Talanx’s first-half net income fell 5.6% to €437 million ($684.5 million), with higher taxes eroding earnings and the industrial lines business hit by losses in Germany.

The HDI Global owner’s gross written premium (GWP) grew 6.9% to €18.8 billion ($29.4 billion) and the combined operating ratio improved to 96.7% from 97%.

Industrial lines GWP grew 3.7% to €2.9 billion ($4.5 billion) as Australia, the Netherlands and France buoyed revenue. But the division posted a €28 million ($43.9 million) underwriting loss, with the combined operating ratio blowing out to 102.3% from 97.2% on higher property claims, mainly in the German fire cover line.

“The sector expects that overall industrial property insurance in Germany will have a combined operating ratio of 115% for [this year],” Talanx board member Christian Hinsch said. “In the first half, unfortunately, we as well were unable to escape this.”

Hannover-based Talanx is restructuring its fire cover business with a focus on Germany, and expects to turn the segment around over the next 18 months.

Higher earnings before interest and tax were reported for the German and international retail businesses, and in reinsurance.

Natural disasters and large losses cost €241 million ($377 million) in the half, within the group’s proportional large-loss budget of €501 million ($784.7 million).

“The unused budget will provide a robust shock-absorber for the second half of the year,” the company said.