The North American (re)insurance market is the largest single market both worldwide and for Hannover Re. Our business is written through brokers.

Non-life reinsurance: Breakdown of gross written premium in North America by line of business

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The economic environment for our clients in North America was broadly advantageous in the year under review. Insured values continued to grow and premiums increased. For many of our clients the rise in premium volume points the way forward and puts in place the foundation for further positive earnings trends. Yet the continued low level of interest rates was an adverse factor, as was the so-called “Superstorm Sandy” loss event in the fourth quarter of 2012. Returns on equity in the primary insurance market consequently only came in around 4% to 6% for the fourth consecutive year. In view of these tendencies, the pressure to achieve a combined ratio significantly below 95% mounted on all major risk carriers. The rate increases in the original market that could be observed from mid-2011 onwards gathered momentum in the 2012 financial year. The most appreciable price increases were in industrial property lines and for workers’ compensation covers. Nevertheless, the attractive profitability level of the last hard market phase has by no means been achieved as yet.

Premium income in the reinsurance market again climbed disproportionately strongly in the year under review. There were scarcely any new market players, while the process of consolidation progressed apace thanks to a number of takeovers. Although capital resources are higher, the market can be described as disciplined.

Against this backdrop Hannover Re boosted its premium income in the original currency by 15% in the year under review; our expectation last year had been just 2%.

Thanks to our excellent credit rating we are a valued partner for our clients, who therefore attach considerable importance to the fact that almost all their casualty placements are submitted to our company. The upgrading of our rating from “A” to “A+” by A.M. Best served to reinforce our clients’ trust, enabling us to further enlarge our shares in their reinsurance coverage.

Access to the entire portfolio of our clients and brokers also puts us in a position to optimally diversify our own portfolio. This is illustrated by the following figures: we maintain some 2,500 treaties with almost 600 clients. Time and again our clients voice their considerable appreciation of our broad product range and our willingness to participate in all lines as long as the price is commensurate with the risk. As a result, for more than ten years now relevant surveys have regularly ranked us as number 1 in the broker market.

Responding to an improved pricing climate, we further expanded our business in the year under review. We succeeded in doing this despite the fact that many insurers increased their retentions. In property lines, we achieved rate increases averaging between 5% and 10% in the catastrophe sector and in per risk reinsurance. On the casualty side prices rose in virtually all lines – for the second year in succession in workers’ compensation business.

Hannover Re is also active in agency business. Both in the United States and Canada we have significantly expanded this segment with the aid of our Group companies and their extended licences.

The major loss situation in the 2012 financial year was crucially dominated by Hurricane Sandy, which ensured that losses from the hurricane season were not as light as in the previous year. Hannover Re incurred loss expenditure of EUR 258 million from this event. For further information please see the section entitled “Global catastrophe business”. The combined ratio stood at 102.5% after 110.8% in 2011. Essentially, we are thoroughly satisfied with the result of our business in North America.