United Kingdom, London market and direct business

Traditional reinsurance

We are satisfied with the business that we write in the United Kingdom and on the London market. Against a backdrop of broadly stable rates and conditions, developments in the various lines were on the whole gratifying.

The cold spell in January 2010 and poor results in motor business prompted rate increases in the United Kingdom in both homeowners and motor insurance. These did not, however, affect our reinsurance business, since for the most part we write the middle and higher layers of programmes and hence we had not been impacted by the disappointing results of the previous year.

In the casualty sector we again benefited from our very good rating and were able to expand our portfolio. Although we maintain a small number of long-term participations, we generally pursue a strictly profit-oriented underwriting policy in the London market. Our premium volume grew appreciably in the year under review.

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 essentially involves acceptances concentrated on tightly defined portfolios of niche or other non-standard business.

Our expectation of increased premium growth for 2010 was fulfilled: we were able to substantially enlarge our premium volume in direct business. The stepping up of our involvement in professional indemnity lines in the UK, especially in connection with liability policies for the legal profession, was also a factor here. Nevertheless, our premium volume written in South Africa similarly increased in the year under review.

Thanks not least to a new branch of Inter Hannover in Australia we were able to expand our business. Not only did we extend the geographical reach of our involvement in direct business, we also launched new products on the market. In cooperation with a US company, for example, we developed the “Energy Savings Warranty” programme to provide an insurance backstop for energy-saving guarantees in the United States.

We booked rate increases in the UK in the areas of motor own damage insurance and professional indemnity for lawyers. Overall, rates in property and liability business were stable.

Our second company writing specialty business, namely Compass Insurance Ltd., is one of the leading players in this segment in South Africa. The company’s strategic objective, which was successfully accomplished in the year under review, is to expand profitable business with underwriting agencies. The reinsurance of this portfolio is in large measure assumed by Hannover Re Africa. Altogether, agency business accounts for roughly two-thirds of the total non-life reinsurance written by Hannover Re Africa.

Both companies – Compass Insurance and Inter Hannover – generated highly satisfactory results in the year under review.