Annual Report 2003 - Hannover Re

Management report
property and casualty reinsurance
Other international markets
Africa
On the African continent South Africa is
by far Hannover Re's most important market.
Having experienced considerable problems in
recent years, most insurers in this market moved
back into underwriting profitability in the year
under review. For reinsurers, too, this is a favourable
development.
The rest of the African reinsurance market
also saw improvements in rates and conditions
in the year under review, although we stand by
our assessment that these are not sufficient in
all areas. There are still local takers for proportional
business that cannot be placed on the
market with large international reinsurers. From
now on, therefore, our underwriting policy is to
accept only non-proportional covers or niche
business – most notably the reinsurance of program
business. However, the full effect of this
policy will not make itself felt until the current
year. As part of this reorientation we discontinued
our activities in Mauritius and transferred the
existing treaty relationships to Hannover Re
Africa, Johannesburg.
The gross premium income booked by Hannover
Re Africa contracted slightly year on year
due to our systematic profitability orientation.
Latin America
In the year under review the region recovered
from the severe crisis of recent years.
Estimated economic growth of 1.1% is expected
to be followed by a further 3.6% in the current
year. The volume of insurance and reinsurance
business in the major market of Argentina scarcely
grew in euro terms due to the devaluation of
the peso.
It remains the case that sufficient capacity
is available on the property and casualty
primary market in Latin America. Most notably,
property business – to which Hannover Re attaches
particular importance – was highly competitive
in both the insurance and reinsurance
sectors. Rates and conditions consequently deteriorated
slightly, although our premiums remained
on a very satisfactory level. There were
no major losses to report from the region in the
year under review.
As in previous years, industrial fire insurance
was our principal business in 2003. We expect
further very good results from Latin America
in the year under review, and the companywide
application of our prudent underwriting
policy has thus once again proven its worth.
Asia
By far Hannover Re's largest market in Asia
is Japan. The renewals here were fairly unremarkable,
although successful. In accordance with
our strategy, we improved and extended our cooperation
with target clients and thereby generated
modest growth. In Japan Hannover Re
enjoys the status of a so-called "core reinsurer"
with four of the five most important insurance
providers. For these and other clients we wrote
both proportional and excess of loss covers.
Although Hannover Re did not suffer any
significant reinsurance losses in Japan during the
year under review, the Korean market had to absorb
the effects of typhoon "Maemi" in 2003.
This once-in-a-century event produced an estimated
insured loss of USD 600 million. With a
share of approximately EUR 6 million, Hannover
Re's exposure was quite clearly disproportionately
low.
Business in China, Taiwan and Hong Kong
remained difficult; the hard market has still not
really taken hold in these countries. China is a target
market for numerous international insurers
and reinsurers, and the competition prevailing
there is not always justifiable. In the year under
review there were even signs of further deteriorations
in rates and conditions, despite two significant
losses in Hong Kong and Shanghai.
The state of reinsurance business in South
and Southeast Asia was better, with no major
losses and a satisfactory overall price climate in
a generally unremarkable market.
Typhoon "Maemi"
caused below-average
losses for the Hannover
Re Group
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