As a globally operating reinsurer, our focus in the prevailing highly competitive climate is on sustainable success. In the current financial year our business will be influenced above all by developments on capital markets and the complex regulatory requirements in individual regions.

In Germany it is our expectation that the low level of interest rates will be sustained in 2015 and that the pressure on returns facing primary insurers will remain correspondingly high.

These anticipated developments will therefore also affect our business. Particularly in the case of traditional life insurance policies, for example, the reduction of the guaranteed interest rate from 1.75% to 1.25% as at 1 January 2015 will likely mean a further contraction in the business volume. The order of the day for both insurers and reinsurers alike is to explore alternatives and attractive provision products that can generate demand.

Preparations for the impending implementation of the Solvency II Framework Directive are also playing a major role. The new reporting and disclosure requirements enter into effect on 1 January 2016. In the course of the current year we shall step up our efforts to ensure that all requirements are satisfied as early as possible. As far as our business is concerned, we shall cooperate even more closely with our customers in 2015 in order to offer attractive reinsurance solutions for solvency and capital relief under the new Solvency II regime.

Changes in regulatory provisions will affect us not only in Germany but also globally in the year ahead. China, for example, plans to implement new solvency directives with effect from 2015: the new China Risk Oriented Solvency System (C-ROSS) puts the focus on risk-based capital requirements and imposes more detailed reporting. The adoption of C-ROSS will significantly improve comparability with Solvency II – which in principle must be viewed favourably with an eye to progressive globalisation. We are monitoring the implications of C-ROSS implementation particularly closely in order to be able to respond flexibly and appropriately to the requirements. The South African insurance industry is similarly seeing moves to roll out risk-based capital requirements. This will serve to close the gap and improve comparability both with Europe’s Solvency II regulatory regime and with other international risk-oriented systems of prudential regulation.

Turning to longevity business, the announcement in the United Kingdom of new arrangements relaxing the rules on compulsory retirement already led to a decline in annuity business in the year under review. With effect from 1 April 2015 pensioners will enjoy considerably greater flexibility in accessing and using their pension lump sums on reaching retirement age. At the same time the one-year transitional period will also come to an end. It is to be anticipated that this will continue to affect the UK annuity market in 2015. Nevertheless, it is our assumption that the influence on the market volume of enhanced annuities will, if anything, be rather slight, and hence the general outlook for our enhanced annuity business is bright. Going forward, therefore, we continue to expect substantial business volumes for our UK longevity portfolio. Working in concert with our customers in the interest of policyholders, we are confident that we can offer solutions tailored to the new situation and thereby tap into new business opportunities.

In Continental European and international longevity markets we expect to see further growth in demand. Against the backdrop of progressively shifting demographics this will increasingly extend also to emerging markets, including China and Hong Kong, thereby generating additional business potential.