Specialty lines

We were thoroughly satisfied with the treaty renewals in specialty lines. Rate movements were particularly favourable in offshore energy business. In view of the heavy losses associated with the sinking of the “Deepwater Horizon” drilling rig, prices here rose sharply in both the property and casualty lines; we therefore expect to enlarge our premium volume for 2011 by 16%. Rates remained stable in other marine lines such as cargo and hull covers as well as marine liability.

Thanks to our very good positioning we continue to see attractive business opportunities in aviation reinsurance. Prices on the reinsurance market are broadly stable; rate erosion can be observed in non-proportional business. We successfully expanded our customer base, especially in emerging markets such as China and India. For the current financial year we expect growth of around 12% in our gross premium volume.

Business should also develop well in credit and surety reinsurance. Although the treaty renewals as at 1 January 2011 saw price decreases in credit business after above-average rate rises in the previous years, the development of claims rates should nevertheless continue to be satisfactory. On the surety side, too, business is likely to fare well; we do, however, anticipate a moderate increase in the claims frequency. Given our selective underwriting policy the premium volume in credit and surety reinsurance is expected to contract by 8% in 2011. Nevertheless, the premium level is still 50% higher than at the beginning of the financial market crisis.

Overall, we are seeing sustained demand for contracts with a greater risk transfer in the area of structured reinsurance products. Given the likelihood of more exacting capital adequacy requirements under Solvency II, it is our expectation that further growth will be possible in Europe. We see potential for surplus relief contracts in emerging markets, since here too risk-based capital models are increasingly being adopted. In 2011 we shall again persevere with our strategy of enhancing our portfolio’s regional diversification. We are looking forward to further pleasing development of our business in the current financial year.

We shall continue to expand our business in the area of Insurance- Linked Securities in 2011. Along with our activities in non-life reinsurance, we are now increasingly turning our attention to the securitisation of life reinsurance risks.

As far as the Direct Business/United Kingdom and London Market portfolio is concerned, we expect another rise in premium volume (+15%) in the current financial year. On the back of improved conditions in motor insurance on the primary market as well as price increases in offshore energy business and in response to the implementation of Solvency II, we expect more business opportunities to open up in the United Kingdom.