Probable development of the Group

Retail International

In the 2011 financial year we shall continue to pursue a clear expansionary strategy in international retail business, always emphasizing growth with adequate profitability. The strategic orientation will concentrate on the establishment and further extension of business in the target regions of Latin America as well as Central and Eastern Europe and Turkey – with both organic and inorganic growth considered desirable – as well as on the optimization of activities in existing markets. Opportunities outside the target regions are acted upon if a clear value-added can be generated above and beyond the set parameters.

Gross premium in the Group segment is expected to grow to around 10% of the Group’s total volume by 2012. Our Brazilian company is the principal driver of growth. It is our expectation that the Brazilian economy will continue to flourish over the next two years – a development which will be particularly beneficial to our company, which writes predominantly motor business. HDI Seguros S. A., Brazil, anticipates premium growth of almost 50% in 2011. Growth in the other markets is likely to be in the high single digits or even the double-digit percentage range.

In the Polish market, where we largely transact motor liability business, the rates that can be obtained are still scarcely sufficient. In 2011 we shall take the opportunity to adjust rates and further optimize workflows so as to generate adequate profitability. In light of our favorable assessment of the development of the Polish life insurance market, we shall realign our company accordingly so as to share fully in its growth.

Growth in life insurance could come in higher overall relative to the 2010 level, were it not for the fact that the cessation of new business in Liechtenstein and Luxembourg as well as the reduced demand for single-premium products offered by the Italian company will likely cause the premium volume to flatten out by the end of 2012.

In cooperation with our new strategic partners of the Meiji Yasuda Life Group we shall make the most of opportunities to grow together in foreign markets when the occasion presents itself. Investments in Central and Eastern Europe as well as Turkey and Latin America feature particularly prominently in the target corridor. With the Polish company HDI Asekuracja closing the financial year just-ended in negative territory and owing to the growth recorded by the Italian company HDI Assicurazioni, only the Brazilian company HDI Seguros is expected to pay a dividend in 2011. For 2012 we are looking to generate dividend income from Poland, Brazil and Italy.