Probable development of the Group

Non-Life Reinsurance

In Non-Life Reinsurance we expect broadly good conditions for the current financial year and beyond. The renewals as at 1 January 2011 passed off better for us than the market players had anticipated.

In our target market of Germany we are looking ahead optimistically to the current financial year. With premium volume stable overall, prices for loss-impacted programs rose while rates declined under programs that had been spared losses. In motor business the primary insurance market bottomed out in 2010. This development, combined with improved conditions, will have favorable implications for our result in proportional motor business and also – indirectly – for our non-proportional motor liability portfolio.

Lively competition is once again shaping business conditions in North America in the current financial year. In terms of premium volume, we expect to see a modest increase (+1%) in 2011. Growth will be driven by Canadian business. Given our very good market position and the excellent relations that we enjoy with our clients, we continue to see good business prospects going forward in our target market of North America.

We are thoroughly satisfied with the treaty renewals in specialty lines. Rate movements were particularly favorable in offshore energy business. In view of the heavy losses, prices here rose sharply in both the property and casualty lines, and we therefore expect to enlarge our premium volume for 2011 by 16%. In aviation reinsurance we expect growth of around 12% in our gross premium volume. Business should also develop well in credit and surety reinsurance; given our selective underwriting policy, however, the premium volume here is expected to contract by 8% in 2011. In the area of structured reinsurance products we are seeing sustained demand overall for contracts with a greater risk transfer and we are looking forward to further pleasing development of our business in the current financial year. We shall continue to expand activities in the area of insurance-linked securities in 2011.

We shall grow by around 2% in global treaty reinsurance in 2011, even though the treaty renewals as at 1 January 2011 presented a mixed picture in the individual markets. Owing to the absence of major loss events in zones with peak exposures, such as in the United States, the overall tendency towards declining rates in catastrophe business was sustained. Altogether, the gross premium from our global catastrophe business is likely to contract by around 10% in the current financial year. The price situation in facultative reinsurance, i.e. the underwriting of individual risks, remains tense. At this point in time it is our expectation that rates will for the most part decline. Nevertheless, given the varied nature of demand and the diversification of the markets, our facultative portfolio should again generate profitable growth in 2011. We anticipate that the rate erosion in conventional property and casualty business will be offset by the writing of niche segments.