Germany

The German market is served by our subsidiary E+S Rück. As the dedicated reinsurer for the German market, the company has for decades been a sought-after partner thank to its good rating, highly developed customer orientation and the continuity of its business relationships. E+S Rück continues to rank as one of the leading providers in Germany, the second-largest non-life reinsurance market in the world.

The general economic environment in Germany was difficult on account of the repercussions of the financial market crisis. Most significantly, the protracted economic downturn – which bottomed out towards the middle of the year under review – led to a historically low interest rate level. Results in lines such as motor insurance – which needs not only a satisfactory underwriting performance but also good investment income – consequently came under pressure. The industrial insurance lines – such as business interruption, public liability or marine – also suffered losses of premium, since for the most part premiums are calculated on the basis of company turnover. An unremarkable loss situation had a positive effect on industrial business.

The German primary insurance market was dominated by sustained fierce competition in the year under review – both in industrial lines and private customer insurance. In the latter case this was especially true of motor business, an important line for our company. Compared to the original market, however, the climate on the reinsurance side was more favourable, i.e. rates and conditions continued to be broadly adequate.

In motor liability insurance the positive trend towards a falling claims frequency observed in recent years was not sustained. It increased slightly in the year under review – while original premiums continued to decline –, hence enabling us to generate only a barely adequate result in our proportional motor liability business.

The state of the market in industrial fire and fire loss of profits insurance improved: the combined ratio nudged below 90% on the back of lower loss ratios year-on-year. For the first time in quite a while we were therefore able to recoup the cost of capital. The situation in homeowners' comprehensive insurance also took a brighter turn, although we were unable to generate an adequate result here.

The loss situation in the engineering lines was satisfactory overall in the year under review, although the insurance of wind turbines has still to turn a profit on account of various serial losses.

Business developed favourably in general liability insurance, which delivered a positive profit contribution thanks to a combined ratio under 100% and good cash flow revenue.

Personal accident insurance, which remains one of our target lines, continued to develop favourably. Our clients again benefited from our product innovations in the year under review, including for example a combined personal accident annuity, a product designed to protect the insured's livelihood that constitutes a cost-effective supplement to disability insurance. An innovative product for children was also unveiled on the market in 2009, with two further product launches pending. Yet it is not only in personal accident insurance that we are able to assist our clients; we also support them with our own self-developed tools, namely “ES HagelT” – for measuring the exposure of a motor portfolio to hail events – and “ES FluteT” – for calculating the flood risk to portfolios of residential property.

The burden of catastrophe losses and major claims in Germany was moderate in the year under review; we incurred a loss in the low double-digit million euros in 2009 as a result of the collapse of the Cologne City Archive. The month of July also saw hail events that caused heavy losses in motor own damage insurance and, above all, agricultural insurance. These hailstorms had no particular impact on the reinsurance side, however. The combined ratio for our German business stood at 103.1%.

We succeeded in cementing our position as one of the leading reinsurers in the profitable German market in the year under review.