Hannover Re ranks among the market leaders in international marine reinsurance.

The general business environment in this segment in the year under review was to some extent still influenced by the financial and economic crisis of 2008. While turnover volumes in 2011 were again higher than in the previous year, in many areas they still fell short of pre-crisis levels. Insurance premiums consequently also failed to entirely climb back to the levels seen before the crisis. On the reinsurance side demand in the marine line was essentially stable.

The explosion of the “Deepwater Horizon” drilling rig last year also continued to have reverberations for business written in the year under review. The insurance industry had expected a far-reaching reform of the Oil Pollution Act to usher in changes to the general framework for underwriting such offshore energy risks; this did not, however, come about.

A primary objective of our underwriting policy in 2011 was to push through improved conditions in the offshore energy segment. We were largely successful in achieving this goal. We nevertheless wrote such risks very prudently and tended to reduce our limits of liability in order to keep the volatility of results as low as possible. Most notably, we maintained our exposure in the Gulf of Mexico on a low level. On the other hand, we expanded the rest of our marine portfolio for reasons of improved diversification. Gross premium contracted in the year under review.

On the claims side the year under review was characterised by a high frequency of smaller and mid-sized losses. The largest single event involved the damaging and putting out of operation of a large Danish FPSO (floating production, storage and offloading) unit, causing a market loss of some USD 1 billion. For Hannover Re this gave rise to a major loss with net expenditure in the order of EUR 16 million.

The combined ratio improved from 89.5% to 73.6%.