Interim Report 2/2010 - Hannover Re

clients in this regard, inter alia concerning the current requirements of the socalled
Quantitative Impact Study (QIS5) as well as questions relating to the implementation
of risk management systems.
In non-life reinsurance we are observing a trend towards gradual softening on
the markets, as a consequence of which the improvements in conditions obtained
for reinsurers in the past year have in some instances already been relinquished
again. It should, however, be noted that this market softening is not
equally evident in all areas of non-life reinsurance. In sectors that have been
impacted by losses the markets continue to be able to push through the necessary
improvements in conditions. Active cycle management geared specifically
to the various subsegments of non-life reinsurance is therefore of crucial importance.
In areas where we observe that conditions remain attractive, we are in a
position to enlarge our business volume. We scale back our involvement, on the
other hand, if it is our assessment that conditions no longer suffice to cover the
cost of the invested capital.
I would now like to return to the burden of major losses: although this decreased
sharply compared to the first quarter, it nevertheless again exceeded
our expected level in the second quarter. The largest individual loss was the
"Deepwater Horizon" drilling rig in April, which – in addition to the direct loss
of the oil platform itself – has caused and continues to cause quite considerable
environmental damage. Particularly with regard to possible liability claims,
there are still many unanswered questions; at this point in time, therefore, it is
still difficult to estimate the loss for the insurance industry and hence for reinsurers.
The loss reserves that we have established – giving rise to a net strain of
EUR 89 million – reflect all concrete and potential exposures of our portfolio
from this loss complex that are currently known to us.
We are highly satisfied with the development of life and health reinsurance. In
view of the lower volatility of results in this business group, we also set ourselves
targets for premium growth in life and health reinsurance. We achieved
these goals in the first half-year 2010 with double-digit growth. Yet in life/
health reinsurance – as in non-life reinsurance – we attach even greater importance
to profitability than to premium growth. With net income after taxes of
more than EUR 110 million in the first half-year, it is gratifying to report that we
exceeded our profit targets. That this result fell short of the comparable period
2 LETTER OF THE CHAIRMAN OF THE EXECUTIVE BOARD Hannover Re interim report 2/2010