Annual Report 2003 - Hannover Re

Management report
outlook
Financial reinsurance
We regard financial reinsurance as a growth
segment within the Hannover Re Group and expect
both premium income and profitability to
record average increases of between 10 and 15%
in the years to come. Growth in 2004 is likely to
be somewhat smaller owing to the significant
increase generated in the year under review.
At the beginning of this year Hannover Re
Ireland and E+S Re Ireland relinquished their
preferential tax treatment in Ireland. Instead of
the previous rate of 10.0%, the companies will
be subject to the normal tax rate of 12.5%. As a
consequence of this change the premium tax of
1% currently due for American business will no
longer be payable. This move will enhance our
competitiveness on the US market.
performance. This is especially true of exchangelisted
enterprises. Demand for the tailored solutions
offered by financial reinsurance will therefore
increase. Based on our vast experience, strong
market position and the limited number of competing
players, we look forward to a favourable
development in this climate.
As in the past, the bulk of our clientele will
be concentrated in the highly developed markets,
especially the United States. Still, we also
intend to systematically cultivate the emerging
markets of Asia and Latin America and expand
our portfolio in these regions. Our planned marketing
activities will also pay closer attention to
the countries of Eastern Europe.
Companies will come under increasing
pressure to produce a consistently favourable
Program business
The rate increases in program business will
probably be less marked in 2004 than in the
year under review owing to the emerging competitive
pressure on the market. Nevertheless,
the highly price-conscious reinsurance market
coupled with the low current returns on capital
markets will keep up the pressure on insurers
needed to maintain rates and conditions at their
present high level.
In Europe and South Africa we shall steadily
extend our market position in program business
through our subsidiaries Inter Hannover and
Compass.
The overall result generated by our program
business is expected to improve in 2004.
Overall result expected
to develop favourably
Overall business outlook
Our largest business group, property and
casualty reinsurance, continues to enjoy a highly
attractive market environment in 2004. This assessment
is equally true of broad sections of the
primary market. During the January 2004 renewals
it was very evident – even in those segments
where sufficient market capacity was already
available – that underwriting discipline
did not break down and the advantageous rates
and conditions for reinsurers were sustained.
With this in mind, a downward slide into a soft
market is unlikely to set in next year, even if the
capital market continues its resurgence over the
course of the year.
68