R+V Versicherung AG Annual Report

As a result of the relatively poor capitalization
of many direct insurers and Latin
America’s high frequency of natural disasters,
the fire insurance class together
with its supplementary elemental risks are
heavily reinsured. After a phase of immense
pressure on reinsurance conditions and
correspondingly poor results, claim events
initiated a market turnaround. The high
costs incurred in the previous year by the
storms “Mitch” and “Georges”, as well as
flooding in Venezuela and the earthquake
in Columbia, led to an increase in original
premiums and paved the way for improved
reinsurance conditions. The growth of these
markets was severely restricted by the economic
recession, however.
Asia
Southeast Asia started to experience an
economic downturn in mid-2000 which
snowballed during 2001. Real gross domestic
product even fell at times in many countries.
Only in China did overall economic
production continue to expand at more or
less the same speed. Taking the official
statistics as a yardstick, real GDP has now
been increasing at between 7% and 8%
per year for many years, regardless of the
performance of the global economy. In the
other countries, the weakness in the US,
Japanese and EU economies became
increasingly apparent, with the result that
exports collapsed in numerous cases. The
setback in the IT sector had an even more
critical impact, however. Many countries
had specialized very heavily in such
products, and for years their exports had
benefited from the global boom; by the end,
IT products had made up around a quarter
of their total goods exports on average.
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Consequently, the region – and especially
Singapore, Malaysia and Taiwan – was
extremely hard hit by the downturn in the
market. In other countries which had not
concentrated quite so heavily on IT products,
such as South Korea and Thailand,
vigorous expansion in domestic demand
helped offset the weak exports.
While exports fell much more sharply than
imports throughout practically the whole
region, the majority of Southeast Asian
countries still recorded a sizeable balance
of payments surplus. This reduced the
risk that external economic shocks would
trigger a crisis as in 1998. Another point in
their favor was that inflation was low in all
countries except Indonesia, which meant
that the central banks were able to react to
the economic downturn by relaxing their
monetary policy.
Like the Japanese economy as a whole,
the Japanese insurance sector experienced
difficulties. Life insurers were faced with
major challenges due to the strained situation
on the capital markets. Property and
casualty insurers were forced to adapt to
the consequences of deregulation.
After the direct insurance market in Taiwan
had developed extremely satisfactorily in
2000, the fiscal year under review was
characterized by stiff competition. This led
to declining original rates in key insurance
classes.
China joined the World Trade Organization
(WTO) and issued clear guidelines for
regulatory approval of foreign insurance
companies.