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Global catastrophe business

The bulk of Hannover Re’s catastrophe business is written out of Bermuda, which has established itself as the worldwide centre of competence for this line. Our financial strength and excellent ratings have made us a preferred and sought-after partner for ceding companies and brokers for quite some years now.

All in all, we are satisfied with the development of catastrophe reinsurance. Responding to the heavy losses incurred in 2011, rates showed a very promising trend in the renewals as at 1 January 2012. We were able to secure appreciable price increases, particularly for loss-impacted programmes. This tendency was sustained as at the 1 April 2012 renewal date. It was only as the year progressed that the price increases began to lose impetus. Although this was principally applicable to North America, original rates here continued to move clearly higher.

The rate increases on the reinsurance side were driven in part by the losses incurred in the previous year but also by adjustments made to natural catastrophe models.

After the two previous years had seen exceptionally heavy losses, the 2012 financial year essentially passed off moderately for the worldwide (re)insurance industry; this was especially true of the first six months. Nevertheless, small to mid-sized loss events were recorded, including for example the earthquakes in Italy and hailstorms in the United States. Other events were for the most part carried by primary insurers in their retentions. In contrast to early expert assessments, Hurricane Sandy in the US took a substantial toll on the insurance industry: the market loss is put at more than USD 20 billion. The net strain from Sandy for Hannover Re’s account totalled EUR 258 million.

Our strategy for underwriting catastrophe business remained largely unchanged in the year to review.

We are satisfied with our result in global catastrophe business. The combined ratio improved to 50.9% after 119.4% in the previous year. Our gross premium volume grew by 11% in the year under review to EUR 407 million (EUR 364 million).

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