Facultative reinsurance

In contrast to obligatory reinsurance, which covers an insurer's entire portfolio, a reinsurer underwrites primarily individual risks in facultative business. The general environment in the various markets was, however, for the most part comparable in the year under review.

In facultative (re)insurance, too, we noted stronger demand in some areas as a consequence of the financial market crisis. Competition in virtually all segments remained fierce. The picture on the reinsurance side was a mixed one: rates and conditions generally remained stable, while in certain markets – such as Asia and the Middle East – a downward tendency could be discerned. In some Latin American countries, on the other hand, premiums increased.

In the year under review we profited from the capacity shortages affecting a number of reinsurers. Yet neither in Asia nor in Europe was the scarcity of capacity in industrial insurance reflected in higher prices. The rate increases anticipated for 2009 consequently only partially materialised. We made the most of the opportunities that presented themselves, for example in US professional indemnity covers for small and mid-sized enterprises and in motor business. Generally speaking, we were able to improve our market penetration in these lines in the United States.

We grow only in those areas that we believe offer adequate profitability. Overall, our premium volume increased in the year under review. We have consistently expanded our market position in recent years and continue to see considerable potential for profitable growth in facultative reinsurance.

The explosion at a hydroelectric plant in Russia produced a net loss of EUR 11.9 million. We were satisfied with the development of our facultative reinsurance business in the year under review; the combined ratio stood at 94.9%.