talanx group annual report 2011 en

Overall assessment of
the economic situation
Non-Life Reinsurance
Non-financial
performance indicators
Corporate Governance Remuneration report Events of special
significance
2011 2010 2009
Figures in EUR million
Gross written premium 6,826 6,340 5,753
Net premium earned 5,961 5,395 5,237
Underwriting result –264 78 136
Net investment income 880 779 610
Operating result (EBIT) 629 909 760
Combined ratio (net) 1) in % 104.2 98.3 96.7
1) Including interest income on funds withheld and contract deposits
By far the bulk of the non-life reinsurance transacted within the
Talanx Group is written by the Hannover Re Group. Here we offer
our clients a comprehensive product range in treaty and facultative
reinsurance and structured reinsurance solutions. We attach great
importance to geographic diversification of our business, most of
which is written at headquarters in Hannover with support from
numerous branch and representative offices world-wide.
In non-life reinsurance we do not pursue any growth targets, but
instead pursue active cycle management, expanding our business
if the rate situation is favourable and scaling back our portfolio if
prices do not appear commensurate with the risks.
Business experience in line with expectations
The situation on the international reinsurance markets was largely
favourable in the year under review. The renewals round in the leadup
to 1 January 2011 – which is when 67% of our treaties in traditional
reinsurance were re-negotiated – went off better than some
market players had initially expected. Even if market conditions
tended softer, we had enough opportunities to write profitable business.
Prices and terms remained essentially stable, and we were able
to increase our premium volume by around 2% overall.
Mid-year renewals brought rate increases especially in the reinsurance
lines with a natural catastrophe exposure. The price rises were
driven by the huge loss events in the first quarter of 2011. However,
rate increases were also achieved on some claims-free reinsurance
programs from regions that were not affected by large-scale losses.
Risk report Forecast and
opportunities report
After the devastating earthquake in Japan in March of the year under
review, it proved possible to obtain the expected price increases
for non-proportional earthquake covers and improved terms under
proportional treaties. Prices also picked up in private accident
reinsurance and for industrial fire programs. We made a point in the
renewal round of standing by our Japanese cedants in these difficult
times and provided them with the capacity they required. Treaty
negotiations for Australia and New Zealand also ended with substantial
price adjustments, both for programs with a recent claims
record and for loss-free programs. This was particularly true for
New Zealand, which had suffered severe earthquake damage in both
2010 and 2011. We were also satisfied with renewals in other Asian
countries; here, too, our premium volume grew slightly. In North
America – our largest single market – we were able to achieve rate
improvements in the course of the year. This was the result both of
the US insurance industry having been impacted by tornado and
flood events and of adjustments to the Risk Management Solutions
(RMS) agency model.
All in all, market opportunities in non-life reinsurance were highly
satisfactory, so that we were able to grow profitably and expand our
market share in the year under review. The focus of our activities
was on the Chinese, Central and Eastern Europe markets, on facultative
reinsurance and on agricultural risks.
Premium growth satisfactory
The gross premium volume in our non-life reinsurance segment
rose by 8% in the year under review to EUR 6.8 (6.3) billion. Without
exchange rate effects, it would have been 1 percentage point more.
The retention rate rose from 88.9% to 91.3%. Net premium earned
increased by 11% to EUR 6.0 (5.4) billion, which was better than
expected.
Heavy loss expenditure weighs on results
Although the hurricane season in North and Central America again
passed off quite moderately, the (re )insurance industry was exceptionally
hard hit in the year under review. The largest loss event
for the insurance industry was the earthquake in Japan and the
ensuing tsunami. This event cost us EUR 229 million net. However,
the floods in Thailand and the earthquake in New Zealand also led
to high loss expenditure, impacting Hannover Re with EUR 196 and
121 million, respectively. These and other natural catastrophes and
a series of high-frequency losses resulted in a net expenditure of
EUR 981 (662) million on large-scale claims in the year under review.
This figure not only exceeded the already above-average figure of
the previous year but was also much higher than the EUR 530 million
anticipated. Against this backdrop, the combined ratio rose
from 98.3% to 104.2%.
Talanx Group. Annual Report 2011
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