stable. That means that if we want to grow in this market then we have to increase our market share. We have to do this intelligently, meaning that we will not try to increase our market share by discounting prices, but rather by utilising techniques of cycle management.
Despite these challenges, Wallin identifies some key areas he plans to
target in search of growth. The first is in its life business, where he sees three major areas of growth. One is in the US protection business, which although a shrinking market overall, Hannover Re now has a foothold in thanks to its acquisition of the ING US portfolio. “We have been able to develop our position in that market; we are doing quite well in terms of new business,” he says.
His second target is in certain emerging markets, in particular Asia and
specifically in China. “We are growing due to our local presence and the fact that these markets are growing. We have seen particularly significant growth in China. The growing market means it is competitive but we are still able to grow.”
Finally, in Europe, on the life side, he targets growth on the longevity
side of the business. He acknowledges that as people live longer, there are some inherent risks in this market, and as a result, targets mainly what he calls “the short end” of the longevity business. “We are looking more for blue collar workers than white collar workers, and also pensions which are relatively small, and which are therefore diversified,” he explains.
18 | INTELLIGENT INSURER | October 2011
On the non-life side of the business in Europe, the company is targeting
specialty lines such as agricultural business. “We are developing partners such as underwriting agencies in niche markets and also in specialty lines such as agricultural business. Due to rate increases, we also see some opportunities for growth in the energy exposed excess of loss business,” he says.
This problem of growth being hard to come by is compounded in
the short term by the difficult investment environment the industry is grappling with at present. He admits this presents Hannover Re with a problem. Between two-thirds and three-quarters of the company’s profits have traditionally been generated by investment income as opposed to underwriting income. “In the current sovereign debt crisis, managing our investments is a very important challenge and in the current uncertain environment, there is no easy way to deal with that,” he says.
To try to overcome some of these challenges on the investment side,
the company has implemented a variety of strategies. It has exited the equity markets, which given the current volatility he believes has paid dividends. It has also reduced its exposure to high-yield sovereign debt and government bonds and increased its involvement in corporate bonds but within strict limits in terms of counterparty exposure. It has also invested in real estate more.
© Hannover Re
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