Development of the Group segments

Key figures: Non-Life Reinsurance ¹⁾

Non-life reinsurance is transacted within the Talanx Group by the Hannover Re Group, one of the five largest reinsurers in the world measured by gross premium volume. The proportion of primary insurance business in this segment is now only minimal following the sale of the US company Praetorian Financial Group, Inc. and the withdrawal of Clarendon Insurance Group, Inc. – also operating in the US market – from active specialty business. Only International Insurance Company of Hannover Ltd., London, and Compass Insurance Company Ltd., Johannesburg, are still operating – successfully – in this segment.

Active cycle management

Non-life reinsurance is not only the larger of the reinsurance segments, it is also the more difficult because in almost all lines and markets the business development is volatile and cyclical. In these typically cyclical markets and lines we do not pursue any volume, growth or market share targets – but trust exclusively in profitable relationships. During an upswing we increase our market share, while in a downward cycle we scale back our participation and at the same time seek to identify market and product niches. This systematic cycle management enables us to be prepared for more difficult market situations, such as those we are currently facing. Our basic principle of "profit before growth" will be more important than ever in the upcoming market phase.

Reduced risks

We continually analyze and assess potential threats so as to be able to take appropriate action as and when necessary. In the year under review, for example, we further reduced our peak exposures under catastrophe covers. We also made further moves to ensure that our equity base is not burdened by exceptionally large losses: in the year under review we topped up our 2005 "K5" transaction – through which we transfer worldwide insurance risks to the capital market – and thereby made our portfolio even more weather-proof. That we are on the right track was confirmed as early as January 2007, when winter storm "Kyrill" swept across large parts of Europe and caused enormous losses for insurers and reinsurers alike. Thanks to the "K5" transaction our strain from this winter storm was appreciably lower than would otherwise have been the case.

Profitable concentration

In non-life reinsurance we concentrate on those segments that promise the greatest profitability. These include, inter alia, property catastrophe business, worldwide credit and surety insurance, marine insurance and the markets of Central and Eastern Europe. In the lucrative German market, too, we continued to enlarge our share as one of the leading reinsurers. In view of the enormous growth potential inherent in the Islamic insurance markets we are also systematically pursuing – through our subsidiary in Bahrain – the development and expansion of Sharia-compliant business in full conformity with Islamic principles. We take a particularly favorable view of the initial rating of "A" with "stable" outlook awarded to the Bahrain-based Hannover ReTakaful in November 2007 by the rating agency Standard & Poor’s. In the year under review Hannover Re also established a branch office in Bahrain that will concentrate exclusively on traditional reinsurance in this region.