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01 Gothaer Konzern_E_09_Umschl - Gothaer Allgemeine ...

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Property/Casualty segment<br />

General risk situation<br />

Private client business<br />

Management Report<br />

In addition, appropriate reinsurance treaties are in place to limit the risks arising from<br />

major and accumulation losses.<br />

For the individual Group segments, this means:<br />

Our operations are differentiated by target group into private and corporate client<br />

business. The possible impacts of the financial crisis are analyzed and assessed on a<br />

continuous basis. Where bank credit dries up, the implications for our corporate client<br />

target group are wide-ranging – from increased insolvency through reduced inclination<br />

to invest to generally cautious purchasing behaviour. Insolvency leads to loss of client<br />

accounts, a lack of willingness to invest and purchase and the absence or decline of<br />

demand for insurance cover and, as a consequence, a tendency towards diminishing<br />

premium revenues. The sharp drop in revenues registered by some of our industrial<br />

clients resulted in premium income downturns even in 20<strong>09</strong>, especially in liability<br />

insurance. In 2<strong>01</strong>0 at the latest, however, reduced revenue figures and lower payroll<br />

expenses will lead to diminishing premium income from lines of insurance where premiums<br />

are based on annual turnover. These lines include liability, marine and property<br />

insurance. Engineering insurance and property insurance will also be affected by the<br />

anticipated downturn in inclination to invest. In fleet insurance, investment in more<br />

economical vehicles or the absence of any new investment will impact on insurance<br />

cover and premium income. These negative impacts, which were more than compensated<br />

by new business in 20<strong>09</strong>, will leave visible marks on premium income figures in<br />

2<strong>01</strong>0. This has been taken into account in planning for the current financial year.<br />

The poorer economic climate will also impact on private client business, although to a<br />

lesser extent.<br />

Furthermore, the general risk situation is being reshaped by changes in the legal<br />

environment. <strong>Gothaer</strong> is not affected by the recent court rulings on the validity of instalment<br />

surcharges. However, there is a risk that leading supreme court rulings will be<br />

delivered on this issue in the future.<br />

Private client business continues to be marked by high price sensitivity and a pronounced<br />

readiness to change providers on the part of policyholders. Sustained extreme<br />

price pressure and a high degree of market saturation are also evident. <strong>Gothaer</strong> offers<br />

comprehensive, high-value-for-money insurance solutions to counter this market trend.<br />

In private automotive insurance, <strong>Gothaer</strong> again refrained from participating fully in the<br />

price competition that has become ruinous in some areas of business; it markets a<br />

product pitched at an adequate price, committing to profit even at the expense of market<br />

share. As in previous years, the quality of the portfolio continues to be improved by<br />

effective portfolio management. Private automotive insurance on the whole is thus well<br />

positioned to meet the upcoming developments in the market.<br />

<strong>Gothaer</strong> Group Annual Report 20<strong>09</strong> 63

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