he will actually take a look at the call and the process before he starts his new job. Of course, at the end of the call, he will also address a few words to you. A replay of today's call or webcast will be available a few hours after the event, and you'll find all the relevant documents on our webpage. With these remarks, I would like to hand over to Immo Querner.
Well, thank you, Carsten. Warm welcome. Very warm welcome, actually. Warm welcome from Hanover. It's pretty hot. Sorry for running a bit late. We had a few technical difficulties, but I hope everything is up and fine. First of all, given that we are still in the middle of the pandemic, I hope you're all fine and healthy. Talanx is, as you'll see in a second. Let me start with exhibit number two and look at the main takeaways that we could report. Well, the net income is down. The return on equity is down to 6.4%, which is definitely less than what we had wanted to see in the first half- year. As you know, we put a minimum return on equity hurdle that is risk-free for the 800 basis points, so we have fallen short of this one because of Corona.
At the same time, I think it's fair to say that it actually demonstrates that Corona is an earning event for us, not a capital event. What is of particular relevance today? I think the top line. We see in several items, first signs of the top line being affected, be it via lower new premiums, particularly in the retail market, or be it via premium refunds that we've set aside in Q2 to account for very likely premium rebates that we will pay as a result of lower turnover. For instance, [by Revit], we have a turnover-related insurance policy, and this is of particular relevance for the Industrial Lines business. In general, I think it's fair to say that despite of this effect, top line has become an issue for the retail business outside Germany and also in Germany. I'll come back to this in a second.
Top- line is doing fine in the wholesale businesses of Talanx, that's both the industrial lines and reinsurance business. On the opposite, bottom line-wise, particularly the retail operations have been very robust. If you take all Corona-related effects together, I'll come back to this in a second. We're talking about a EUR 658 million EBIT burden because of the variety of Corona effects, out of which EUR 430 million of Corona-related claims as one effect had to be digested in Q2. If you look at the structure of the claims, we're talking about IBNRs mainly. That's like 70%. Yes, we have benefited from some offsetting effects in the retail businesses, but I come back to this, I think, in one of the next slides.
If you would allow for a world without Corona, without the burdens and without the offsetting effects, and assuming a normal large loss pattern, we would have seen a combined ratio in the first six months amounting to 97.4%, which I think is not a figure you can see in the account because Corona has happened. I think it is a good indication of the underlying strength and the technical profitability of our business. The group net income, again, I'll come back to this in a second, would have been in excess of EUR 500 million without Corona, again, demonstrating the underlying resilience of our business. In fact, you could say that because of the stronger-than-expected underlying profitability, we've been better able to cope with the challenges of Corona.
In April, we withdrew our guidance for the full- year 2020, and that will not change today. At the very end of my presentation, I'll talk about the reasons why we have decided to continue this agnostic communication policy. What else is important, I think the development of our solvency ratio. It now stands at 191% without any consideration of traditional. The main drivers of a slightly softer figure in comparison to Q1 are the development of the interest rate curve, particularly at the longer end. Of course, some bottom fishing that we did in April. That was actually tactically quite successful, but of course, went along with a somewhat higher SCR requirement for some of the fishes that we bought on the asset side in this bottom fishing exercise. Let me move on to exhibit four. Premium is up by 6%.
This is driven by the wholesale sectors, P&C, and reinsurance, and Industrial Lines. In the aggregate, the currency impact has been not very material. This looks completely different when we talk about the Retail International business of Talanx, but I'll come back to this in a second. The technical result, and that is just claims and premium, stuff like that, has been burdened by EUR 824 million in the first six months, out of which EUR 63 million would relate to life reinsurance claims that we have accounted for. Again, the pro forma combined ratio would have been 97.4%. Investments are down, or no, the assets are up, but the investment result is down for two reasons. A, the positive one-offs that we benefited from in the first half- year 2019 did not recur. There was no second Viridium disposal.
On the other hand, there was some corona-related headwind in two dimensions. A. The interest rate, the general interest rates are down, and whenever we reinvest maturing investments, we find it very difficult to invest them at the same yields. Second, there were some corona-related depreciations. For instance, in a certain part of our private equity portfolio, that is a kind of time deferred realization of what we see on listed equities in Q1. What else is interesting or important is the relatively low tax ratio. This is mainly driven by some special one-offs in our reinsurance segment. The proportion of profits that we've made in lower tax countries is up, so this has helped.
