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Andreas Bronk Agriculture Insurance Seminar Kyiv, July 8th, 2008 Global agriculture insurance & agriculture reinsurance of Hannover re.

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Presentation on theme: "Andreas Bronk Agriculture Insurance Seminar Kyiv, July 8th, 2008 Global agriculture insurance & agriculture reinsurance of Hannover re."— Presentation transcript:

1 Andreas Bronk Agriculture Insurance Seminar Kyiv, July 8th, 2008 Global agriculture insurance & agriculture reinsurance of Hannover re

2 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 1 (2)High economic growth is bringing large part of population out of poverty (Mexico, Brazil, China, India, etc.) …...and also the food consumption pattern is changing, increasing the consumption of meat and healthy, high quality food (organic) (1)Global population is growing by people every day Strongest population growth in Asia People increasingly live in urban centres Life expectancy is increasing (3)The natural resources are limited Land and water scarcity Changing weather and increasing pollution (4) There is a need and a trend to invest, diversify and intensify agriculture Foreign capital is moving into agricultural sector in emerging markets Rich countries are interested in supplying high- quality food for world markets Countries worldwide are interested in gaining food self-sufficiency Trends AGRIBUSINESS - A GLOBAL MEGATREND As population and income rise, the race is on to meet changing nutritional needs Our global food supply is faced with enormous challenges In 1985 meat consumption in China was 20 kilos per person per year, by 2000 it had increased to 50 Kg. and further increases are projected. On the supply side, environmental pressures and increasing urbanization are putting further strain on already limited resources.

3 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 2 GLOBAL TRENDS AFFECTING AGRICULTURE Our global food supply is faced with enormous challenges Arable land Food, Fuel, Feed, Forest, & Fiber Demand Population growth Time Value Every 7 years arable land of the size of Germany disappears due to desertification and urbanization In 2015 the population will be about 7,1 bn Demand for food is growing by 30% until 2020 Trends

4 ReinsurersPortfolio HRAggregates"PPP"Perspectives 3 Cows in Sudan DEMAND FOR MEAT SETS BIG PRESSURE ON GRAIN SUPPLY Large quantities of grain are required to produce meat Feed Conversion Efficiency An important characteristic of the increasing levels of incomes and expenditures is a changing food consumption pattern, and in particular, an increasing consumption of meat and milk products. As a result the agriculture sector need to increase its level of feed grain production in full synchronization with the increasing demand for feed grains by the livestock sector. Trends

5 ReinsurersPortfolio HRAggregates"PPP"Perspectives 4 The surge in food prices was one of the main commodity highlights of 2007, sending our agriculture price index up a record 61% during the year largely due to increasing grain prices. Wheat price gained in 2007 an unprecedented 86% as a result of strong demand by the developing world (even excluding China). Insurance premium is pushed up due to an increase in insurable values. Source: Der Spiegel 4/2008 WORLD PRICES OF FOOD COMMODITIES ARE HIGH with consequences on demand for agriculture insurance Trends

6 ReinsurersPortfolio HRAggregates"PPP"Perspectives 5 Insurance demand Value Specialisation Time Intensification Capital Investment GLOBAL TRENDS AFFECTING AGRICULTURE Risk transfer is necessary to protect the capital investment in the agric. sector Higher efficiency required at every stage of the food supply chain - from farm to fork Trends

7 ReinsurersPortfolio HRAggregates"PPP"Perspectives 6 Reinsurers GLOBAL REINSURERS ARE CREATING SPECIALIZED TEAMS Hannover re is one of the few reinsurers with a specialized team in agronomy and veterinary science

8 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 7 Worldwide HR Agro World reinsurance premium volume = 1,63 bn USD World reinsurance premium in 2010 = 2 bn USD PREMIUM VOLUME IN 2007 per region Worldwide Spread Portfolio HR

9 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 8 In USD Latin America Asia West Europe USA Germany PREMIUM DEVELOPMENT BY REGIONS Geographical spread Portfolio HR

10 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 9 Worldwide Estimated Premium HR Group 100 Mio USD Estimated world reinsurance premium volume 2007 = 1,35 bn USD EARNED PREMIUM IN 2007 per Line of Business Worldwide Spread Portfolio HR

11 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 10 in m EUR DEVELOPMENT OF PREMIUM PER LINE OF BUSINESS New product as Multi Peril Crop Insurance growing Figures correspond to the premium of TD31 – Agro only. Portfolio HR

12 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 11 Aggregates Even if there is no accumulation with other branches, it is of big importance to keep control of aggregates AGGREGATES CONTROL New negative correlation with classical accumulation (EQ + Storm)

13 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 12 There is a clear development from Governments & International Organizations to provide risk-management instruments in agriculture through the private sector Why? -Maintain alimentary security and thereby reduce the risk of social commotions, civil wars & riots -Maintain an international competitive agriculture -Provide modern (WTO-Compliant) risk management instruments -Effective deployment of funds -Effective and individual coverage of agricultural production against weather- related yield losses -High insurance penetration, available to all farmers Where? -Multi Perils Crop Insurance Development -> France, Italy, Chile, Brazil -HR's meetings with the Ministry of Agriculture -> Colombia, El Salvador, Poland, Brazil -Training for insurance companies -World Bank -> Central America, Peru, Caribbean & Colombia "PPP" PUBLIC - PRIVATE - PARTNERSHIP (1) International organizations & Governments are interested in AGRO insurance

14 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 13 Insurance companies' role Assume liability Product development and innovation Active underwriting, monitoring, loss assessment and claims handling Cooperation with government, associations and organizations Hannover re's role Knowledge transfer from other markets Active support in development and establishment Tailor made reinsurance concepts / capacities Efficient handling of agricultural insurance cover thanks to special agricultural insurance know-how PUBLIC - PRIVATE - PARTNERSHIP (2) International organizations & Governments are interested in AGRO insurance "PPP"

15 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 14 OUTLOOK Large potential to expand agricultural insurance Perspectives now Insured Under insured Not insured Not insurable projection "PPP"

16 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 15 Agricultural output 2003 = 1,5 Trillion USD 2007 = 2,5 Trillion USD Agriculture insurance premium 2003 = 5,5 billion USD 2007 = 8,0 billion USD POTENTIAL IN EMERGING MARKETS If governments and insurers adopt appropriate initiatives to bring insurance penetration in the emerging markets to levels commensurate with more developed economies, the size of the world agricultural insurance market could reach USD 15 bn "PPP"

17 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 16 INSURANCE PENETRATION IN AGRICULTURAL SECTOR Agriculture insurance premium as % of agriculture GDP Perspectives

18 TrendsReinsurersPortfolio HRAggregates"PPP"Perspectives 17 POTENTIAL TO GROW Perspectives

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