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In the last quarter of 2001, GKG formed the subsidiary GGLRB Bridge- town, to offer clients greater flexibility in Life reinsurance business.

At GGLRe Los Angeles, a capital increase of € 22.2 million was effected. In the same period, the equity base of GGL Toronto was strengthened to the tune of € 16.6 million. As a result, the interests held in GGL Toronto by Canadian holding company Gerling Global Investment Corporation Ltd. (GICL), Toronto, and GKG were simplified, leaving GICL as the sole owner of GGL Toronto. GKG retains 100% ownership of GICL.

Gross premium income decreased to € 292.1 million (p.y. € 335.3 mil- lion). The high level of premium revenues in 2000 was due to a single premium deal.

In the US market, the events of 11 September had significant conse- quences for the Life reinsurance industry. Benefit and claim payments arising from those loss incidents reached a gross total of € 5.0 million and presented a net burden of € 2.2 million, which was less than the average loss bill registered by rivals.

Severe turbulence ensued throughout the US economy; capital markets in particular were hit hard by the events. Across the entire economic spectrum, corporate profits were reduced for many primary insurers’ clients. This gave rise to lower increases in premiums and profits from corporate-owned life insurance (COLI). Against this background, the profits attained surpassed our expectations.

“Regulation XXX”, which was introduced in 2000, as anticipated, became law in more federal states. It obliges Life insurers and reinsurers to meet significantly higher reserving requirements for Life insurance products with long-term premium guarantees.

The purchase of reasonable catastrophe coverage will continue to be a major challenge in the future. Very bright prospects are seen for the diversification already initiated through to non-traditional Life rein- surance business and COLI.

Growth in the Canadian market is proceeding on target. Further prof- itable business links are being forged.

26 Gerling Global Re Group

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