We're benefiting from a specific piece of corona-related tax legislation in the U.S. , whereas now you can use your tax credits at the tax rate that prevailed at the time when you made losses, and not the current tax rate. That has helped. There is a special item in Australia that would be something for the tax connoisseurs among you. Page five, a deep dive into the second quarter in isolation. Yes, again, premiums are up. Again, it's driven by the wholesale divisions. Here we see a somewhat more significant FX effect that is mainly driven by Retail International. I'll come to this later. The technical result, yes, has been burdened by corona, and the claims that we've digested, including the life re part, is EUR 511 million out of the EUR 824 million.
That means that roughly 40% of what we have digested in the first six months had already been digested in Q1, and 60% in Q2. If you compare this to our peers, I think it's fair to say that relatively speaking, we have done more already in Q1 than the peer average. A bit more has occurred. I think what is interesting, if you look at Q2 in isolation, is the composition of the profit contributors. Both reinsurance and the primary business, both segments have contributed profits. What is interesting to see is that the 50% of the profits have now come from the primary business and 50% from the reinsurance business. It is because of the particular resilience of the primary businesses of Talanx, that the proportion of the primary business is actually significantly up, which is quite interesting.
Page six is a bit complicated, but yet, I would say very revealing, and tells you quite a bit about the Corona effects as they have hit us. On left-hand side, you see an EBIT figure EUR 1.2 billion EBIT that would have been on the cards had Corona not happened. At the end, you see what had actually occurred. The interesting part is, the Corona effect, which in the aggregate is EBIT-wise EUR 658 million and, group net income-wise, EUR 278 million. What are the drivers? First, we had to pick up negative premium effects. Negative premium effects, either because we sell less because of Corona. That is particularly something that is of relevance for the Retail businesses, particularly. Not just me, also Retail International.
On the other hand, we have, accounting-wise , prepared for the fact that we already know that by year-end, we've got to refund some of our industrial policy holders, in terms of the premium contributions, because with sitting on turnover-related policies, and if there is less economic activities, then the premium base will shrink. This has been reflected in the Q2 results as far as we can assess this effect today. The EBIT impact has been EUR 104 million across all segments. Now, we talk about EUR 824 million of claims, including the [liability claims] of EUR 63 million. Here got to come back to how we do quarterly accounts in general. We always account for the higher of the incurred large losses or the expected large losses until we arrive at year-end.
In the first six months of 2020, we've seen very few large losses outside corona. That means if we ask a question, what would have been the effect if corona had not happened? If corona had not happened, we would have topped up the incurred large losses by the difference between the incurred large losses and the expected large losses. Because of corona, there was no need to do so. If you just want to ask the question, what would the P&L would have looked like without corona? We've got this offsetting effect of EUR 352 million of large loss budget that we did not have to account for because of corona, that we would have accounted for in a world without corona. There is EUR 93 million of offsetting effects, particularly in the Retail divisions.
Then, there are corona-related hits on the asset side that amounted to EUR 174 million. The net EBIT effect would have been the EUR 850 million that I have already mentioned in the introduction. The rest is some other special effects that are unrelated to Corona. What does it mean? It means that without corona, we would have seen a EUR 505 million P&L. To put this into perspective, you may recall that the original guidance for 2020 was above EUR 900 million, up to EUR 950 million net income after taxes. This pro forma calculation, it is obvious that we would have done better than this self-set objective, because 505 is more than 50% of the original guidance. That again tells you something about the underlying strength of the business, which is good, and it has really helped us to digest some of the Corona challenges.
On page seven, you see a breakdown of these effects into various segments. They add up to the figures that I've just mentioned. What is interesting, it is interesting to see that offsetting effects is something for the retail lines. It is relatively sort of negligible for the wholesale lines. The reason is that, A, it is less significant, B, it is much more difficult to detect. I think by year-end, we'll see what the net effect will be. I think already our colleagues from Hannover Re already commented on the question of offsetting effects. Have they made it into the quarterly results? Not really. I think this is true for all wholesale lines, and that would include the Industrial Lines business, in our primary divisions.
