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Specialty lines

We were satisfied with the treaty renewals in specialty lines.

In marine business we expect premium volume to rise in the current year. Given the loss events of 2012, including the wreck of the “Costa Concordia” cruise ship, increased prices and improved conditions are anticipated for marine business. Higher sums insured for offshore risks will be reflected in moderate price increases in this area too. In the other lines, such as hull, cargo and marine liability, the rate environment is likely to remain broadly stable, although higher prices should be attainable under loss-impacted programmes. We continue to strive for further diversification in international markets. Price increases are particularly likely in Protection & Indemnity (P&I) business. The heavy losses caused by Hurricane Sandy helped to improve rates.

Based on our very good positioning we also see good business prospects in aviation reinsurance. Although rates softened slightly in the renewals, the business is still very attractive. We further enlarged our client base, most notably in the BRIC countries. Gross premium volume is expected to grow in the current financial year.

Unless the state of the global economy improves, claims rates in credit and surety reinsurance will again tend to move higher in the current financial year. With this in mind, as in the previous year, we are not seeking to expand our market share in 2013, but rather to maintain our share unchanged. In view of the considerable capacities in the market we shall continue to write our business highly selectively. The premium volume for our credit and surety business is likely to remain stable in the current financial year.

Our business with structured reinsurance products, in which we offer our clients tailored and innovative reinsurance solutions, is expected to enjoy stable or rising demand again in the current financial year. This is especially true in light of the more exacting requirements placed on companies’ capital resources. More and more emerging markets are adopting risk-based solvency systems, which should prompt further demand for surplus relief treaties – which ease the strain on a ceding company’s surplus and assist with fulfilment of solvency requirements imposed by regulators. Overall, the premium volume should increase slightly.

We intend to further step up our activities in the area of insurance-linked securities in the current financial year. In this context, our focus will be on packaging and structuring non-life and life reinsurance risks. Our collateralised reinsurance portfolio will also be systematically expanded, and we shall continue to play an active part as an investor in catastrophe bonds.

In 2013 we were able to renew our “K” quota share – a collateralised modelled quota share cession of non-proportional reinsurance treaties in the property catastrophe, aviation and marine (including offshore) lines that we have placed in the ILS market for almost 20 years – with a capacity of USD 328 million.

We anticipate a further rise in premium income for our non-proportional reinsurance business in the United Kingdom in 2013. In the other lines we expect the price level to remain stable. Our involvement in non-proportional motor reinsurance will be expanded. While our Irish portfolio is currently still modest, we are seeking to further enlarge it in the years ahead. Our direct business in South Africa is also expected to deliver an increased premium volume.

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