Treaty reinsurance worldwide

Our portfolio of global treaty reinsurance will generate a larger premium volume in 2012 than in the previous year. Growth rates were especially marked in Asia.

In the markets of Central and Eastern Europe demand for high-quality reinsurance protection remains strong. In 2012, therefore, we see further good opportunities to write profitable – above all non-proportional – business. We shall continue to post above-average growth rates in this region going forward. For the current financial year we anticipate by and large stable prices on account of the fiercely competitive environment. Only under loss-impacted programmes – fire claims in Russia and Romania – were we able to obtain improved rates in the treaty renewals as at 1 January 2012. For 2012 and beyond, we are looking to write more new business and grow our premium income.

We have been anticipating improved conditions for reinsurance business in France for a number of years now, yet a trend towards rising prices has hitherto failed to emerge. For the current year we expect to see stable rates and conditions. The premium volume should come in on a par with 2011. In the Netherlands we are expanding our business; our portfolio in Scandinavia is also developing very favourably.

With competition intensifying in Latin America and given the low claims expenditure of the previous year, we expect prices for reinsurance covers to decline. In Brazil the two major sporting events – namely the 2014 Football World Cup and the 2016 Olympic Games – will deliver significant growth impetus for the country’s economy and hence boost demand for (re) insurance covers. In Argentina new supervisory regulations enter into force in the year under review, bringing restrictions on the activities of foreign reinsurers; in this respect our premium volume from Latin America is likely to contract.

In Japan, our largest Asian market, we anticipate stronger demand and further increases in rates for catastrophe covers in both 2012 and 2013 on the back of the enormous loss expenditures incurred in the year under review. The premium volume should rise in the current financial year.

In the Southeast Asian markets we also expect to see increased demand and substantially higher prices; this is especially true of Thailand, not only due to the impacts of the flooding suffered by this country but also owing to its booming economy.

Motor business in China remains intensely competitive. This can be attributed to the deregulation of motor tariffs. As a result, we expect prices for motor covers to soften slightly. The other lines will also likely see no let-up in the existing fierce competition, which scarcely lends itself to implementation of the necessary rate adjustments. Over the coming years we shall step up our cooperation with selected ceding companies and align our portfolio with the prevailing market conditions.

In view of the heavy losses stemming from natural disasters in the previous year, further price increases and considerable improvements in conditions are expected for the markets of Australia and New Zealand. The current financial year should bring an enlarged gross premium volume and at the same time a reduction in the risk.

In the area of agricultural covers we obtained stable or slightly higher prices in the treaty renewals as at 1 January 2012. On account of the expansion of government subsidy programmes we expect to see additional growth in demand for agricultural covers, as a consequence of which premium income is likely to show further appreciable increases in 2012 and 2013. We shall also continue to support projects run by the World Bank and other international organisations in the field of micro-insurance, which protect individuals with scant financial means in the developing world against crop failures. We shall stand by our strategy of geographical diversification in the years ahead.

It remains our assessment that our retakaful business offers potential going forward. Infrastructure measures – specifically in Saudi Arabia and Qatar – should promote further economic growth in 2012 and beyond. Demand for (re)insurance products can therefore be expected to increase, especially in the construction sector and in the liability lines. Gross premium volume is expected to rise in 2012.

Global catastrophe business

In view of the significant losses recorded in international property catastrophe business, rates increased again in the treaty renewals as at the 1 January 2012 – especially under programmes that had suffered losses. In Australia, for example, prices surged by an average of 60%; the increase in the United States was in the double-digit million euro range. The increases in Europe – varying from 0% to 5% – were more moderate. We expect to see further substantial rate increases at 1 April 2012 renewal date in Japan and in the New Zealand renewals.

For the current financial year our catastrophe business is expected to deliver increased premium income and stronger profitability.

Global facultative reinsurance

Given the varied nature of demand for facultative covers, we see attractive scope to generate further profitable growth in the current year. Market conditions are likely to improve overall. The price rises should be most marked in property catastrophe business. In the casualty sector, however, we do not yet anticipate a trend reversal; nevertheless, rates should at least hold stable. For the current financial year we are looking to profitably grow the premium volume in our facultative portfolio.