SOURCE: Hannover Ruck

October 26, 2009 08:36 ET

Hannover Re subsidiary expects stable prices for upcoming January 2010 treaty renewals in Germany

HANNOVER, GERMANY--(Marketwire - October 26, 2009) -

Hannover Re subsidiary expects stable prices for upcoming January 2010 treaty renewals in Germany

Baden-Baden, 26 October 2009: On the occasion of its press lunch in Baden-Baden E+S Rück - which bears responsibility for German business within the Hannover Re Group - described the climate prevailing on the German market as largely favourable. "Conditions improved in 2009, not least due to the capacity shortage triggered by the financial market crisis. Given the current state of the primary insurance markets, these conditions should at least be maintained this year", Michael Pickel, Member of the Executive Board, explained.

For 2010 the company anticipates a mixed picture as far as reinsurance prices are concerned. In industrial property business the price decline of recent years is likely to continue. E+S Rück will write its business highly selectively in the face of a fiercely competitively environment.

In industrial liability business the company expects the competitive climate on the primary insurance market to remain unchanged. Prospects on the reinsurance side, however, are brighter: owing to the importance of a very good rating for reinsurers in casualty business, the capacities available on the market are of course limited. "It is our expectation that prices and conditions here will continue to be commensurate with the risks", Mr. Pickel emphasised.

In motor liability business, an important line for E+S Rück, the company expects rates for non-proportional covers to rise. This can be attributed in part to sharply reduced premium income in primary insurance business and also to lower investment income.

In accident reinsurance E+S Rück does not rely merely on the traditional assumption of risks, but also offers product innovations: these include, for example, a combined personal accident annuity product that represents a cost-effective alternative to disability insurance.

Mr. Pickel anticipates a stable price level in catastrophe business, adding: "The Solvency II project initiated by the European Commission could further boost demand, especially for catastrophe covers - which should have positive implications for prices".

The burden of catastrophe losses in the current year to date has been moderate relative to 2008: winter storm "Klaus" and the collapse of the Cologne City Archive cost E+S Rück a mere EUR 8 million altogether. The scale of the hailstorms recorded this year has, however, been considerable, although their relevance as losses on the reinsurance side is not appreciable.

All in all, E+S Rück - as the reinsurer for Germany within the Hannover Re Group - is again looking to attractive business opportunities in 2010 and hopes to continue the profitable expansion of its already large market share.

E+S Rück - a subsidiary of Hannover Re - is responsible for German business within the Group, although it also has an interest in developments on the international (re)insurance markets through retrocession arrangements with other Group companies. By adding blocks of foreign business E+S Rück is able to extend the geographical spread of its portfolio, hence improving its risk diversification and stabilising earnings. E+S Rück is the second-largest non-life reinsurer in the German market. The rating agencies most relevant to the insurance industry have awarded Hannover Re as well as E+S Rück very strong insurer financial strength ratings (Standard & Poor's AA- "Very Strong" and A.M. Best A "Excellent").

Disclaimer: Some of the statements in this press release may be forward-looking statements or statements of future expectations based on currently available information. Such statements are naturally subject to risks and uncertainties. Factors such as the development of general economic conditions, future market conditions, unusual catastrophic loss events, changes in the capital markets and other circumstances may cause the actual events or results to be materially different from those anticipated by such statements. Hannover Re and its affiliates does not make any representation or warranty, express or implied, as to the accuracy, completeness or updated status of such statements. Therefore, in no case whatsoever will E+S Rück and its affiliate companies be liable to anyone for any decision made or action taken in conjunction with the information and/or statements in this press release or for any related damages.

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