Traditional reinsurance

We are satisfied with the business that we write in the United Kingdom and on the London market. Particularly attractive market conditions opened up to us in non-proportional motor reinsurance. With US and Bermudan players partially withdrawing owing to changes in accounting requirements, capacity for middle and higher layers contracted. Rates consequently climbed sharply. We used this as an opportunity to substantially expand our portfolio.

Direct business

Through two of our subsidiaries, International Insurance Company of Hannover Ltd. (Inter Hannover) in the United Kingdom and the South African company Compass Insurance Company Limited, a subsidiary of Hannover Reinsurance Africa Limited, we write direct business that complements our principal commercial activity as a reinsurer. This essentially involves acceptances concentrated on tightly defined portfolios of niche or other non-standard business.

In 2012 the state of the UK economy again failed to show any significant improvement on the previous year. For the reinsurance industry it was another year of fierce competition. Owing to reduced spending on infrastructure projects, covers for risks in the construction industry were particularly hard hit. Yet this was also true of professional indemnity insurance, aviation insurance, motor insurance and property lines. Still, market conditions in individual segments varied. Rate increases were obtained, for example, for policies with natural catastrophe exposures and in the area of commercial motor insurance.

After appreciable price increases in the previous year, premiums in private motor business lost momentum in the year under review – prompting us to scale back our premium volume in this sector. In industrial property business our involvement is concentrated on mid-sized clients, since in these cases we are able to exert a stronger influence on the structuring of the programmes.

Our second company writing specialty lines, Compass Insurance Limited, is one of the leading players in this field in South Africa. The year under review was one of unusually heavy losses for the company. In addition to several hailstorms, a blaze destroyed more than 100 thatched homes in a residential area and caused considerable losses for the local insurance industry. We were also impacted by this event because one of our local partner underwriting managers has specialised in thatched houses. The resulting loss expenditure for our account amounted to EUR 10.4 million.