Life and health reinsurance
Business development
| Key figures for life and health reinsurance Figures in EUR million | |||||||
|---|---|---|---|---|---|---|---|
| 2010 | +/- previous year | 20091 | 2008 | 2007 | 2006 | ||
| 1 Adjusted on the basis of IAS 8 | |||||||
| 2 Operating result (EBIT)/net premium earned | |||||||
| Gross written premium | 5,090.1 | +12.4% | 4,529.3 | 3,134.4 | 3,082.9 | 2,793.6 | |
| Premium deposits | 1,617.9 | (30.6) % | 2,331.8 | 2,181.2 | 854.5 | 1,166.2 | |
| Gross premium incl. premium deposits | 6,708.0 | (2.2) % | 6,861.0 | 5,315.6 | 3,937.4 | 3,959.8 | |
| Net premium earned | 4,653.9 | +14.1% | 4,078.7 | 2,784.9 | 2,795.3 | 2,373.4 | |
| Premium deposits | 1,414.7 | (33.5) % | 2,125.9 | 2,126.9 | 783.6 | 1,084.4 | |
| Net premium incl. premium deposits | 6,068.6 | (2.2) % | 6,204.5 | 4,911.8 | 3,579.0 | 3,457.8 | |
| Investment income | 508.2 | (2.3) % | 520.1 | 245.5 | 293.9 | 313.2 | |
| Claims expenses | 3,135.8 | +14.3% | 2,743.0 | 1,674.7 | 1,672.2 | 1,495.3 | |
| Change in benefit reserves | 653.5 | +15.9% | 563.7 | 421.3 | 397.9 | 192.8 | |
| Commissions | 1,022.8 | +10.4% | 926.2 | 743.4 | 780.5 | 831.7 | |
| Own administrative expenses | 118.7 | +20.7% | 98.3 | 70.1 | 61.2 | 50.0 | |
| Other income/expenses | 53.0 | (50.6) % | 107.1 | (0.2) | 52.7 | 22.7 | |
| Operating result (EBIT) | 284.4 | (24.1) % | 374.7 | 120.7 | 229.8 | 139.5 | |
| Net income after tax | 219.6 | (26.3) % | 298.1 | 78.3 | 187.7 | 102.6 | |
| Earnings per share in EUR | 1.82 | (26.3) % | 2.47 | 0.65 | 1.57 | 0.85 | |
| Retention | 91.7% | 90.7% | 89.3% | 90.8% | 85.4% | ||
| EBIT margin2 | 6.1% | 9.2% | 4.3% | 8.2% | 5.9% | ||
As expected, the repercussions of the international financial market crisis continued to reverberate beyond 2009. On the one hand, consumers in many markets showed caution when it came to demand for long-term life insurance products; on the other hand, the persistency of older in-force portfolios deteriorated owing to an increased lapse rate.
What is more, in the important US mortality market and in the Australian disability market we noted an increase in the biometric claim frequencies; in some cases they were significantly higher than the comparative historical values. After detailed analysis of the data it is our assumption that these are temporary phenomena. Despite this sometimes difficult environment, we were again able to generate a highly satisfactory result in our life and health reinsurance business group.
We selectively strengthened our position in our relevant focus markets of the United States, United Kingdom, Germany, Australia and France.
In view of the extremely competitive market climate, we wrote new mortality and critical illness/trauma risks in the UK and Australian markets only with considerable restraint. In large parts of these markets we no longer consider the reinsurance conditions to be commensurate with the risks.
On the other hand, following on from the acquisition of the ING life reinsurance portfolio in 2009, we again significantly expanded our position in the US mortality market in the course of the year under review. We revived reinsurance relations with several ceding companies and are now well on track in the medium term to becoming a relevant market player in the US mortality market with a 10% – 15% share of new business.
We were similarly able to build on our leading role in the UK longevity market. We have a strong presence in new business involving personal annuities for individuals with a reduced life expectancy; in this area we support a number of particularly dynamic providers through quota share reinsurance models.
What is more, we are expanding activities relating to the reinsurance of sizeable pension funds in the United Kingdom through so-called longevity swaps – under which the reinsurer assumes the biometric risk of longevity associated with a portfolio (normally only the part of the portfolio on which benefits are already being paid) in exchange for payment of a regular fixed premium.
In the second half of 2010 we received requests from a number of international pension funds in Denmark, the Netherlands, Canada and South Africa to implement similar solutions outside the United Kingdom; we are confident of closing the first transaction of this type in the first half of 2011. The currently emerging, increasingly international dimension of demand for such covers promises outstanding potential for the future.
In the German life insurance market single-premium products enjoyed strong growth in the year under review. Since these products are for the most part oriented towards the capital market, opportunities for traditional reinsurance are scarce. In the coming years, too, we expect to see hardly any changes on the demand side at primary insurers.
In several emerging markets, on the other hand, we were able to make significant progress in the year under review.
In South Africa we continue to be the leading life reinsurer, based on our extensive support for innovative, customer-oriented insurance companies. In the Indian market, in which we only established a footing in 2008 with a service office in Mumbai, we moved forward with our strategic life cooperation with GIC Re and were able to acquire a number of Indian primary insurers as new clients.
In the Chinese market (Greater China) we are currently represented by three offices: the branch in Hong Kong serves both the market comprised of locally-based life insurers and the regional centres of large multinational insurance groups. It also operates as a regional service centre for East Asia. Our service office in Taipei serves the local Taiwanese market. The branch in Shanghai concentrates on business from China, where – in close cooperation with the CIRC and its express approval – we were able to close the first two liquidity-related financing transactions.
The development of our business in the Islamic insurance sector (takaful), which we write through our subsidiary Hannover ReTakaful in Manama/Bahrain, was also highly gratifying. Our retakaful cedants are located predominantly in Saudi Arabia, Bahrain and the United Arab Emirates.
In the year under review we moved a significant step closer towards attaining our longer-term goal of becoming the number three in the worldwide life reinsurance market. Outside the US we already rank third by a wide margin.