Life & Health reinsurance

In the international life and health reinsurance market we expect new business opportunities to open up in 2019. It is our assumption that emerging markets, in particular, will continue to make up economic ground. Based on the associated rise in incomes and improvement in living standards, demand for insurance protection – including for example disability, accident and pure mortality covers – as well as for products geared to retirement provision can be expected to rise.

Life & Health reinsurance: Forecast development for 2019
	Volume 1	Profitability 2
Financial Solutions		++
Risk Solutions
Longevity		+/–
Mortality		+/–
Morbidity		+/–
1 In EUR, development in original currencies can be different 2 ++ = significantly above the cost of capital   + = above the cost of capital   +/– = on a par with the cost of capital   – = below the cost of capital

Regulatory issues relating to capital adequacy and solvency ratios have dominated the more mature markets for a number of years. We expect this trend to continue in the upcoming reporting period. As an established and long-standing valued partner, our clients trust in our expertise and we consider ourselves well prepared for potential new developments.

Looking at individual regions, Australia is particularly likely to see a tightening of the regulatory requirements governing the financial services sector. Just what form developments actually take will become clearer in the course of 2019.

In the German market it appears that market consolidation will remain a defining issue. The regulatory requirements imposed by the Federal Financial Supervisory Authority (BaFin) in combination with a complex set of market circumstances – such as low interest rates, a decline in business with traditional life insurance policies and higher capital adequacy ratios – are presenting the insurance industry with considerable challenges. It remains to be seen whether the market is already equipped to tackle them. Notwithstanding the above, we believe that insurance products aimed at senior citizens offer potential opportunities, given how growth in this area is driven by an ageing German population.

As it looks towards Brexit, the United Kingdom is on the cusp of an event with far-reaching implications for the local economy and for the entire European Union. It is still too soon to make any detailed observations, given that only the vaguest key points about the country’s withdrawal are known. We are, however, keeping a close eye on developments and are positioned to respond flexibly to the changes that lie ahead.

We consider Asia to be the continent that offers the greatest growth potential. The Chinese market, in particular, is recording very dynamic growth, and we therefore anticipate continued promising new business in the coming year.

In our assessment, microinsurance is another area that offers further business opportunities. Drawing on innovative networks of a wide range of sales partners, the goal is to enable groups of individuals to access insurance who cannot be reached through normal distribution channels. This is particularly important for less developed economies. Thanks to our global network, we are able support providers as they expand their product range in these countries, thereby open opening up access to insurance for more people.

Turning to our automated underwriting systems, we are similarly optimistic that we can build on the success story written so far. Numerous new deployments of hr|ReFlex are already envisaged for the coming year. What is more, the growing demand for lifestyle insurance products that combine health-related aspects (e. g. fitness and nutritional habits) with insurance protection will remain a trend in 2019 and have major implications for the life insurance industry around the world.

In general terms, we increasingly see ourselves as more than just a pure risk carrier. In our role as an expert partner, we draw on our worldwide know-how spanning a wide range of topics to give our customers comprehensive support. We attach just as much importance to the advantages of already being closely integrated into the business process in advance so as to jointly identify the exact reinsurance requirement as we do to staying involved throughout the process and keeping track of the business experience. The business relationships with our customers are routinely of a long-term nature because life and health reinsurance typically involves long-duration treaty types. This makes it all the more important to generate sustainable value for all parties concerned in their mutual interest.

We anticipate that the forecast developments in the markets will affect our key earnings figures as follows: gross premium income is expected to show organic growth averaging between 3% and 5% (assuming constant exchange rates; over a three-year period). The operating result (EBIT) should grow by more than 5% on average over a three-year period. The value of new business should exceed the minimum target of EUR 220 million.