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 Ltd., a subsidiary of Hannover Re Africa, we write direct business that complements our principal business activity as a reinsurer. This involves, inter alia, acceptances concentrated on tightly defined portfolios of niche or other non-standard business.

The rate situation in this sector improved in the year under review. Prices in the UK climbed on the back of the effects of the financial market crisis and the flood damage of the previous year. Especially in the area of professional indemnity covers for financial institutions we booked vigorous rate increases.

The strategic focus of our business relationships in the United Kingdom is on smaller and mid-sized enterprises. In the year under review we stepped up our involvement in the professional indemnity lines for these clients and generated substantial premium growth. Covers for attorneys, an area in which we expanded in 2009, were an especially prominent factor here. A new addition to our portfolio in the UK is legal protection insurance, a segment which we expect will bring attractive business opportunities. We considerably enlarged the overall premium volume in the year under review.

Our second operation for specialty business, namely Compass Insurance Ltd., is one of the leading companies in this segment in South Africa. Its strategic objective, which was successfully accomplished in the year under review, is to expand profitable business with underwriting agencies. The reinsurance of this business is in large measure assumed by Hannover Re Africa. Through capital participations in most of the managing general agents we are able to incorporate our expertise into the business processes. Above and beyond the actual coverage of their risks, clients profit from our extensive expertise in – among other things – actuarial matters.

In the year under review we successfully converted the South African MUA Insurance Company Ltd., which was acquired in the previous year, to an underwriting agency. Its core business is the insurance of high-value motor vehicles. Thanks to expanded activities in this sector as well as in the insurance of minibus taxis, we were able to substantially enlarge our motor portfolio. An increase in premium income was also booked in the fire line.

We are satisfied with the development of our direct business in the year under review.