The corona claims themselves; this is something that is of particular relevance for the wholesale businesses, as you see on page seven. You see the same breakdown, just for Q2 in isolation. The pattern is very much the same. I'd like to draw your attention to two special items that I think are interesting. If you look at the second line, corona-related net claims. With the second column, Retail Germany is a positive seven. Is this a typo? Have we reclaimed money from our policyholders, or have we seen run-up gains? Neither of these theoretical answers is correct. The true story is completely different. In Q1, we have been very conservative, in terms of accounting for the risk-sharing with the reinsurers.
By now, it is clear that a significant part of the non-life claims that we have seen in our domestic retail P&C operation will be shared with the reinsurers. From a net perspective, that has translated into an alleviation of the corona-related losses. Industrial Lines, on the opposite, have seen a marked increase. How is that? What is the story behind this development? Well, it is particularly not so much business interruptions in a narrow sense. It is more business closures, particularly in the food processing industry. This, of course, is something that can happen. It is not something that you can predict, let alone account for at the end of Q1. Sort of effects that have not occurred would never, ever be part of incurred but not reported. Because it is incurred. That has to be met first.
That is, I think, a particular development in Q2. Page nine is the table summary that you're accustomed to reflecting our large loss claims. You see that NAT CAT losses have been very benign in the first six months. Have other man-made losses. The big elephant in the room is Corona. Corona alone has amounted to EUR 760.7 million in non-life. You would have to add the life insurance business to arrive at the EUR 824 million. The non-life part alone is EUR 751, and that translates into 7.1% combined ratio. Because there was no need to top this up by unincurred large losses, or positively speaking, some of this white elephant was picked up by an otherwise underutilized large loss budget. The pro forma Corona impact is not as high.
The excess large loss development beyond the expected value, including corona, is 4%. You see this on the right-hand side. Page 10. I think it's quite interesting because it breaks down the reported figures and the pro forma figures without all tactical corona effects, the world without corona, by applying the logic that I've talked you through on page six. In the entire group, we are seeing a six-month combined ratio of 101.3%. Without Corona, it would have been 97.4%. In Q2 alone, it would be 98%. The Industrial Lines business, I think this is quite interesting, has reported, including corona, 104.7%. Without all corona effects, it would have been 98.6% in the first six months, 96.7% in Q2 in isolation. This is interesting.
It is not only interesting, I would say it's also good news because it demonstrates that the pruning measures that have been initiated some while ago, as a front runner in the industry, have really paid off. This is really good news because it means that we've turned around the technical quality of the business. Retail Germany, same figures, reported 96.9% in the first six months. Without corona, the first half-year would have seen a 95.1% and a 95.3% for Q2 standalone. You may recall that we've always reported figures without cost-related special cost items that will now fade out. We've seen a little bit in the first six months. Would we report the used ex-cost figure, we would have seen in the first six months a 94.8%.
That means that in the first six months, we have already arrived at a tactical profitability level that we were supposed to achieve in 2021. I think this is most important that both technical turnaround programs have at least delivered what they have meant to deliver. Page 11. I look at the EBIT composition over time. You see that the primary businesses have been particularly resilient. Retail International even has contributed a higher EBIT contribution than a year ago. The big swing has come from the reinsurance business. This is again reflected by the fact that I mentioned in the introduction that, as per Q2, 50% of Talanx profits come from the reinsurance business, net of minorities and taxes, and 50% from our primary operations. Now, deep diving into the segments.
We've seen a positive top-line momentum at the Industrial Lines business, and that is again driven by the Specialty business. I think I already explained the reason behind the higher corona claims. Run-off-wise , Specialty is kind of a no-show, and this should not come as a surprise because all the run-up profits that we would see at HDI Global Specialty or Inter Hannover, as the company used to be called previously, would have been ceded to Hannover Re, given that they have always been sitting on a 90% group internal reinsurance arrangement, as you know. Return on investment is somewhat softer, and this is again, the result of lower reinvestment yields and some corona-related hits on the asset side. I think what is important, going forward, our medium and long-term targets, a combined ratio of 97% or 95% respectively, remain intact.
We actually do take comfort from the fact that the market, the Industrial Lines market, has turned around. That we now benefit from the fact that we've been among the first ones turning this market. I think this is good news, looking forward. Let me turn to Retail Germany in the aggregate. You see a decline of top line. This is due to softer bancassurance business. This should not come as a surprise because selling via branches that are closed is not as easy as selling via branches that are open for business. It is as easy as this. This is something that is not only relevant for the life business, and is equally relevant for the non-life business because we have successfully developed our non-life business in our bancassurance channel. That, of course, suffered because of corona.
