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Life and health reinsurance

Key figures for life and health reinsurance
in EUR million 2013 20121
  1.1. - 31.3. +/-
1.1. - 31.3.
1 Adjusted on the basis of IAS 8
2 Operating result (EBIT)/net premium earned
Gross written premium 1,560.3 +11.9% 1,394.0
Net premium earned 1,388.9 +10.1% 1,261.5
Investment income 162.4 -8.5% 177.4
Operating result (EBIT) 88.3 -27.8% 122.3
Net income after tax 65.3 -34.9% 100.2
Earnings per share in EUR 0.54 -34.9% 0.83
Retention 90.0%   90.8%
EBIT margin2 6.4%   9.7%

The market environment in international life and health reinsurance continued to be favourable in the first quarter of 2013 and hence built seamlessly on the year just ended. We got off to a thoroughly successful start in the new financial year with the assumption of three longevity portfolios in the United Kingdom. When it comes to our clients in mature insurance markets such as the United States, Germany, the United Kingdom, France and Scandinavia, our primary focus – along with covering longevity risks – is on optimising liquidity, capital and risk management through the assumption of underwriting risks. Demand for life insurance products in emerging Asian markets, including China, remains strong. In this context, we concentrate particularly on the conceptual design and implementation of innovative reinsurance solutions that cater to the individual needs and circumstances of our clients and ultimately those of policyholders. Along with key emerging markets in Asia, parts of Latin America and Eastern Europe are becoming increasingly attractive owing to rising prosperity in society and the resulting growth in demand for risk protection and retirement provision.

Gross written premium in life and health reinsurance climbed to EUR 1.6 billion (EUR 1.4 billion) as at 31 March 2013, a pleasing increase of 11.9%. At constant exchange rates growth would have come in at 12.6%. Net premium earned was boosted by 10.1% to EUR 1.4 billion (EUR 1.3 billion). This is equivalent to a retention of 90.0% (90.8%). Adjusted for exchange rate effects, net premium would have grown by 10.8%.

Our portfolio developed broadly in line with our expectations. The investments held for our account by US clients developed favourably in the period just ended. We generated unrealised gains here in the mid-single-digit million euros. All valuation gains and losses are, however, completely offset if the securities perform as planned until maturity, which means that this item is considered to have no expense implications over the entire duration – provided there are no defaults due to insolvency.

The operating profit (EBIT) totalled EUR 88.3 million (EUR 122.3 million) as at 31 March 2013. The EBIT margin of 4.8% in the areas of Longevity and Financial Solutions and 7.6% in Mortality and Morbidity business beat the targets of 2% and 6% respectively. Group net income came in at EUR 65.3 million (EUR 100.2 million) and earnings per share amounted to EUR 0.54 (EUR 0.83).

We normally also report on the Market Consistent Embedded Value (MCEV) of the financial year just ended in the context of our interim report on the first quarter. The MCEV captures our entire life and health reinsurance portfolio, since it recognises the corresponding cost of capital in addition to the expected future profits. The MCEV therefore serves as a very good means of assessing the profitability of longduration life and health reinsurance business. Bearing in mind the protracted strain on capital markets, the MCEV developed favourably as at 31 December 2012 and stood at EUR 3,133.9 million (EUR 3,065.8 million). This corresponds to growth of 2.2%. Including non-controlling interests, the MCEV amounted to EUR 3,238.6 million (EUR 3,180.7 million). The value of new business excluding non-controlling interests showed an increase of 30.3%; this is equivalent to an amount of EUR 313.6 million (EUR 240.6 million) and is the highest value of new business recorded to date. Further details of this topic are provided in the MCEV 2012 report published on our website.

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