HDI Global’s fire book restructure ahead of schedule at half-year stage

Torsten Leue, chairman of the board of management at Talanx, parent company of HDI Global and Hannover Re, said the ongoing restructure of the former’s fire book is ahead of schedule and “having the desired effect”, as he reported group second-quarter results. HDI Global delivered a small €14m underwriting profit in the second quarter of this year, compared with a loss of €15m in the second quarter of 2018. The combined ratio is not quite where it should be, but is now heading in the right direction. It fell from 102.3% in the second quarter of last year to 101.9% during the last quarter. This reflects a “positive trend” from the change programme of HDI Global’s fire insurance business, according to Talanx. The group is confident that the industrial lines business will hit its 100% combined ratio target for full-year 2019. “We are seeing growth in all our divisions. Our 20/20/20 programme to restructure the industrial fire insurance business is having the desired effect and will be reflected in a steady improvement of our results going forward,” added Mr Leue. Gross written premiums in the industrial lines division rose by 20.2% to reach €3.5bn at the half-year stage, compared to €2.9bn in H1 2018. The volume leap was mainly attributed to the inclusion of HDI Global Specialty, which was launched at the start of the year through a combination of HDI Global’s specialty business and the direct industrial business formerly written by Hannover Re. This business kicked off with roughly €1bn of gross written premiums. After its initial setup phase, HDI Global Specialty is now busy hiring new underwriters and building its business. At the half-year stage, HDI Global reported an underwriting loss of €32m compared to a loss of €28m in the first half of last year. Talanx explained that the loss expenditure remained “somewhat in excess” of the budgeted figure in the first quarter, because of reserve additions for a large loss dating back to the previous year. Storm Jörn in Germany and a ship fire in Singapore also hit the results in Q2. “In contrast, the 20/20/20 programme had positive effects. Implementation of the restructuring programme for the fire insurance business, which was launched last year, is running ahead of schedule and continuing in the second half of the year. Further positive effects on profitability will be seen during the rest of the year, but the frequency loss ratio has already declined in the property insurance business,” explained Talanx. “The combined ratio was stable at 102.3%. The industrial lines division is expecting a more or less balanced underwriting result in 2019,” added the Hannover-based group. At group level, Talanx’s gross written premiums rose by 11.2% to €20.9bn, compared with €18.8bn at the half-year stage of 2018. EBIT was up 2.7% to €1.2bn. Group net income rose 9.4% to €477m. Talanx said its “strong business performance” in the first half of the year has enabled it to raise its 2019 group net income outlook to more than €900m. In the second quarter, group gross written premiums rose to €9.1bn, an increase of 11.6%. The underwriting result deteriorated to a loss of €350m, compared with a loss of €318m at the half-year stage last year. “The main reason for this was the late claim notification for Typhoon Jebi in the property/casualty reinsurance segment (€54m), which passed across Japan in September 2018,” explained Talanx. The group first-half 2019 combined ratio increased to 98.1% from 96.5% at the same point last year, while net investment income rose 5.6% to €998m. The second-quarter group operating profit grew by 1.3% to reach €628m and group net income climbed by 10.8% to reach to €242m.

HDI Global’s fire book restructure ahead of schedule at half-year stage

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