talanx group annual report 2011 en

Overall assessment of
the economic situation
Non-financial
performance indicators
Corporate Governance Remuneration report Events of special
significance
According to experts, life insurers’ return on equity in the international
insurance markets has remained on or around the 12%
mark since the beginning of 2010. As such, profitability remains
below the pre-crisis level of 2007 and there are no signs that the 15%
mark will be reached in the foreseeable future.
Global premium income from conventional life reinsurance business
fell in the year under review, this slump resulting in the main
from the industrialised markets. A rise in premium income is still
being predicted for the growth regions in the year under review.
Nevertheless, the ten biggest life reinsurers succeeded in increasing
net premium income by around 7% in the first nine months of the
year alone, this gratifying development being achieved mainly by
company acquisitions.
German insurance industry
Development of gross premium income in
the individual insurance lines in Germany 2011 1) 2010
In % compared to previous year
Property and casualty insurance +2.5 +0.9
Life insurance −5.7 +6.0
Private health insurance +4.9 +5.7
Total −1.2 +4.4
1) Provisional figures Source: GDV
2011 saw the financial and debt crisis enter its fourth consecutive
year. Thanks to their broadly diversified, longterm investment policies
and only minor exposure to government bonds from the socalled
GIIPS countries, German insurers were largely able to absorb
the negative impact of the crisis on business and clients. Despite the
crisis and signs throughout the year that the recovery was stalling
again, business development was satisfactory in our opinion. The
slight fall in premium income recorded by all lines of business was
mainly attributable to a normalisation of single-premium business
in life insurance, which had experienced significant volume
increases in the two preceding years. With a total premium volume
of EUR 176.7 billion, the GDV reported its second-highest figures of
all time in 2011 for the German insurance industry. Benefits paid
by primary insurers increased in the year under review on the back
of an increase in the number of routinely maturing life policies,
coupled with rising claims expenditure in the property and casualty
line of business.
Risk report Forecast and
opportunities report
Property and casualty insurance
At around 2.5%, premium growth in the property and casualty line
of insurance in the year under review was the biggest since 2003,
continuing the upward trend of the previous year. This was mainly
thanks to growth in premiums in motor insurance, which increased
markedly in 2011. Tariff increases were pushed through for both new
and in-force business in this sector.
All other lines of insurance are expected to show positive growth
as well, with marine and credit insurance faring particularly well.
Although, the industry recorded only a small percentage rise in
claims expenditure in the year under review, 2011 delivered the second-highest
burden of losses in absolute terms the industry has had
to cope with since the River Elbe floods of 2002. The situation was
compounded by key loss events such as the lengthy frost period at
the start of the year and two extreme weather fronts that arrived on
the scene in August and September. Although relatively localised,
they gave rise to an extremely high claims burden. All told, with the
positive effects of the growth in premium income outweighing the
rise in claims expenditure, the underwriting profit of property and
casualty insurers actually grew again in 2011 for the first time in two
years. According to the GDV, these results are likely to be reflected in
a 1 percentage-point rise in the combined ratio.
Life insurance
All in all, the life insurance line of business returned to normal in
the year under review. Against the backdrop of the financial and
economic crisis, 2009 and 2010 had been marked by an extreme
trend towards single-premium business. This expansive development
was not maintained in 2011 – indeed, as expected in our
opinion, it actually fell perceptibly. In contrast to single-premium
business, new business with regular premium payments – much
more important for sustaining future growth in this class of insurance
– grew by 8.1% to EUR 6.1 billion in 2011 following declines in
the two preceding years. Thus, in terms of aggregate premiums –
the benchmark by which policies with regular premium payments
are weighted with their respective terms – new business grew by
5.5% in total during the year under review. In contrast, total gross
premium income in life insurance contracted by 4.8% in the year
under review as a result of the trend toward single-premium business.
Once again, the number of lapsed policies fell slightly, this
despite the ongoing financial crisis.
Talanx Group. Annual Report 2011
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