Annual Report 2010 - Hannover Re
Annual Report 2010 - Hannover Re
Annual Report 2010 - Hannover Re
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We shall continue to expand our business in the area of Insurance-Linked<br />
Securities in 2011. Along with our activities in<br />
non-life reinsurance, we are now increasingly turning our attention<br />
to the securitisation of life reinsurance risks.<br />
As far as the Direct Business/United Kingdom and London<br />
Market portfolio is concerned, we expect another rise in premium<br />
volume (+15%) in the current financial year. On the<br />
back of improved conditions in motor insurance on the primary<br />
market as well as price increases in offshore energy<br />
business and in response to the implementation of Solvency<br />
II, we expect more business opportunities to open up in the<br />
United Kingdom.<br />
Given the double-digit premium growth on the primary insurance<br />
market in China, there will be no let-up in the existing<br />
fierce competition. We anticipate stable conditions in proportional<br />
reinsurance, but continued rate erosion in non-proportional<br />
business. All in all, we are looking to further profitable<br />
business opportunities in China in the years ahead.<br />
In the Southeast Asian region we anticipate further growth in<br />
the area of agricultural insurance. Conditions are expected to<br />
improve under programmes that suffered losses in the year<br />
under review. With no easing in the intensely competitive environment,<br />
the soft market phase is likely to be sustained in<br />
2011.<br />
Global reinsurance<br />
Treaty reinsurance worldwide<br />
We shall grow by around 2% in global treaty reinsurance in<br />
2011, even though the treaty renewals as at 1 January 2011<br />
presented a mixed picture in the individual markets.<br />
In the coming years, too, we expect to see stronger demand<br />
for our entire portfolio of agricultural covers on account of the<br />
growth in government subsidy programmes. Premium volume<br />
is therefore forecast to rise in both 2011 and 2012. We shall<br />
continue to devote our energies to the cultivation of new markets<br />
and the development of innovative products.<br />
In the markets of Central and Eastern Europe it may be assumed<br />
that the importance of high-quality reinsurance protection<br />
will continue to grow and we shall again have very good<br />
opportunities to write profitable business in 2011. Although<br />
rates retreated on account of adequate capacities, demand<br />
remains strong for reinsurers of excellent financial standing.<br />
It was even possible to obtain modest price increases under<br />
programmes that had suffered losses. Based on our good positioning<br />
we expect to write more new business in 2011 and<br />
beyond. Gross premium should continue to grow.<br />
With no easing of the intense competition prevailing in the<br />
Spanish market we expect to see further rate reductions. The<br />
premium volume is therefore likely to contract in 2011. In<br />
France, on the other hand, the premium volume should expand<br />
slightly.<br />
Owing to the severe earthquakes in Chile and Haiti, rates for<br />
natural catastrophe covers in these countries increased. Overall,<br />
though, prices in Latin America are likely to remain stable<br />
both in the current financial year and in 2012. We anticipate<br />
somewhat lower gross premium in the face of growing competition.<br />
In Japan, our largest Asian market, we expect rates to remain<br />
broadly unchanged; nor do we anticipate any significant<br />
changes in our underwriting policy for 2011. The extent to<br />
which the current wave of mergers in the primary sector will<br />
impact our premium volume remains to be seen.<br />
Going forward, it remains our assessment that business with<br />
Sharia-compliant reinsurance products (retakaful) offers considerable<br />
potential. The engineering and liability lines should<br />
profit from an upswing in the construction industry in the current<br />
financial year. Gross premium volume is expected to rise<br />
in 2011.<br />
Global catastrophe business<br />
Owing to the absence of major loss events in peak zones such<br />
as the United States, the overall tendency towards declining<br />
rates in catastrophe business was sustained. Rate increases<br />
were only recorded in areas where <strong>2010</strong>/2011 saw appreciable<br />
loss expenditures. Prices in Europe remained stable on account<br />
of a moderate claim incidence in the previous year. We<br />
expect the premium income from our business in Australia<br />
and New Zealand to grow in the current financial year. Given<br />
the heavy burden of losses from the earthquake in New Zealand<br />
in <strong>2010</strong> and the severe flood events in Australia in December<br />
<strong>2010</strong> and January 2011, further price increases for<br />
natural catastrophe covers are to be anticipated. Altogether,<br />
the gross premium from our global catastrophe business is<br />
likely to contract by around 10% in the current financial year.<br />
Global facultative reinsurance<br />
The price situation in facultative reinsurance, i.e. the underwriting<br />
of individual risks, remains tense in the current financial<br />
year. At this point in time it is our expectation that rates<br />
will for the most part decline, with the exception of prices for<br />
offshore energy covers. Nevertheless, given the varied nature<br />
96 Management report Forecast<br />
<strong>Hannover</strong> <strong>Re</strong> Group annual report <strong>2010</strong>
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