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Life & Health reinsurance
The business performance in life and health reinsurance was shaped by both positive and negative developments.
Our financial solutions business, which further increased its profit contribution, was thoroughly gratifying. We were less satisfied with the development of our US mortality business – and in particular with the portfolio assumed in 2009, which continues to show a mortality in excess of expectations. In addition, we booked a non-recurring negative effect of around EUR 45 million. This one-time charge was attributable to the recapture of a reinsurance treaty in order to avoid higher losses over the long term.
Gross premium income in life and health reinsurance contracted marginally by 1.0% and was on a par with the previous year at EUR 7.1 billion (EUR 7.1 billion). Adjusted for exchange rate effects, modest growth of 1.4% would have been recorded. The Value of New Business (VNB) came in at EUR 364 million, again comfortably beating the targeted level of EUR 220 million.
Investment income declined by 12.3% in the year under review to EUR 560.6 million (EUR 638.9 million). The decrease was due to reduced interest on funds withheld and contract deposits. Of the total investment income, EUR 343.5 million (EUR 330.8 million) was attributable to assets under own management and the remaining EUR 217.1 million (EUR 308.1 million) to securities deposited with ceding companies.
The operating profit (EBIT) fell by 28.6% to EUR 245.2 million (EUR 343.3 million) due to the situation described above in US mortality business and the one-off effect. The EBIT margins achieved within the individual reporting categories were as follows: in mortality and morbidity business we fell well short of the 6% target with an EBIT margin of 0.0%. Longevity business reached its stated target of 2% with an EBIT margin of 2.1%. The EBIT margin for financial solutions business amounted to 25.4%, thereby comfortably beating the minimum target of 2%. The Group net income booked for our Life & Health reinsurance business group totalled EUR 172.6 million (EUR 252.9 million).