Non-Life Reinsurance
Key figures: Non-Life Reinsurance 1)
| 2008 | 20072) | 2006 | 2005 | 2004 |
Figures in EUR million |
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Gross written premium | 4,997 | 5,611 | 7,143 | 7,243 | 6,046 |
Net premium earned | 4,287 | 4,631 | 5,638 | 5,481 | 5,050 |
Underwriting result | 200 | 16 | 79 | –694 | –154 |
Net investment income | 47 | 863 | 925 | 872 | 853 |
Operating result (EBIT) | 121 | 902 | 813 | 33 | 581 |
Combined ratio (net) 3) in % | 95.0 | 98.8 | 98.2 | 109.4 | 97.7 |
2) Adjusted on the basis of IAS 8 3) Including deposit interest |
Non-life reinsurance is transacted within the Talanx Group almost exclusively by the Hannover Re Group, one of the world’s leading reinsurance groups, which maintains business relations with more than 5,000 insurance companies in about 150 countries. The Group’s global network consists of more than 100 subsidiaries, affiliates, branches and representative offices in around 20 countries.
Cycle management in the interest of profitability
Non-life reinsurance is volatile and cyclical in almost all lines and markets. In such lines and markets, therefore, we do not pursue any volume, growth or market share targets – but instead we closely monitor rate movements: during an upswing we increase our market share, while in a downward cycle we scale back our involvement. This active cycle management continues to be a cornerstone of our underwriting together with a profit-oriented underwriting policy, according to which we concentrate on those segments that promise the greatest profitability. In the year under review this strategy enabled us to largely offset more pronounced premium declines in some areas with increases in the German market as well as in worldwide credit and surety reinsurance.
Capital market transactions reduce risks
In 2008 we again took steps to ensure that our equity base is not strained by exceptionally large losses. On the one hand, for example, we further scaled back our peak exposures, while on the other we again topped up our “K5” capital market transaction.
At the beginning of the year we set up an Insurance-Linked Securities (ILS) department, which inter alia aggregates risks from primary insurers and transforms them into securities tailored to the capital market. As part of these activities an initial transaction was completed in the year under review: property catastrophe risks of a number of US cedants were packaged and passed on to the capital market in several tranches. Unlike Hannover Re’s previous securitizations, it was not designed for our own protection but rather to directly transfer clients’ business to the capital market. A special purpose entity capitalized at USD 133 million was established in Bermuda for this transaction.