We've seen a somewhat softer top line in the motor business. As I mentioned already on the occasion of the discussion of the Q1 results, because profitability is simply more important than the vanity of showing high top-line figures. We have benefited from some offsetting large claims in motor and other lines. Net net, of course, corona has impacted the segment as well. Retail Germany in isolation for the first six months. It's off the top line because of reasons that I've already mentioned. The lighter claims out of motor and other lines amounting to EUR 22 million, which is what it is. Life is down, as far as top line is concerned, because of corona and the bancassurance channel. The softer interest rates, particularly for longer duration, has also made it into an accelerated buildup of the ZZR stock.
We're now talking about EUR 4.1 billion, which is quite a bit. It's much more than we would have expected at the beginning of the year because of the development of the interest rates. The operating EBIT is down from EUR 71 million- EUR 40 million in the first six months. Why is that? I think there is a multitude of reasons. If you look at the six-month 2020, there is roughly a zero effect of positive and negative one-offs. We had a positive effect in Q1 that was the consolidation of one of our investment vehicles that contributed a little bit more than EUR 5 million. In Q2, there was the standard review of our actuarial assumptions that contributed roughly to EUR 5 million EBIT burden.
In the first half month 2016 and also in the second half 2019, we benefited from positive one-offs in the life business. That would have been like EUR 50 million or so. There is now a decline from EUR 55 million on a pro forma basis to EUR 40 million, and this is certainly also partially true to the lower margins in absolute terms out of the credit life business that is sold via the bancassurance channel, because again, policies that we do not sell would not contribute to the profit margin of our life operations. Retail International. I think this is an interesting one. Interesting in two dimensions because, bottom line, this is as nothing had happened. Even slightly more than last year. Extremely resilient. Despite an adverse development of the interest rates. The low interest rates begin to kick in. Also, in the emerging markets.
Where we see a major challenge is the top line though. This comes out of three drivers. Driver number one is corona in a narrow sense. If the new car market completely breaks down in places such as Brazil, that should not come as a surprise that we sell not as many insurance, car insurance policies as we would have sold without corona. This is effect number one. Effect number two is a partially corona-related effect because many of the emerging market currencies have particularly suffered because of corona. Not only due to corona, but also because of corona. That is particularly true for the Turkish lira and the Brazilian real, and that contributes to roughly 50% of the top-line decline, as you can see in the first gray box on the left-hand side.
The third effect is our somewhat restrained appetite to sell the Italian single premium business. That has also contributed to the top-line decline. If you just look at the core P&C business without currency effects, we would have seen a slight increase of 0.2%, which is, of course, not as much as the figures that we reported in the previous years, but this is now due to corona. The other sort of important thing is that the low-interest environment has begun to also bite into the business models of our emerging market non-life portfolios. Despite of all that, we are confident that we'll make the 10.11% return on equity in the midterm ROE projection. We reconfirm this one. Reinsurance, I want to keep it brief because Mr. Henchoz and Mr. Vogel, I think, have talked you through the figures already. Top line, it's up.
It's up as all the wholesale lines, and bottom line, it's down as all the wholesale lines. The return on equity is nearly halved. Again, it's an earnings event and not a capital event, and this is of particular importance for the reinsurance business because what we'll see in 2021, in my eyes, is not only higher rates, which is good for the industry. We also see a flight to quality, and therefore, it means this is the year when you'll distinguish men from boys. There is a flight to quality that Hannover Re will benefit from because it's just an earnings event for them, and they're sitting on a very resilient capitalization. Life is doing fine in spite of the excess mortality that we have seen in some of our U.S. businesses. Net investment income, page 20.
Yes, the ordinary investment is down, and that is mainly to be attributed to the low-interest-rate environment. The extraordinary investment income is also down. That is because two effects. One is the non-recurrence of special positive effects in the first half- year 2019, like Viridium. At the same time, we have [with the death of] a few corona-related write-downs in a minor part of our portfolio. In hindsight, I would say at Q1, we were much more concerned about what could happen as what really has happened on the asset side. The asset under management still grows, and that means that the inflow of premiums is still intact, which is good. Page 21, looking at the accounting equity, it's more cut flat. That means that the dividends that we've paid in May have already been re-earned, so to speak, in the first half- years.
