Global catastrophe business
The bulk of Hannover Re’s catastrophe business is written out of Bermuda, which is considered the centre of competence for this line worldwide. Along with the expertise of our local team, our financial strength and excellent rating have made us a particularly highly sought-after partner for ceding companies and brokers for a number of years.
2010 was a difficult year for catastrophe business around the world; in the first place, a large number of catastrophe losses were recorded, and secondly, the forecast rate reductions for the most part materialised. Following a relatively untroubled major loss experience in 2009 and with primary insurers enjoying an improved capital base, prices for catastrophe covers declined in the year under review. The reductions were particularly marked in the United States. The pressure on rates increased still further during the US mid-year treaty renewals in June and July. Price increases could only be obtained under programmes that had suffered losses.
Whilst the severe earthquake in Chile led to price increases in the affected region, it did not usher in a general trend reversal in prices for natural catastrophe risks.
The strains caused by catastrophe losses were sharply higher in the year under review than in 2009. The costs to the global insurance industry from natural disasters and man-made losses rose by more than 30% to approximately USD 37 billion. The most expensive natural disaster in 2010 was the severe earthquake in Chile; for Hannover Re, too, this was the largest single loss in the year under review with a cost of EUR 181.9 million. Hurricane events were again the exception in the year under review and had no bearing on our technical account.
Our gross premium volume from global catastrophe business increased slightly. The result fell well short of the previous year’s very good performance on account of the heavy loss expenditure. The combined ratio for global catastrophe business came in at 121.3% and was thus significantly higher than in the previous year (31.5%).