Annual Report 2016

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Property & Casualty reinsurance

Market conditions in property and casualty reinsurance continued to be fiercely competitive. Reinsurance capacity substantially exceeded demand. Furthermore, additional capacities from the insurance-linked securities (ILS) market put prices and conditions under sustained pressure. Against this backdrop we wrote our business highly selectively, causing gross premium – as anticipated – to contract slightly. It fell by 1.4% as at 31 December 2016 to EUR 9.2 billion (previous year: EUR 9.3 billion). At constant exchange rates the premium volume would have remained stable.

Investment income from assets under own management in property and casualty reinsurance declined by 5.2% year-onyear to EUR 876.9 million (EUR 924.8 million). We are nevertheless highly satisfied with this performance. Reflecting the protracted low interest rate environment, ordinary income contracted in line with our expectations by 5.1% to EUR 899.3 million (EUR 947.4 million).

All in all, the results in property and casualty reinsurance were thoroughly satisfactory. The underwriting result improved again on the already exceptionally positive level of the previous year to reach EUR 479.1 million (EUR 432.2 million). Expenditure on large losses was higher than in the previous year at EUR 626.6 million (EUR 572.9 million), but still within the expected bounds. The combined ratio of 93.7% (94.4%) came in well below our targeted maximum of 96%. The operating profit (EBIT) as at 31 December 2016 remained stable at EUR 1,340.3 million (EUR 1,341.3 million). Reflecting the very good development of our business, the EBIT margin of 16.8% (16.6%) once again beat our minimum target of 10%. Group net income came in at a pleasing EUR 949.9 million (EUR 914.7 million) and thereby surpassed the record level of the comparable period.

Business development
Life & Health reinsurance
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