Treaty reinsurance worldwide

The premium volume for our portfolio of global treaty reinsurance is expected to remain stable.

Although improved conditions have been anticipated for several years in France, a trend towards higher prices cannot currently be discerned. On average, we are assuming prices will be slightly lower in 2013. The premium volume should remain stable overall.

In the Netherlands, where more mergers are likely, we expect to see a stable premium level in catastrophe business, slight erosion for casualty covers and a rate decline for property business. With that in mind, a modest contraction in gross premium volume is anticipated.

In the markets of Central and Eastern Europe demand for high-quality reinsurance protection should remain strong in 2013 and beyond. We expect reinsurance rates to remain stable overall. Despite the worldwide financial and economic crisis, we are convinced that further profitable growth can be generated here going forward. It is our assumption that the premium volume in the current financial year will again show double-digit growth.

In most Latin American countries we expect reinsurance conditions to worsen and rates to fall on the back of the low losses recorded in the previous year. The premium volume should, however, remain stable. Rates in Brazil are expected to remain broadly unchanged. Demand for (re)insurance covers is likely to continue rising here, driven by extensive construction activity and energy projects in the run-up to the 2014 FIFA World Cup and the Olympic Games two years later. In the next four years alone, for example, 50 hydroelectric power plants are to be built. Not only that, all the needs of a growing middle class will help to further boost demand for insurance products. In Argentina the regulatory restrictions placed on foreign reinsurers are continuing to hamper premium growth in this market.

In view of the more exacting local capital requirements we expect to see rising demand in Japan. Rates for catastrophe covers should stabilise on a high level. Our premium volume will likely show a modest increase in the current financial year.

The region of Southeast Asia is expected to deliver an enlarged premium volume for our portfolio. Appreciable growth in business with agricultural risks is likely in India, although this line is also developing very well in the markets of Indonesia, Malaysia and Vietnam. Further growth stimuli are anticipated from the implementation of risk-based capital models and the associated more demanding solvency requirements.

Market conditions in China continue to be competitive, and rates must therefore be expected to soften. With this in mind, we are writing our business highly selectively. Growth potential is evident in the areas of agricultural risks, aviation and credit/surety, where we are looking to further enlarge our portfolio.

Premiums and conditions for the markets of Australia and New Zealand are expected to be adequate in the current financial year. Higher capital requirements should be reflected in greater demand for capacity. Overall we expect a slightly larger premium volume from this region.

In the area of agricultural covers we obtained stable or slightly higher prices in the treaty renewals as at 1 January 2013. Under programmes that had incurred losses rates increased accordingly and conditions improved. In view of the growing demand for food and with weather conditions becoming increasingly extreme, we can anticipate a continued rise in demand for agricultural covers; further significant premium growth is therefore likely in 2013 and 2014. We shall stand by our strategy of geographical diversification in the years ahead.

Retakaful business will again be heavily influenced in the current year by major investments in infrastructure and in the energy and construction sectors, first and foremost in relation to sports. We shall remain focused on expanding profitable business; this includes construction risks and liability covers in Qatar and Abu Dhabi as well as participations in energy business. The gross premium volume for our total portfolio of retakaful business should rise in 2013.

Global catastrophe business

In part owing to the low interest rate environment, further capital can be expected to flow into global catastrophe reinsurance. As was already observed in the past year, activities in the area of insurance-linked securities should continue to gather momentum in 2013. As an additional factor, the (re)insurance industry enjoyed a thoroughly successful 2012, hence leaving the capital base of insurers further strengthened. Nevertheless, the losses incurred from Hurricane Sandy should help to significantly ease the pressure for price reductions. Both the impacted programmes and those with a negative experience from earlier loss events should see marked rate increases. We expect to show a modest increase in our premium volume from global catastrophe business.

Global facultative reinsurance

Given the varied nature of demand for facultative covers, we believe that the current year offers further good prospects for generating profitable growth. Market conditions are favourable overall, and we expect rates to hold broadly stable. In the area of energy production, however, rates are likely to come under increasing pressure. Price increases should be possible under treaties that suffered losses. Both in Latin America and in Europe we are looking to enlarge our profitable catastrophe business and non-proportional property business. The premium volume for our total portfolio of facultative covers is expected to rise.