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The terrorist attack on the World Trade Center in September 2001 had a dramatic impact on the reinsurance industry’s results. Capital in- creases and new market players could only partially make up for the shortage of capacities. The turnaround towards harder premium rates in the reinsurance market was further accelerated by these events.

The effects were most noticeable in the Property business renewal figures for 2002. The rates for catastrophe excess of loss coverage rose sharply. In industrial insurance, too, price increases were put across. In proportional business, the improved conditions were reflected in recessive commission expenses and reductions in volume of cover.

In the current financial year, we anticipate at best moderate premium growth. Developments in premiums are flanked by exclusions and higher retentions by primary insurers. Price level adjustments are mak- ing up for shortfalls due to terminated reinsurance treaties which do not meet profitability targets. The heightened retentions also result from limitations of liability, notable examples being the exclusion of previously co-insured risks such as terrorism and Internet risks. In the 2002 renewals, we significantly reduced the number of unlimited Motor Liability treaties.

The dynamic expansion of our Life reinsurance operations will contin- ue in the years ahead. The positive prognoses that drive it are based on the observation of three developments: a shift from state to private provision in the European market, changes in accounting and solvency standards in developed markets creating a need for accountancy and financial management products among primary insurers, and a height- ened need for risk prevention and capital accumulation products in developing markets. In addition to providing risk management, the Gerling Global Re Group supports its ceding insurers worldwide with innovative solutions and services.

In view of these developments in the Property classes and Life reinsur- ance business, we anticipate good results in the current underwriting year. The 2002 results will be curbed, however, by underrated Property treaties from previous years.

30 Gerling Global Re Group

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