R+V Versicherung AG Annual Report
R+V Versicherung AG Annual Report R+V Versicherung AG Annual Report
A difficult year for property insurers For property and casualty insurers, 2002 was principally marked by a sharp rise in claims expenses. Fierce spring storms, the flooding of the Elbe and its tributaries, the fall storm “Jeanette” and numerous large claims resulted in heavy losses and a combined ratio of over 100% in a number of insurance classes. In addition, the stiff competition in particular segments of property and casualty insurance prevented insurers from changing premiums that covered their costs. Given the current stock market environment, it is highly unlikely that the technical losses can be offset with investment income. On the whole, claims expenses in property and casualty insurance during the fiscal year rose by 10.2% to €44.3 billion. Premium income, however, improved by a mere 2.8% to €51.1 billion. As in the past, motor vehicle insurance – the largest branch of property insurance – accounted for this growth. With premium income of €21.9 billion, this 2.9% increase is nevertheless considerably lower than in the previous year (up 4.8% in 2001). This figure is offset by an expected technical loss of €0.5 billion, principally due to the large number of storms in the first half of the year and last summer’s flood disaster. Full cover insurance was the main contributor to this loss, which rose by €270 million to €400 million. Partial cover insurance recorded a loss of over €50 million down from a positive €168 million in the previous year. Losses from motor vehicle liability insurance fell by €150 million to €476 million. 6 General property insurance recorded a slight increase of somewhat over 1%, with premium income of €9.4 billion. In contrast, claims expenses rose by close on 47.0% to €8.5 billion. Fierce premium competition in the commercial area and in comprehensive residential insurance in particular resulted in heavy losses. Industrial property insurance fared no better: the high combined ratio of 128% (due to an increase in claims expenses of 21.3% to €3.8 billion) offset the encouraging premium increase of 12.3% to €3.4 billion. This higher premium income results from the systematic implementation of restructuring measures in this class, giving rise to hope of further improvements. The situation in the marine insurance sector also remains strained, with the combined ratio standing at 126%. Premium income improved by 3.0% to €1.8 billion. General liability insurance demonstrated a slight growth in premium income of 1% to €6.0 billion. The situation in private accident insurance is much healthier; here, premium income rose by 1.5% to €5.6 billion, while claims expenses increased by a mere 0.5% to €2.5 billion. This puts the loss ratio at a positive 54.0%, almost unchanged on the previous year. Legal insurers also boosted their premium income by 1% in the past fiscal year to €2.7 billion, while claims expenses rose by 2.0% to around €2 billion.
Developments on the international reinsurance markets Business assumed from cedents outside the R+V Group was affected by developments on the international reinsurance markets. Because most property and casualty insurance business is deferred by one year, the following paragraphs primarily present the situation as it was in calendar year 2001. Economic environment The contraction of the global economy in the middle of the year accelerated in the course of 2001, with the rate of expansion slowing substantially in almost all countries and regions. A major factor in this development was that the strong boom in the US, which had long functioned as the motor for the global economy, came to an abrupt end. The downturn quickly spread to the rest of the world via a crash in stock market prices, deterioration in sentiment among companies and finally a contraction in trading activity. This slowdown was triggered by two key factors. The preceding increase in crude oil prices curbed economies almost everywhere and fears of inflation took hold, resulting in a tightening of monetary policy in key countries. The slump was further accelerated by the downturn in the IT sector. Whereas massive investments in this area had accelerated growth in many parts of the world up to mid-2000, the slump in this sector accelerated the economy’s downturn. This extraordinary development was another reason why forecasts for numerous countries had to be revised downwards in the course of the year – even before the events of September 11. 7 However, in the early summer of 2001, the first indications emerged that the downturn would not continue in the same form as in the past and that a recession was therefore not in sight. The business climate brightened, both in the US and in the euro-zone, due to the improvement in underlying economic conditions and the fact that the global raw materials markets were showing signs of relaxation. At this time, the economy appeared to have bottomed out and it seemed that a recovery was on the cards for the last quarter of the year. These hopes were dashed by the events of September 11. International reinsurers had never been so affected by one single event in any previous year. The terrorist attacks in the US on September 11 resulted in the largest single insurance claim in insurance history – at least USD50 billion. The insurance claim from Hurricane Andrew, which had broken all records up to then, amounted to only half of the sum payable as a result of the terrorist attack on the World Trade Center. This puts the extent to which the insurance sector was affected in fiscal 2001 into perspective, but also highlights the enormous capacity of the direct insurance and reinsurance sector to cope with such a once-in-acentury event. This extraordinary event and the complexity of the related claims created uncertainty and led to a review of risk exposure in the entire insurance sector. The face of the insurance market changed dramatically as a result. Direct insurance policies increased almost across the board, reinsurance capacity declined and cover for terrorism risks in commercial and industrial sectors became almost impossible to come by.