If you would add the hidden book value, we're talking about EUR 40 million per share. Excluding goodwill, it would be at least in excess of EUR 35 per share. Page 22. It is the chart that you should be accustomed to. There are two kinds of off-balance sheet reserves. The one that has not yet made it into the P&L, then the true off-balance sheet hidden reserves on the asset side, that are mainly, of course, attributable to the policyholders and minorities and the FISG. If you just look at the part that would make it into the chest of the shareholder, we're still talking about EUR 2.19 per share of hidden value that you can't see in the balance sheet. Is this good or is it bad? Well, having more is always good.
At the same time, it is a reflection of a low-interest-rate environment, and this, of course, is bad. Solvency II capitalization, it is 191%. As you can see in the chart, it is fairly robust. It is very comfortably within the upper part of our target range, which is good. The Talanx group, in its entirety, should benefit from a flight quality. It appears that would have reported higher solvency figures a year ago. In that sense, and I think it is interesting, from a Solvency II point of view, without any conditionals, of course, as usual, we've seen a more robust development of our solvency figures, which is good. A slight softening of the figures in comparison to Q1 is due to the interest rate curve. It is due to the regular update of our operational risk assessment.
It is due to the bottom fishing that we did, particularly in April. That has proven to be a tactically smart move. Yet, it's a slight negative for the solvency ratio. I think that's fine. Development is not really influenced by any model changes because the major model changes would only kick in at year-end. We've seen insignificant, minor model changes that really are immaterial. Now, outlook. The short-term outlook is opaque. Therefore, we again, will abstain from a precise guidance for the year 2020. Yes, we've seen a better-than-expected first half year 2020 net of Corona. Yes, we're sitting on a very robust business model. Yes, we believe we have played it rather conservatively when it comes to the Q2 accounts. What we know is that Corona is not over. Corona will hit us.
Anyone saying that we could put a lid on Corona, well, I would very much doubt that. Second, we do not exactly know what is going to happen. Just let me share with you some of the thoughts that have led us to this conclusion. We don't know what the premium development because of Corona is going to be. Neither do we know what the new premium will look like in Q3 and Q4, nor do we know, in as much we could allow for premium rebates that would make it into the P&L, as it is already done in Q2. Claims-wise, we cannot account for non-incurred claims. We can account for incurred but not reported claims, but not for non-incurred claims. These could be people that haven't died yet. This could be companies that haven't gone bust yet.
That could be companies or operations that haven't been shut down yet because of business closures. Would I dare to say that this is completely over? No. That would be too risky call for me. Large loss budget. Yes, we have been lucky in a way that part of the Corona-related claims have been compensated indirectly by lower non-Corona-related large losses. Is this something that we can bank on for the second half of 2020? I wish I knew. The only thing I know is that people are actually quite pessimistic as far as the hurricane season is concerned. Yes, we are sitting still on an unutilized large loss budget that would more or less be the provider share that is built in in our assumptions what a second year could look like.
I think it would be very risky to assume that we would be as lucky in Q3 and Q4 as we have been, apart from Corona, in Q1 and Q2. Offsetting effects. Will we continue to benefit from offsetting effects? Will we eventually see offsetting effects in the wholesale businesses? Again, highly speculative. I don't know. What I know is that in the summer period, in certain important markets of ours, we've seen a normalization of the driving patterns and of the accident patterns. No one, I think, would be in a position to give the answer what it will look like during the autumn, for instance. Investments. So far, it's fair to say that markets have been much more benign than originally feared. Will the fear come back? Maybe, maybe not.
For all these reasons, we know that something is going to come, but we don't know where, and we don't know how much. This is why we are, in a way, optimistic because I think the operation is running well, and we often think about the underlying market trends, and this would be of particular relevance for 2021. It puts us into an impossible position when it comes to sharing precise guidance for 2020. Well, as you can see, we've done reasonably well, although it's been a difficult quarter and a difficult hard year. Now, something else. For me personally, this is the last quarterly call with you. I think it's been 30, if not more, quarterly calls since we got listed back in 2012.
