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Our business opportunities and risks

Non-life reinsurance

Irrespective of statements made regarding individual markets in non-life reinsurance, it should be noted – as in past years – that the probabilities of occurrence for (natural) catastrophe events in terms of their number and scale as well as their magnitude for the insurance industry are subject to considerable fluctuations.

Two major trends emerged in the demand for reinsurance protection in the year under review. Firstly, financially strong insurers are raising their retentions and carrying a larger share of the risk themselves. As a result, the proportion of administrative expenses caused by basic losses has been reduced for reinsurers. Secondly, diversification considerations are continuing to take on added importance when it comes to buying reinsurance, in part against the backdrop of risk management aspects. As these developments gather momentum they entail risks for reinsurers, but also offer opportunities.

The continued strained economic state of some member countries of the single European currency, combined with the protracted low level of interest rates, is stepping up the pressure on investment income. Many fixed-income investments made in years when the yield curve was higher are gradually maturing. For companies seeking to achieve their earnings targets primarily by eliminating reserve redundancies, the protracted low interest rate environment is increasingly becoming a critical factor as the volumes available for reserve releases dwindle from period to period. These effects serve to ratchet up even further the demands placed on a profit-oriented underwriting policy – a situation which in 2012 was again reflected in a stable price level. Price increases, however, could only be pushed through in light of the supply environment, which was characterised by sufficient availability of reinsurance capacity. This underscores the significance attached to a high service quality and sustainable innovation management.

Actors with efficient processes and structures can in fact profit from the current economic situation by using the margins made possible by their low costs as competitive advantages. Profitable growth can be safeguarded, in particular, by taking a forward-looking approach to emerging risks such as climate change, health risks (e. g. through resistance to antibiotics or due to endocrine disruptors) as well as cyber risks such as digital wildfires. Furthermore, major losses such as Hurricane Sandy (2012), the floods in Thailand (2011) and the earthquakes in Japan and New Zealand (2011) have shown that not only the continuous enhancement and rechecking of models but also the assurance of rapid, objective and reliable major loss management so as to be able to meet client concerns in a flexible manner are crucial success factors.


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