Our Johannesburg-based subsidiary HLR Africa writes life business in South Africa as well as in the region of English-speaking southern Africa, i.e. in countries such as Botswana, Namibia and Kenya. It concentrates on traditional individual mortality and morbidity business, although it also supports some rapidly growing primary insurers with financially oriented solutions. We maintain only a highly selective presence in group life business.

In addition, we have developed special expertise for alternative distribution channels in South Africa, most notably direct sales and Internet sales. It is our expectation that not only in South Africa will these distribution methods help to provide large parts of the rural population with suitable life and health insurance products for the first time.

The premium income of HLR Africa showed vigorous growth of 35.3%, in part due to the strength of the South African rand; it totalled EUR 149.5 million (EUR 110.5 million). The underwriting result remained good. This produced an operating profit (EBIT) of EUR 11.9 million, corresponding to an EBIT margin of 9.5%.

The rating agency Standard & Poor’s has awarded the company a rating of “A” (stable outlook), which is higher than that of the country of South Africa.

The markets in this region are served directly from Hannover, although our offices in Mexico City (for Central America) and Rio de Janeiro (for Brazil) are assigned an important service role.

Whereas in Central America we support a broad range of primary insurers first and foremost through services in the areas of underwriting and claims management, our focus in South America is on bancassurers. We moved forward with our strategic cooperation in Brazil with Malucelli Re.

By carefully selecting our ceding companies we enlarged our business volume to EUR 131.4 million, after EUR 101.5 million in the previous year. Of this amount, roughly EUR 30 million was attributable to the markets of Central America (incl. Mexico) and EUR 102.1 million to South America (incl. Brazil). Profitability again proved to be highly satisfactory.

Within the Hannover Life Re network the major growth region of Asia is served by a number of branches and service offices of Hannover Re. In this context the life branches in Kuala Lumpur and Hong Kong take on regional coordination and service functions in addition to their own direct market responsibilities.

Business in ASEAN markets – with a focus on Malaysia, Singapore, Thailand and Vietnam – is written in Kuala Lumpur, while our service office in Mumbai handles the Indian market and the strategic cooperation with GIC Re.

For the region of South Asia/Southeast Asia we booked premium of EUR 21.4 million in the year under review; results were thoroughly gratifying.

Business in East Asia is coordinated through our regional centre in Hong Kong, which also bears direct responsibility for the markets of Hong Kong, Macau and Taiwan. Responsibility for the Chinese and Korean markets rests with our branches in Shanghai and Seoul respectively, while the Japanese market is served by our Tokyo office.

Business in the entire East Asian region is growing at a very dynamic pace. Particularly in China, we were able to extend our position as one of the two leading foreign life reinsurers.

A groundbreaking development occurred in this regard in the first half of 2010 with the first-ever completion of a financing arrangement for the in-force portfolio of a mid-sized primary insurer in the local currency – a transaction that we executed in close cooperation with and with the explicit consent of the China Insurance Regulatory Commission (CIRC). In the second half of the year we were able to close another transaction of this type and we anticipate further potential in the years ahead.

Total premiums from the East Asian region (Greater China, Korea and Japan) amounted to EUR 201.6 million, an increase of more than 60% compared to the previous year.

Premium income for the entire Asian region thus surpassed the EUR 200 million mark for the first time to reach EUR 223.0 million (EUR 147.2 million). Despite fierce competition, most notably in Korea and Hong Kong, the technical results were again quite satisfactory.

Both these markets are served by our Sydney-based subsidiary HLR Australasia, which we acquired in 1993. The company writes traditional risk-oriented business from Australia and New Zealand, with an emphasis on mortality and critical illness covers as well as disability annuity business.

In addition, in the role of primary insurer, we assume the biometric risks of Australian funds for occupational retirement provision (superannuation funds) and cooperate with a major Australian direct sales organisation to offer a range of risk-oriented products. We see both these activities as an important source of diversification.

Although the Australian reinsurance market showed scarcely any growth potential, HLR Australasia succeeded in significantly expanding its business volume overall. Premium income rose to EUR 324.4 million after EUR 251.3 million in the previous year, due in part to the strength of the Australian dollar against the euro.

The highly unsatisfactory biometric risk experience in some areas was largely cushioned by quota share retrocessions, leaving an attractive operating profit of EUR 23.7 million for the net retention. This was equivalent to an EBIT margin of 15.4%.