Hannover Re’s head office “This goes as much for current activities, which are no longer
contributing to the bottom line, as it does to additional tasks. If anything, current tasks are more difficult to deal with, because there is a habit within all organisations to carry on doing what they are used to doing and not to question the validity of those activities. But we try and we have managed a lower expense ratio than most of our competition,” Wallin says.
Another way Hannover Re has maintained tight control of its cost base
is through its preference for broker-generated business on its international non-life portfolio. This has allowed it to access a high volume of business globally while keeping its costs centralised and low.
“We write the majority of our US, Latin American, Asian and London
business from Hannover,” Wallin says. “That means it makes sense to distribute through brokers, because we are a little bit further away from the markets. It also means we are not establishing expensive fixed-cost structures around the world and it allows us to be more flexible. Again, this comes down to our lean structures.” He adds that Hannover Re also writes a lot of non-proportional business—a market in which brokers have a big market share.
16 | INTELLIGENT INSURER | October 2011 The exception to its broker-based model is Germany where 90 percent
of its business is ceded directly. He explains that this is partly because of its proximity to clients and partly because its subsidiary E+S Rück writes a lot of business ceded to it by the Talanx Group, Hannover Re’s main shareholder, and eight German mutuals, which are minority shareholders in E+S Rück. “We have preferred access to that business, which allows us to generate around 90 percent of our business on a direct basis, rather than through brokers,” he says.
FUTURE CHALLENGES But while Wallin’s disciplined approach has restored stability, discipline and growth to Hannover Re, he admits that the company faces challenges maintaining these things going forward. He anticipates little growth for the reinsurance industry as a whole long term, which means that if Hannover Re is to continue to grow, this must be through gaining market share.
“The challenge is always to generate growth for business, in both
non-life and life,” he says. “In the longer term, it would appear that the reinsurance market is not a growth market, but rather a market which is
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