Annual Report 2010 - Hannover Re

have enlarged our portfolio. In the aftermath of the devastating
fires seen in Russia in the year under review the government
is now increasingly looking at boosting its spending on
measures to support farmers; legislation is currently in the
pipeline.
In addition to cementing our involvement in traditional markets
such as the United States or Western Europe, we added
new market shares – including for example in Brazil following
the deregulation of the local insurance market. We were also
able to expand our business in Peru.
The strains for our account were caused by claims associated
with drought conditions in Russia, flood damage in Pakistan
and severe rainfall in Mexico.
Retakaful business
We write retakaful business – that is to say, insurance transacted
in accordance with Islamic law – in both Southeast Asia
and on the Arabian Peninsula. With the Bahrain-based Hannover
ReTakaful we maintain a subsidiary that bears exclusive
responsibility for transacting this line of business; we also
have a local branch that writes traditional reinsurance in the
Arab world.
The economic crisis led to an overall slowdown in construction
work and put a stop to infrastructure measures. The premium
volume generated by primary insurers consequently
grew less strongly. This, in turn, had implications for reinsurers.
We nevertheless succeeded in boosting our gross premium
volume. Yet our company does not aspire primarily to
growth targets or market shares; rather, our focus is on the
profitability of the business. Our largest single market is Saudi
Arabia.
The year under review passed off very well for our company:
despite rising competition we were able to increase our premium
volume in casualty business and the engineering lines.
The successful growth of our retakaful business can be attributed
to the very good relations that we cultivate with our
clients, our quick response times and the financial standing of
Hannover Re.
Facultative reinsurance
In contrast to obligatory reinsurance, which covers an insurer’s
entire portfolio, a reinsurer underwrites primarily individual
risks in facultative business. The general environment
for both types of reinsurance in the various markets was, however,
for the most part comparable in the year under review.
Here, too, our strategy is to grow only in those areas that we
believe offer adequate profitability. As planned, our premium
volume in the facultative sector increased considerably in the
year under review. We further improved our market position
and continue to see considerable potential for profitable
growth in facultative reinsurance going forward.
We were able to particularly strengthen our position in Latin
America, the United States and the Middle East; this was also
true of Asia, where we are benefiting from our new branch in
Shanghai.
Rates in energy business continued to move lower in the year
under review. The “Deepwater Horizon” loss did, however,
have positive implications for reinsurance prices in the offshore
energy line.
In North America we enlarged our portfolio in both property
and casualty business – and here most notably in professional
indemnity. Although rates were certainly under strain, conditions
remained relatively stable.
In common with our obligatory business, our facultative portfolio
was also impacted by the severe earthquakes in Chile and
Haiti and the loss of the “Deepwater Horizon” drilling rig. Our
shares in this case were, however, relatively moderate. The
combined ratio in facultative reinsurance stood at 99.4%
(94.9%).
Management report
Even though the result of our retakaful business in the year
under review fell somewhat short of the previous year’s performance,
we are not dissatisfied with its development.
Hannover Re Group annual report 2010
Non-life reinsurance Management report
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