United Kingdom
In the UK market, which remains Europe’s largest life reinsurance market, we have operated for many years on two levels: our subsidiary HLR United Kingdom in Virginia Water/London handles the conventional reinsurance market with a comprehensive range of services in the areas of underwriting, claims management and administration, while the parent company Hannover Re in Hannover concentrates on the rapidly expanding longevity segment.
The hallmark of the traditional reinsurance market in the United Kingdom continues to be extremely fierce competition for new business. Against this backdrop HLR UK maintained its prudent underwriting policy.
The gross premium booked by HLR UK totalled EUR 197.6 million (EUR 182.5 million), corresponding to growth of 8.3%. The risk experience and investment performance were gratifying, as a consequence of which the operating profit (EBIT) of EUR 26.7 million surpassed the previous year’s level by 35.6%. The EBIT margin in the year under review stood at 18.4% in relation to the net premium earned of EUR 144.7 million. The result amounted to EUR 19.9 million after allowance for taxes on income.
Since the mid-1990s Home Office in Hannover has taken the lead responsibility for writing private pension business, an area in which we have focused on immediate annuity products for individuals with a reduced life expectancy (enhanced annuities). This market segment is showing consistent growth, and our clients rank among the leading providers of this type of product.
For some years now we have been working together with a number of specialist insurers and investment banks to reinsure the longevity risk of selected UK pension funds. When it comes to structuring and quoting these transactions, we are able to draw upon the risk expertise that we have gathered since 1995 as well as the data available from the private pension sector.
In the first quarter of 2010 we concluded a significant transaction through a European investment bank which covers the longevity risk for annuity recipients of a large pension fund. As lead reinsurer, Hannover Re has a share of almost 50% in this transaction. On this basis we are able to generate a premium in the order of EUR 89.8 million. In addition, we wrote a number of smaller transactions of this type in the second half of 2010.
The two longevity segments booked a premium volume of EUR 944.3 million, corresponding to growth of 47.2% relative to the previous year’s figure of EUR 641.6 million.