Well, I think it's a time to say thank you to you, because I must say that I've greatly benefited from your professional vigilance and your insightful understanding of the insurance industry. The questions have been difficult. I've always taken away something from them. I've enjoyed that. On top, of course, I would like to thank you a lot because I understand that quite a few of you have voted for me in investors and analyst surveys, and the result of these surveys have been quite flattering, I must say. Many thanks for that as well. In case you'd like to stay in touch with me, to discuss industry matters or other matters, I think the easiest way would be to get in touch via the investment relations partner, via Carsten Werle. We could establish or reestablish or continue our dialogue.
I'll be looking forward to this one. You can be looking forward to a new moderator and communicator when it comes to our accounts. This is Dr. Jan Wicke. He's done exactly this for one of his previous employers, [Non-English content] . He has been a very successful, longstanding CEO of our German operations, the mastermind behind KuRS, and the reason why I have been in position to always report on KuRS successes. Perhaps you want to say a few words to the participants that will be your audience going forward.
Well, thank you. Thank you very much, Immo. First of all, I really have to say, great respect for the outstanding job you have done, and thank you so much from a perspective as a colleague of you. I just can say, I'm very thankful that Immo will act as an advisor, also for me, for the coming time, so that I can continue to participate, and to listen to his very intellectual, precise analytics, which is, from my point of view, outstanding. I could understand that some of the participants, Immo, will miss you, because of that. Well, from my point of view, I'm excited to take over the CFO function at Talanx from September. Today, I've listened into the call to get to know the process a little bit better, and I will be well-prepared for November.
Then I will be here to present the nine-month figures to you. I will be also meeting some of you on roadshows and conferences in the near future. From my point of view, I would just say all the best to everyone. Stay healthy, and I will speak to you at latest in November. Before it comes to that, I could assume that some of you have some questions to Immo and are eager to listen to his explanations. Go ahead.
Yeah. Hailey, I think it's your turn now.
Ladies and gentlemen, we will now begin with the question and answer session. If you have dialed in via 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, please press star followed by two. Questions can also be raised by 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 via telephone. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one on your telephone, or type a question using the chat box. The first question is from the line of Michael Huettner of Commerzbank. Please go ahead.
Thank you very much. Good morning. Three questions, if I may. First, on the investment income, you said the COVID-19-related impact on the investment income is minus EUR 174 million. Can you tell us a bit what is included there, where it comes from? Second, the premium rebates, EUR 9 million in the second quarter. I would be interested in how much of this is discretionary and how much is defined contractually, so automatic rebates from the lower mileage driven. Last question, on the Specialty Business, which is now part of primary insurance and accounted in Industrial Lines. Can you talk a little bit how Specialty stand-alone has performed in H1 2020? Any special developments, both top line, market opportunities, and also bottom line?
Well, let me start with the first question. The investment income is down by EUR 170-something. It's a combination of forgone ordinary income, because the interest rates are not as high as they would have been in a non-Corona environment. Everyone, central banks have pushed interest rates down, and just try to figure out what this has meant for us. When it comes to the write-downs, I think the single most important figure is the write-down that we've seen on the private equity part that is roughly EUR 60 million, being the lion's share of the extraordinary part of the opportunity costs or opportunity income that we have not seen because of Corona. We've seen some depreciations on individual active positions. Fixed income has been relatively benign.
There we've seen a depreciation of only EUR 15 million, which is, I would say, next to nothing, because EUR 15 million is a lot of money. In relation to the overall record and the management of fixed income part, this is really a very manageable figure. It's been equities and private equity behind this. On premium rebates, it is an assessment of our contractual obligation to allow for the premium rebate at year-end. It's not yet a final calculation. The final calculation will be done at year-end. What we've got to do under IFRS, as opposed to digest the balance sheet and reflect on the balance sheet, the effects that have already incurred, also on the top line, based on the current contractual arrangements, and that's it. It's not so much discretionary relief for everyone. This is not the driver.
The other part that is hard, but also hard to assess is, what is the forgone part of the top line P&L item, because there has been a reduction of new car registrations in countries such as Brazil. It's probably a fair assumption that a new premium would be down by 10% as well. This is, again, an estimation, and it also means that not all the forgone premiums have made it into a lower EBIT. We've also, of course, allowed for the forgone cost and variable cost, and any claims. This is the logic behind that. I think the third question was around Specialty. Just for a second. Just give me a second. The Specialty business in the first half- year has seen a combined ratio that is slightly above 100%. Again, Corona, and in Australia.
Do you see any market opportunities due to corona in specialty?
Yeah.
