Annual Report 2011 - R+V Versicherung

Management Report 4
gency management activities at R+V and reports to the R+V
risk conference on significant findings and on the emergency
exercises carried out.
Business continuity management guarantees that the business
operations of R+V Versicherung AG can be sustained in the
event of a crisis. The business processes necessary for this are
identified and supported with personnel resources within the
context of emergency planning.
The risk inventory that is taken once a year encompasses the
entire risk management of R+V. The purpose of the risk inventory
is reviewing and documenting all known individual and
cumulative risks as well as the risk bearing ability and the
business continuity management system. The indicators and
threshold values used are also reviewed here.
Compliance with the regulations of the risk management
system and its effectiveness is examined by the Group Audit
department. Measures are agreed to rectify any deficits that
are identified and are followed up regularly by Group Audit.
Technical risks
The technical risk describes the risk by which the actual
expenditure on losses and services differs from expected
expenditure due to accident, error or change.
The main technical risks for a reinsurer are in portfolios endangered
by natural disasters and in fundamental changes in
trends in its main markets.
R+V Versicherung AG counters these risks by continually
observing the market. Particular importance is attached to a
balanced portfolio in terms of both geographical diversification
and the mix of classes of insurance. Risk control is carried
out through a clearly structured earnings-oriented underwriting
policy. Risks are assumed within binding underwriting
guidelines and limits which restrict liability both in individual
and cumulative loss and within clear underwriting mandates.
Compliance with these stipulations is reviewed regularly.
Supplementary report / Risk report
Annual Financial Statements 35 Further Information 62 23
The actual and possible impact of losses caused by disasters
with regard to their extent and frequency is continually
recorded and tracked using standard industry software
supplemented by in-house verification.
An important risk management tool is systematic cumulative
control i.e. checking the possible accumulation of losses from
one loss event. Cumulative risks, such as those resulting from
a natural disaster, are controlled centrally. The technical provisions
are set appropriately.
Risk reduction measures are utilised. The management of
insurance excesses and of retrocession is done by taking risk
bearing capacity and the effective retrocession costs into
account. There are minimum creditworthiness requirements
for retrocessionaires. The risk bearing capacity of R+V Versicherung
AG is created through adequate capital resources
and reserves and consequently there is currently no retrocession
purchasing due to the high costs of retrocession protection.
Loss development in 2011 was characterised by an extremely
strong impact from large losses. The largest losses resulted
primarily from natural disasters, such as the loss events from
the earthquakes in Japan, Christchurch in New Zealand and
the flood disaster in Thailand. Following the exceptional year
in 2011, business development envisages a return to positive
results with a combined ratio of < 100%. Various measures
contributed towards an increase in profitability. These included
price increases and a reduction in volatility, for example,
selective underwriting of earthquake risks. In addition, the
equalisation provision serves to compensate accidental fluctuations
in the loss area over the course of time.
Financial instrument risks
Within the framework of providing insurance cover for customers,
insurance companies see themselves as exposed to
specific market, credit, liquidity and concentration risks.
These could lead to a permanent loss of the value of capital
investments and – in the final analysis – to endangering the