01 Gothaer Konzern_E_09_Umschl - Gothaer Allgemeine ...

Management Report
The principal drivers of new single-premium business – after individual annuity policies –
were capitalization contracts. Increasing their volume to €4.75 billion, they account for
24.1 % of all new single-premium business. 2009 again showed the importance of
annuity insurance as a source of new business for life insurers. It accounted for nearly
50 % of all new policies concluded and nearly 65 % of the total premium income they
produced. Premature terminations showed a year-on-year increase of 10.5 % in terms of
regular premium income and made for a lapse rate of 6.2 %.
The volume of insurance benefits paid underscores the undiminished high capacity of
the German life insurance industry. At €70.78 billion, benefit payments to life insurance
policyholders very nearly matched the record level reached in 2008, equalling 34.1 % of
the total benefits paid under statutory pension schemes. Future benefits payable to
policyholders increased by €33.38 billion. This upturn was due to a rise in policy reserves
for conventional and unit-linked policies. The percentage of all new unit linked policy
business relating to unit-linked life and annuity policies with maturity guarantee –
a statistic identified by the GDV for the first time in 2008 – rose to 70.9 %.
The still-increasing number of maturing policies and a marked rise in surrenders and
contracts transformed into non-contributory policies were compensated by increased
new single-premium business. As a result, gross premiums written by life insurers grew
by 6.6 %, as against 1.1 % in the prior year. Single premiums accounted for 24.1 %, up
from 16.0 % in 2008. The gross premiums written by pension trusts affiliated to the GDV,
however, decreased by 0.2 %, while those of pension funds increased by 129.9 %.
It should be noted here that pension funds account for only around 1 % of the total
premium income generated in life insurance. Furthermore, the development of business
in this area was shaped by instances of outsourcing an internal company pension
scheme to a pension fund.
Overall, premium income for life insurers, pension trusts and pensions funds increased
by 7.1 % (PY: 0.8 %).
In 2010, classical life insurance business will continue to be defined by the impacts of
financial and economic crisis on the real economy and the resulting sustained reluctance
of broad sections of the population to engage in long-term investments. Provided the
volume of single-premium business is unchanged, the GDV estimates that premium
revenues will decrease by 3% in 2010.
The forecast for 2010 is similar for pension trusts and pension funds, which are classed
as a form of life insurance. They are not expected to be affected by any special developments
that might cause the premium income they generate to develop along substantially
different lines from the rest of life insurance. After years of vigorous expansion,
pension trusts, in particular, started the decade on a significantly slower growth path and
are thus no longer a source of additional growth stimuli. Although the possibility of a
considerable volume of individual transactions cannot be ruled out for pension funds,
the GDV believes that life insurance as a whole (including pension trusts and pension
funds) will generate 3 % less premium income than in the year under review.
Gothaer Group Annual Report 2009 35