- Page 1 and 2: 2002 R+V Versicherung AG Annual Rep
- Page 3 and 4: Content Management Report 4 Proposa
- Page 5: However, the significant increase i
- Page 9 and 10: However, the events of September 11
- Page 11 and 12: As a result of the relatively poor
- Page 13 and 14: Business development and position o
- Page 15 and 16: Liability business developed negati
- Page 17 and 18: Including interest on deposits and
- Page 19 and 20: In terms of sums insured, the portf
- Page 21 and 22: Overall, gross premium income decli
- Page 23 and 24: Major claim events such as ”Petro
- Page 25 and 26: Shareholder structure As of the bal
- Page 27 and 28: Investment risks: In order to creat
- Page 29: Significant events and outlook The
- Page 32 and 33: Proposal on the Appropriation of Pr
- Page 34 and 35: Balance Sheet as of December 31, 20
- Page 36 and 37: Equity and liabilities 36 2002 2001
- Page 38 and 39: Income Statement for the period fro
- Page 40 and 41: 40 2002 2001 € € € € 8. Ext
- Page 42 and 43: Premiums and discounts were amortiz
- Page 44 and 45: List of Shareholdings Shares in aff
- Page 46 and 47: Notes to the Balance Sheet Statemen
- Page 48 and 49: Assets C. Investments Present value
- Page 50 and 51: Notes to the Income Statement I. 1
- Page 52 and 53: Dr. Jürgen Förterer Chairman Wolf
- Page 54 and 55: Auditors’ Report We have audited
A difficult year for property insurers<br />
For property and casualty insurers, 2002<br />
was principally marked by a sharp rise in<br />
claims expenses. Fierce spring storms, the<br />
flooding of the Elbe and its tributaries, the<br />
fall storm “Jeanette” and numerous large<br />
claims resulted in heavy losses and a<br />
combined ratio of over 100% in a number<br />
of insurance classes. In addition, the stiff<br />
competition in particular segments of<br />
property and casualty insurance prevented<br />
insurers from changing premiums that<br />
covered their costs. Given the current stock<br />
market environment, it is highly unlikely that<br />
the technical losses can be offset with<br />
investment income.<br />
On the whole, claims expenses in property<br />
and casualty insurance during the fiscal<br />
year rose by 10.2% to €44.3 billion.<br />
Premium income, however, improved by a<br />
mere 2.8% to €51.1 billion. As in the past,<br />
motor vehicle insurance – the largest<br />
branch of property insurance – accounted<br />
for this growth. With premium income of<br />
€21.9 billion, this 2.9% increase is nevertheless<br />
considerably lower than in the<br />
previous year (up 4.8% in 2001). This figure<br />
is offset by an expected technical loss of<br />
€0.5 billion, principally due to the large<br />
number of storms in the first half of the year<br />
and last summer’s flood disaster. Full cover<br />
insurance was the main contributor to this<br />
loss, which rose by €270 million to €400<br />
million. Partial cover insurance recorded a<br />
loss of over €50 million down from a positive<br />
€168 million in the previous year.<br />
Losses from motor vehicle liability insurance<br />
fell by €150 million to €476 million.<br />
6<br />
General property insurance recorded a<br />
slight increase of somewhat over 1%, with<br />
premium income of €9.4 billion. In contrast,<br />
claims expenses rose by close on 47.0% to<br />
€8.5 billion. Fierce premium competition in<br />
the commercial area and in comprehensive<br />
residential insurance in particular resulted in<br />
heavy losses. Industrial property insurance<br />
fared no better: the high combined ratio<br />
of 128% (due to an increase in claims<br />
expenses of 21.3% to €3.8 billion) offset<br />
the encouraging premium increase of<br />
12.3% to €3.4 billion. This higher premium<br />
income results from the systematic implementation<br />
of restructuring measures in<br />
this class, giving rise to hope of further<br />
improvements. The situation in the marine<br />
insurance sector also remains strained,<br />
with the combined ratio standing at 126%.<br />
Premium income improved by 3.0% to<br />
€1.8 billion. General liability insurance<br />
demonstrated a slight growth in premium<br />
income of 1% to €6.0 billion. The situation<br />
in private accident insurance is much<br />
healthier; here, premium income rose by<br />
1.5% to €5.6 billion, while claims expenses<br />
increased by a mere 0.5% to €2.5 billion.<br />
This puts the loss ratio at a positive 54.0%,<br />
almost unchanged on the previous year.<br />
Legal insurers also boosted their premium<br />
income by 1% in the past fiscal year to<br />
€2.7 billion, while claims expenses rose<br />
by 2.0% to around €2 billion.
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