Steady as she goes – Christian Hinsch, HDI

Adrian Ladbury (AL): How was 2012 for HDI-Gerling—was it a good year?

Christian Hinsch (CH): The year 2012 went fine for us. We had major losses such as ‘Sandy’ and some major man-made losses in property but in general it was positive. Our multi-year plan is to increase our industrial footprint and we have really progressed there. We also have seen some positive signs in the market in terms of rates. Some lines really saw some hardening. After eight years of a soft market this was really something necessary and we go along with this trend, we are not trying to outdo it. But we agree with others that we need a turn in the property market after all these natural catastrophe events and we welcome this trend.

AL: Where have you seen greatest movement in terms of hardening?

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CH: There are different situations in different regions. It is fair to say that, while rates are lower in some regions than others, it was time for a movement in property in Germany and that came about. This was good because this was where there was the highest need for a turn. But we also saw a hardening in other markets than Germany in property. This occurred especially when there was a high exposure to natural catastrophes. After the recent events in Japan, Thailand, New Zealand, Australia, Chile and so on the market definitely needed to take these into consideration and into its calculations.

AL: What about lines of business other than property?

CH: It was not only property that was looking better last year and year-end. Also it must be noted that we had a hardening in some lines such as motor fleet already in the year before. For some carriers last year was the first but for others it was the second year and I can see this trend running into 2013 because some of the competition started late. There are other lines such as group accident or marine and professional indemnity and also legal protection, which are also hardening. We are seeing some industries changing faster than others too such as recycling for example. These are the industries that are most exposed in property and so are experiencing the tightest markets. Other lines such as liability, engineering and D&O we are seeing movement only on the very basis of individual accounts so you can’t really talk about a general market hardening in these lines.

AL: What about the outlook for 2013?

CH: The hardening will continue gradually. In property it has to be said that some players are still sticking on the sidelines but there is some pressure on technical results as many companies struggle to manage their combined ratios. I am relatively sure that most companies will show combined ratios way over 100% for 2012 in property and if that is the case then this will not be the first year. Rates have just gone too low so I am quite positive that we will see more hardening in property. Whether it spreads to other lines of business, I would not be so sure about. But overall combined ratios will vary between 95% and 105% and so I would say that, depending upon loss history this year, the hardening will continue to accelerate.

AL: What is HDI’s strategy this year? Are there any significant changes to the past and where do you see the biggest opportunities and challenges?

CH: We are happy with the existing strategy, which has been quite successful. We have defended our position in Germany in the face of intense competition and increased our business share in other core European markets step by step. Most importantly we have grown our book of business in target markets and acquired lead business because of our reputation, experience and knowledge. You can only really bring your experience to bear as a leader and we would rather do that than follow someone else who may not have the same expertise and experience. We have gained 3–5 lead positions with major accounts in western Europe each year over the last 2–3 years, which is important for us and we want this to continue. Part of this is to focus on delivering very professional claims handling. We have also continued to strengthen our footprint in Europe such as through the acquisition of the Warta business in Poland last year and Nassau in the Netherlands in 2011. Of course elsewhere in the world we seek to support our European customers as they expand and also generate new business elsewhere. Last year we opened a branch in Bahrain, which is the hub for industrial insurance in the Gulf region and also joined forces with finance investor Magma Fincorp to establish the company Magma HDI in India. As ever we will look at further opportunities, whether through acquisitions of companies or teams of experts, as they arise.