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Life & Health reinsurance
In life and health reinsurance we see ourselves as more than a pure risk carrier. In our role as an expert partner, we draw on our worldwide know-how 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. Due to the very longterm relationships that this business routinely entails, there is a mutual interest in the reinsurance coverage generating sustainable value for all parties concerned.
| Life & Health reinsurance: Forecast development for 2018 | ||
| 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 | ||
For the German (re)insurance market it is our expectation that in the coming reporting period the interest rate level will remain unchanged on the present low level, thereby further adding to the strain associated with the additional interest rate reserves that have to be constituted by German life insurers. However, policymakers are expected to take appropriate supportive actions in relation to the additional interest rate reserves as part of the revisions to the Life Insurance Reform Act. The concrete implications for the industry remain to be seen.
Owing to the pressure of consolidation in the German life insurance market, it remains likely that several primary insurers will firm up their plans to sell parts of their books of life insurance that are closed for new business. We are confident of our ability to assist companies in this situation. Along with this challenge, German life insurers are under considerable pressure to safeguard the future viability of the industry with innovative new product concepts. Particularly in the increasingly relevant area of insurance products for seniors, we operate directly at our customers’ side in order to develop and implement concrete solutions.
Furthermore, we see the potential to instil fresh momentum in our customers with our automated underwriting systems. Demand for such automated solutions is especially brisk in France. Upcoming supervisory changes could generate business potential here in connection with hr | ReFlex. In Russia, too, regulatory reform will influence business going forward: the establishment of a new state reinsurer and the associated requirement to cede 10% of all transactions to it will trigger movement in the market. The mandatory cession applies to all business and is applicable effective 1 January 2018 – as well as retroactively from 1 January 2017.
Broadly speaking, it is our assumption that the need and demand for both solvency and capital relief will generally increase in European markets. The requirements that have to be met for individual risks – which in some instances are very high – are at times putting primary insurers under heavy pressure. In the area of financial solutions we similarly see thoroughly positive growth opportunities in Australia and the United States.
The tax reform package adopted in the United States shortly before the end of 2017 will also have implications for our life reinsurance business there. Thanks to our robust Group structure, we will nevertheless be able to continue operating as one of the leading providers in the world’s largest life reinsurance market. We stand ready to support our clients with our customary expertise and service.
With regard to the book of US mortality business assumed in 2009, we anticipate further strains in the current year on account of higher-than-expected mortality rates.
In Latin America we anticipate positive growth stimuli, just as we do in Asia, Africa and the Middle East. Most notably, we take an optimistic view of the future development of business in conjunction with wellness-oriented insurance concepts that not only provide policyholders with pure risk coverage but also motivate them through an individually tailored bonus system to stay active and eat a healthy diet.
Furthermore, it is our expectation that the international longevity market will continue to develop favourably and that our customers will increasingly show concrete interest in relevant reinsurance solutions.