North America incl. Bermuda
Responsibility for the US life market is borne by our subsidiary Hannover Life Re America, which is headquartered in Orlando and maintains an underwriting office for group life business on Long Island/New York.
Our activities in the year under review were concentrated on financially oriented covers for US clients and on those areas of health insurance for seniors handled by the private sector, namely Medicare Supplement and Medicare Advantage.
The assumption of a significant portfolio of US mortality risks in the first quarter of 2009 under a specially tailored reinsurance transaction marks a turning-point for our positioning in the traditional US mortality market.
In conjunction with the portfolio we also took over a number of underwriting and administration systems together with the relevant databases and offered a new working home to a group of 130 expert reinsurance professionals in Charlotte and Denver. With a portfolio of more than four million individual policies and annual premium income in excess of USD 1.0 billion, we are in a position to immediately realise appreciable economies of scale for the future run-off.
The assumed portfolio of cedant relationships was a complementary benefit: previously, HLR America had itself only been able to establish relationships with five of the forty most prominent cedants included in the acquired portfolio. Looking ahead, then, this group of cedants will offer outstanding opportunities to enlarge new business in the conventional US mortality market.
The premium income booked by HLR America totalled EUR 1.0 billion (EUR 613.6 million) in the year under review, while net premium earned increased by around 8.6% to EUR 262.5 million.
The development of the mortality risk – also with respect to the portfolio assumed effective 1 January 2009 – was satisfactory, and profitability in the area of financially oriented covers was excellent once the US capital market had largely normalised. What is more, here, too, the aforementioned non-recurring effects were a positive factor. The operating profit (EBIT) consequently improved substantially to EUR 40.7 million, following a loss of EUR 17.7 million in the previous year. This was equivalent to an EBIT margin of 15.5%. Net income after tax climbed to EUR 25.3 million.
Our subsidiary Hannover Life Re Bermuda can report a highly gratifying business development in the year under review. It offers a broad spectrum of reinsurance solutions on a worldwide basis, maximising Bermuda's edge as a favourable insurance business environment to the benefit of our ceding companies.
A special focus is on bancassurance business from North America and Japan. In its second full financial year the company wrote six new reinsurance treaties.
The gross premium of HLR Bermuda totalled EUR 113.2 million, of which the company retained EUR 112.8 million. The operating profit (EBIT) grew to EUR 15.9 million (EUR 9.2 million), producing an EBIT margin of 14.1%. This pre-tax result is identical to the net income after tax.