Credit and surety
In worldwide credit and surety reinsurance Hannover Re ranks among the market leaders. As in previous years, we concentrated exclusively on the core business of the credit and suretylines. We do not write financial guarantees or credit default swaps.
The framework conditions varied widely from market to market in the year under review. Major emerging markets and national economies with strong export sectors such as Germany enjoyed a marked upswing in the first half-year. The second half of the year was overshadowed in particular by the worsening debt crisis and crisis of confidence in Europe and the United States. It was, however, countries with a high debt ratio such as Greece, Italy and Spain that came under the greatest pressure.
The moves towards consolidation made by insurers and reinsurers in the years 2009/2010 had broadly positive effects and claims rates in credit insurance in the year under review remained below the pre-crisis level of 2008. Results in surety business and in the area of political risks were similarly scarcely impacted.
Surplus capacities prevailed on the reinsurance side owing to the appreciable improvement in claims rates in the original business. Having scaled back their participation in the challenging years of 2009 and 2010, all the established reinsurers enlarged their portfolios again. Not only that, a number of new players entered the market.
Following significant expansion in the two previous years Hannover Re stabilised its portfolio in the year under review. We are currently not interested in increasing our market share. Our business development in the year under review was thoroughly satisfactory. The credit line profited from a sharp reduction in claims rates as the economy rebounded. The surety line and political risks business also performed satisfactorily on the back of stable claims rates.
In view of the very good claims rates in the credit line rates in original business experienced a moderate decline; this trend had, however, softened by the end of the year. Commissions rose under proportional reinsurance covers. Rates for the reinsurance of surety business and political risks remained largely stable in the year under review. All in all, our premium volume in the 2011 financial year was a par with the previous year.
Overall, we are highly satisfied with the development of creditand surety reinsurance. Once again, we did not incur any major losses in the year under review. In non-proportional business our portfolio was virtually spared any claims, as a consequence of which we enjoyed very healthy profitability. The combined ratio improved in the year under review to 87.7%, after 97.8% in the previous year.