talanx group annual report 2011 en

Nature of risks Notes on the balance
sheet – assets
Notes on the balance
sheet – liabilities
Notes on the
statement of income
Other information List of shareholdings
The focus of the Talanx Group’s business activities is on the sale and administration of insurance
products in all standard lines of property/casualty and life insurance in both primary and reinsurance
business.
Risks from insurance contracts
Risks from insurance contracts consist principally of insurance risks, default risks, liquidity risks and
market risks. Insurance risks in property/casualty insurance are considered separately from those in
life insurance because of the significant differences between them.
Management of technical risks in property/casualty insurance
Insurance risks in non-life business (primary insurance and reinsurance) derive primarily from the
premium/loss risk and the reserving risk.
Insurance business is based upon taking on individual risks from policyholders (in primary insurance)
or cedants (in reinsurance) and spreading these risks over the community of (re)insureds and
over time. For the insurer, the fundamental risk lies in providing insurance benefits, the amount
and due date of which are unknown, from premiums that are calculated in advance and cannot be
changed. The reserving risk refers to the possibility of the reserves set up on the balance sheet proving
insufficient and having to be boosted to the detriment of the technical result.
We counter the premium/loss risk by taking out appropriate reinsurance. The volume of reinsurance
cover relative to the gross written premium is measured by the retained premium ratio;
shown below broken down by segments; this indicates the proportion of written risks retained for
our own account.
Retention by segments 2011 2010 2009
In %
Industrial Lines 44.1 46.1 43.7
Retail Germany 92.9 91.6 85.6
Retail International 88.7 92.4 86.9
Non-Life Reinsurance 91.3 88.9 94.1
Total non-life insurance 79.8 78.9 78.7
The retention ratios in non-life insurance at Group level remained roughly on a par with the previous
year, at 79.8% compared to 78.9%. The retention ratio in the Industrial Lines segment dropped,
mainly because of the change to disclosure of the reinstatement premium among the reinsurance
premiums.
The net loss ratio in the segments developed as follows in a year-on-year comparison:
Loss ratio by segments 2011 2010 2009
In %
Industrial Lines 66.8 82.0 68.6
Retail Germany 67.5 69.4 62.5
Retail International 70.5 75.6 71.6
Non-Life Reinsurance 78.8 72.0 72.8
Total non-life insurance 74.5 73.6 70.5
Talanx Group. Annual Report 2011
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