BADEN-BADEN (Bloomberg) — Hannover Re, Germany's second- biggest reinsurer, expects prices for German reinsurance contracts renewed in January to remain stable as primary insurers seek to protect capital hurt by the financial crisis.

"Given the state of the primary insurance market, these conditions should at least be maintained this year," Michael Pickel, head of Hannover Re's German reinsurance business, said yesterday at a news conference in Baden-Baden, Germany. "We expect at least stable prices in natural catastrophe reinsurance in Germany."

While rates for German industrial property insurers will fall as a result of the "fiercely competitive environment", rates for non-proportional coverage on vehicle liability may rise, Pickel said. Non-proportional reinsurance protects an insurer from all or part of a claim that exceeds a specified amount, in contrast with proportional coverage where the reinsurer shares a specified quota of claims and premiums.

The Hanover, Germany-based reinsurer operates in Germany under the E+S Rueck brand, which has about 2.4 billion euros ($3.6 billion) in annual premium income. Hannover Re owns 64.2 percent of the unit, with eight mutual insurers including HUK-Coburg Holding AG and VHV Versicherung AG owning the remainder.

"We hope to continue the profitable expansion of our already large market share in Germany," Pickel said. Hannover Re's share of the German property and casualty reinsurance market stands at about 16 percent, including intra-group business, he added.

New European Union regulations for insurers planned to be introduced in 2012, known as the Solvency II directive, "could further boost demand, especially for catastrophe covers, which should have positive implications for prices", Pickel said.

Reinsurers, which help primary insurers such as Allianz SE and Axa SA shoulder risks for clients, gather this week in the southern German spa town of Baden-Baden for their annual meeting with customers to renegotiate contracts due for renewal in January. The meetings follow a gathering with clients in Monte Carlo in September.