Property claims weigh on HDI in H1
Industrial lines insurer HDI Global has been impacted by numerous property claims in the first six months of 2018, leading to a decline in underwriting results.
The net underwriting result deteriorated in the first half of 2018 to a negative €28 million after a positive 32 million in the same period of 2017. The (net) loss ratio declined to 81.3 percent from 76.0 percent owing to the numerous losses, the company said. The combined ratio deteriorated to 102.3 percent in the first six months of 2018 from 97.2 over the period.
"The heavy loss expenditure in the first half of the financial year was primarily due to fire insurance,” said HDI CEO Christian Hinsch. “This further underscores the fact that the measures we have initiated - and now stepped up - with a view to optimising the fire insurance portfolio are absolutely necessary," Hinsch added.
"With our 20/20/20 programme we shall restore fire business to profitability: Our goal is to improve the premium/risk ratio by 20 percent in 20 percent of our industrial portfolio by the year 2020."
Low premiums in industrial property insurance have failed to cover the claims expenditure in recent years, leading to considerable losses in the segment, according to a corporate statement. With this in mind, HDI plans to raise prices in this area, adjust terms and conditions, reduce shares and relinquish underpriced business.
"Our experience to date shows that we are able to successfully implement our planned measures - especially the premium increases - on the market", said board member Edgar Puls, who is responsible for the fire insurance line.
The need for rehabilitation measures is also supported by a forecast released by the German Insurance Association (GDV), HDI noted. The GDV is projecting a combined ratio of 115 percent for German industrial property insurance in 2018.
Overall, the group’s gross written premiums increased by 3.7 percent year on year to €2.9 billion in the first half of 2018 after €2.8 billion in the same period a year ago, driven by foreign markets - including Australia, the Netherlands, France and Greece. At the same time group net income dropped to €53 million from €112 million over the period.
Talanx group units Hannover Re and HDI Global are in the process of merging their specialty activities in a new joint venture in order to capture global growth and high-margin specialty business.
Going forward, the joint venture will write agency and specialty insurance business in lines such as errors & omissions liability insurance, directors' and officers' liability insurance (D&O), legal expenses insurance, sports and entertainment, aviation, offshore energy and animal insurance.
Get all the latest re/insurance industry news with our daily newsletter - sign up here.
More of today's news
CATCo chairman expects further rate declines at 2019 January renewals
Swiss Re on the hook for collapsed Genoa bridge
IGI expands 20% in H1
S&P ups Argo outlook on profitability measures
Lloyd's syndicate DL Dale taps claims manager from QBE