Anything?
Yeah. Sorry. Yeah. I think what I've said about the market opportunities that we're going to grasp in all wholesale lines is equally true for the specialty business, not just true for reinsurance, not just true for the standard industry lines business. No, I think there is a hardening market that allows us to agree on much firmer terms and to seize market opportunities that we couldn't have seized in a different environment. I think this is perhaps an interesting general comment. While it is difficult for us to assess what's going to happen in the next six months, structurally, the market environment that would take the technical market environment, as opposed perhaps to the interest environment, but the technical market environment is much more supportive. That is something that should support our business across all wholesale lines in 2021. This positively includes size-wise as margin-wise, the specialty business.
Okay, perfect. Thank you very much.
Thank you very much, Michael. We will take the next question.
Yep.
The next question is from Andreas Schäfer of Bankhaus Lampe. Please go ahead.
Thank you. Just two questions. One is on industrial insurance as well. Could you give us some sort of insight on how the rate increases have developed in Q2 and also the claims inflation has developed? The second question is regarding the Solvency II ratio. I think as far as I understand, Hannover Re has reported an unchanged solvency ratio of 225%, roughly. Could you give us some sort of insight, what has really driven down the combined ratio at Talanx level? Is it the German Life business, or?
Yes. Let me start with the second question. The 191% is down roughly by five percentage points, and I think the top reasons are, A, the bottom fishing that we've also done, for instance, in Retail Germany. By our standards, we've been quite an aggressive buyer of spread opportunities that were available in April. In hindsight, we should have done more. Of course, you know our know better approach, and that's been confined by our strategic discipline. Within this general conservative policy, we have seized market opportunities. That has contributed, of course, that has made it into a higher SCR. An indirect effect has supported this development because the mark-to-market values of the assets that we had acquired before, plus the assets that we newly acquired back in April, have improved. Now, the higher the notional of the assets, the higher the SCR.
If you're talking about solvency ratios that are around 200%, then it doesn't square up. Then you get yourself involved from the higher mark-to-market values than you benefit from the higher own fund because of the pickup. This is one effect. The second effect is, yes, indeed, the low interest rates. It's not been as pronounced as perhaps in Q1 in itself. Still, we've seen, again, the slight decline in the rates, particularly at the longer end, and this is not helpful. Third, I think I mentioned this already in passing, that summertime is the time when we sort of conduct our operational self-risk assessment, which is driven by 100,000 things, and that has contributed to slightly higher operational risk.
There was one particular item in the Solvency II balance sheet where we had to correct an interest rate curve that we used for one of our smaller non-EU companies. I think all these together have then contributed to a really mild decline of 191%. Putting things into perspective, I think if you compare our development from year-end 2019 of the 212 down to 191, we've lost 20 percentage points. If you compare this to the development of our wholesale peers, or not the wholesale peers, I think this is a very favorable and benign development that underlines the resilience both of the business and the model. The rate increase. What has happened in Q2? In Germany or in Europe, this has been sort of the main battleground for the insurance business. Not very much because the renewal round is yet to come.
In the markets that have seen renewals, it's up. That is very helpful. I think you're all aware of the market statistics that have been provided by the leading brokers. What they say is that the global insurance composite pricing index continues to rise and rise and rise, and we can confirm that. This is the reason why I believe that going forward, assuming that this trend would not discontinue until the end of this year's renewal round, should be a very welcome tailwind for 2021. Claims inflation, difficult to say. Well, the general level of inflation is down. This is why all the central banks have accelerated money printing. I think we continue to not really see any major concerns or problems out of unexpected claims inflation. I would assume that your question is particularly related to the U.S .
This is, of course, an area where we benefit from a relatively small exposure, because the best part of the business that we do in the U.S. is either short-tail domestic or European linked or related business, and lines such as workers' comp are more or less non-issues for us. Here, I cannot report any red flags. Questions answered, Andreas?
Yes. Thank you.
Thank you, Andreas. Next one, please.
As reminder if you ask a question, please press star on you telephone keypad. The next question is from Paris Hadjiantonis of Exane BNP Paribas. Please go ahead.
