Annual Report 2010 - Hannover Re

The total amount of the net reserve before specific value adjustments,
to which the following remarks apply, was EUR
17,036.6 million (EUR 15,652.8 million) as at the balance
sheet date.
Run-off of the net loss reserve in the non-life reinsurance segment
To some extent the loss and loss adjustment expense reserves
are inevitably based upon estimations that entail an element of
uncertainty. The difference between the previous year’s and
current estimates is reflected in the net run-off result. In addition,
owing to the fact that the period of some reinsurance
treaties is not the calendar year or because they are concluded
on an underwriting-year basis, it is frequently impossible in
reinsurance business to make an exact allocation of claims expenditures
to the current financial year and the previous year.
The run-off triangles are therefore shown after adjustment for
effects associated with the additional premium.
The development of the euro relative to the most relevant foreign
currencies is also a significant influencing factor in the
analysis of run-off triangles. In particular, the depreciation of
7.5% in the euro against the US dollar compared to the previous
year led to an increase in the loss and loss adjustment
expense reserve on a euro basis.
The run-off triangles show the run-off of the reserve established
as at each balance sheet date, this reserve comprising
the provisions constituted in each case for the current and
preceding occurrence years.
The following table shows the net loss reserve (loss and
loss adjustment expense reserve) for non-life reinsurance in
the years 2000 to 2010 as well as the run-off of the reserve
(so-called run-off triangle). The figures reported for the 2000
balance sheet year also include the amounts for previous years
that are no longer shown separately in the run-off triangle.
The run-off results shown reflect the changes in the ultimate
loss arising in the 2010 financial year for the individual
run-off years.
152 NOTES 5.7 technical provisions
Hannover Re Group annual report 2010