talanx group annual report 2011 en

114
The Talanx Group Strategy Enterprise
management
International markets
In the light of the lower economic growth forecast in Swiss Re’s
Talanx Group. Annual Report 2011
Research and
development
Global Insurance Review (GIR) for the developed insurance markets
of Europe and North America for 2012, we likewise expect demand
for insurance products to be slack in those markets. In the markets
we have defined as our markets of the future – Latin America, Central
and Eastern Europe and Asia – economic growth is also likely to
slow down but will still remain at a significantly higher level than
in the industrial nations. As we see it, economic growth should continue
to peg demand for insurance and make for strong premium
growth in these markets, even if the pace may slow down in some
cases.
The main challenge for the EU member countries in Central and
Eastern Europe will probably be the introduction of Solvency II,
which will most likely trigger further consolidation among smaller
insurance companies. In Russia, increased minimum capital
requirements are expected, according to GIR, to speed up consolidation
on the Russian insurance market.
Premium growth in property/casualty insurance in the emerging
markets could be affected by the European financial crisis. Central
and Eastern European insurance markets, especially, are finding
themselves exposed – according to the observations of the GIR
team – to a risk of a slowdown both in economic development as a
whole and in premium growth in the property and casualty lines.
Latin American insurance markets could be impacted by a potential
weakness of the US economy, and especially as a result of exchange
rate risks that could materialise in the context of investments in
assets priced in US dollars. In the light of strong demand in personal
lines and special lines of business, we regard continuing stable premium
growth as not unlikely. The special lines segment, which includes
e.g. surety and engineering insurance, should in our opinion
profit from planned large-scale investments in infrastructure and
energy projects. Agricultural insurance could also see rapid growth
in the medium term, if international demand for produce from
Latin America continues to rise.
Markets and
general conditions
Business
development
Assets and
financial position
The short-term prospects for the development of international
life insurance business are in our view rather modest. The current
macro- economic challenges – GDP trends, unemployment,
incomes – are, according to e.g. the GIR’s analysis, with some probability
likely to slow down premium growth, because they limit
both the savings capacities of consumers (and thus of personallines
business) and also group business. In addition, historically
low interest rates, high volatility on the financial markets and
stricter capital requirements are hampering business.
In the emerging countries as a whole, a return of life insurance
business to the path of growth should in our view be conceivable in
2012, after a temporary inroad in the year under review, assuming
a recovery on the Asian and especially the Chinese and Indian insurance
markets, which were responsible for the negative premium
growth in the emerging countries in 2011. Latin American and Central
and Eastern European insurance markets have, in our assessment,
a realistic chance of continuing their robust premium growth
in 2012, too. The ongoing demand for life insurance products in
the emerging countries is essentially being driven by increasing
prosperity, reforms to health and pension systems, and a growing
awareness of the need for private cover. Major opportunities
for growth going forward may emerge for life insurance products
that serve only to transfer a risk (life insurance without savings
component). Whereas in the past growth has been fueled mainly by
life insurance products with a savings element, in many emerging
countries there is still a huge backlog in terms of the need for cover
against financial losses as a consequence of illness or death. Boosting
demand for such products may be made easier by the unfavourable
macro-economic environment in these countries, as historical
experience shows that the number of classical term insurance
policies taken out increases in times of high economic and financial
risk. Thus, in terms of demand structure, the business prospects for
life insurers in the emerging countries are in our opinion highly
propitious.
Longer life expectancies (i.e. an increase in the actuarial longevity
risk) naturally tend to increase demand. The longer the life expectancy,
the greater is the risk of running out of financial reserves or
of requiring longterm care in old age, and thus there is an objective
need to make the necessary provisions, for instance with the aid of
suitable life insurance products.