Yes. Good morning from my side as well, everybody. Firstly, since it's your last call, Immo, I just wanted to thank you for your help and guidance over the past few years, and obviously wish you all the best for the future. Obviously, also wanted to say best of luck to Dr. Wicke, and congratulate him on his appointment. Now, going to questions, I do have a few. On the Industrial Lines, the combined ratio without the corona impact looks actually quite good. I would guess that there are favorable impacts when it comes to frequency of claims, which are probably quite difficult to quantify. Can you maybe give us an idea of what the net combined ratio looks versus your about 100% initial target that you've set for 2020?
Secondly, you have obviously given us an idea of what the impact on the investment income was year to date, but can you also give us maybe an idea of where your reinvestment rate currently stands and what the impact on ordinary investment income will be in the coming quarters if it was to remain at that level, so very low interest rates going forward. I guess the last thing would be, in terms of the overall impact that we've seen from COVID, particularly on Industrial Lines. Are there any lines of business where you are a bit nervous about, where you don't even have enough information to set aside IBNR? Or do you think that most of the impact has already been accounted for and you should be more or less insulated from further impacts going forward?
Well, thank you for all these difficult questions. Let's start with the last one. I think we've got to distinguish our inability or difficulty in assessing the claims we should have accounted for because they have occurred, but we just don't know, from our inability to look into the future when it comes to claims that may occur, may occur in the future. From accounting point of view, the second category is irrelevant because we shouldn't have reserved for them in the first place. Here, I think, something like mortality or business closures are among the ones that I would name first. Coming back to the other, sort of the more interesting part in a way, where have we seen, or where probably would we have suffered from the biggest uncertainty when it comes to incurred claims or claims that could have incurred, putting it that way.
It's certainly the credit bond business. This is very difficult to say. As you know, the significant part of the credit bond portfolio is protracted default. A part is declared insolvency. This is very difficult to say whether an event has occurred that should have made it into reserve for credit bonds. This is mainly, of course, a thing for Hannover Re, as a group, I think this is certainly an area that is among the most opaque line of business. Business closure. It is also not an easy one because, at least in certain parts of our portfolios, we would still be influenced by court rulings. I think it's not so much something that is of particular relevance for the Retail Germany business because here we've taken a stance that we would not offload the ambiguity of the wording to the policyholder .
In agreement with our reinsurers, have taken the decision that at least where it is really ambiguous, we would pay, after having had a thorough look at the legal quality of the [wording]. It's not really discretionary. It is realistic and not overly optimistic in a way. That means that the discussions that many other peers may have because they have taken a slightly more aggressive or optimistic view, is probably not so much of an issue for us. That may be different in other parts of the world.
This I think, is probably the second area I would say, well, this is uncertain even when it comes to reserve setting, and all this has contributed to my outspoken unwillingness to say, "We have put a lid on this." I think that would not really be serious, and I think it would be very difficult statement. Interest rates. I think in the group aggregate, we've seen a reinvestment rate that is around 1.75%. This, of course, is a wild land of maturities and currencies and businesses. I think that is probably a good proxy for what it would look like if the world wouldn't change. Would the world change or would it not change? I don't know. Cautiously, you've seen the pickup of risk-free rates overnight. In a way, that would be good news. Is this a kind of sustainable development?
I don't know. I think it is fair to assume that for the foreseeable future, the new investment rates will be markedly lower than the rates of expiring financial instruments, period. The Industrial Lines Corona, yes, you're right. Perhaps there has been a small benefit because of lighter ordinary claims because of corona. It's been very difficult for us to put a figure on this, and this is different from the retail segments. I think this is something we'll find out by year-end. If you accept this as a kind of interim statement, I think the pro forma combined ratios ex corona that I've shared with you on exhibit 10 are probably the best proxy that would answer the question, what is the underlying technical quality of our business? What would the profitability would have looked like? Without corona, it would have been 97.4%.
This is better than the black zero, i.e., slightly better than 100% we've initially flagged for 2020, except for Corona, of course. Here, I think this is really strong evidence that the market pruning and the profitability turnaround of the Industrial Lines segment are bearing fruit. Question's answered, Paris?
That's very helpful. Thank you.
Thank you very much. Next one, please.
Once again, to ask a question, please press star and one on your telephone keypad. There are no more questions at this time. I hand back to the presenters for closing comments.
Well, it only remains for me to leave you in the capable hands of my successor. While he is called Dr. Wicke, he is not a wicked person. This is something I can say already.
Thank you.
Thank you. Any more? Okay.
Goodbye.
Goodbye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.