Global reinsurance
Treaty reinsurance worldwide
We shall grow by around 2% in global treaty reinsurance in 2011, even though the treaty renewals as at 1 January 2011 presented a mixed picture in the individual markets.
In the markets of Central and Eastern Europe it may be assumed that the importance of high-quality reinsurance protection will continue to grow and we shall again have very good opportunities to write profitable business in 2011. Although rates retreated on account of adequate capacities, demand remains strong for reinsurers of excellent financial standing. It was even possible to obtain modest price increases under programmes that had suffered losses. Based on our good positioning we expect to write more new business in 2011 and beyond. Gross premium should continue to grow.
With no easing of the intense competition prevailing in the Spanish market we expect to see further rate reductions. The premium volume is therefore likely to contract in 2011. In France, on the other hand, the premium volume should expand slightly.
Owing to the severe earthquakes in Chile and Haiti, rates for natural catastrophe covers in these countries increased. Overall, though, prices in Latin America are likely to remain stable both in the current financial year and in 2012. We anticipate somewhat lower gross premium in the face of growing competition.
In Japan, our largest Asian market, we expect rates to remain broadly unchanged; nor do we anticipate any significant changes in our underwriting policy for 2011. The extent to which the current wave of mergers in the primary sector will impact our premium volume remains to be seen.
Given the double-digit premium growth on the primary insurance market in China, there will be no let-up in the existing fierce competition. We anticipate stable conditions in proportional reinsurance, but continued rate erosion in non-proportional business. All in all, we are looking to further profitable business opportunities in China in the years ahead.
In the Southeast Asian region we anticipate further growth in the area of agricultural insurance. Conditions are expected to improve under programmes that suffered losses in the year under review. With no easing in the intensely competitive environment, the soft market phase is likely to be sustained in 2011.
In the coming years, too, we expect to see stronger demand for our entire portfolio of agricultural covers on account of the growth in government subsidy programmes. Premium volume is therefore forecast to rise in both 2011 and 2012. We shall continue to devote our energies to the cultivation of new markets and the development of innovative products.
Going forward, it remains our assessment that business with Sharia-compliant reinsurance products (retakaful) offers considerable potential. The engineering and liability lines should profit from an upswing in the construction industry in the current financial year. Gross premium volume is expected to rise in 2011.
Global catastrophe business
Owing to the absence of major loss events in peak zones such as the United States, the overall tendency towards declining rates in catastrophe business was sustained. Rate increases were only recorded in areas where 2010/2011 saw appreciable loss expenditures. Prices in Europe remained stable on account of a moderate claim incidence in the previous year. We expect the premium income from our business in Australia and New Zealand to grow in the current financial year. Given the heavy burden of losses from the earthquake in New Zealand in 2010 and the severe flood events in Australia in December 2010 and January 2011, further price increases for natural catastrophe covers are to be anticipated. Altogether, the gross premium from our global catastrophe business is likely to contract by around 10% in the current financial year.
Global facultative reinsurance
The price situation in facultative reinsurance, i.e. the underwriting of individual risks, remains tense in the current financial year. At this point in time it is our expectation that rates will for the most part decline, with the exception of prices for offshore energy covers. Nevertheless, given the varied nature of demand and the diversification of the markets, our facultative portfolio should again generate profitable growth in 2011. We anticipate that the rate erosion in conventional property and casualty business will be offset by the writing of niche segments.