Global reinsurance firm Hannover Re is underscoring its position as a pure-play reinsurer by selling its stake in joint venture HDI Global Specialty SE and targeting further growth.
Hannover Re has announced that it is selling its 49.8% stake in the commercial insurer back to the majority shareholder, HDI Global SE, effective December 31st 2021.
The reinsurer said that by selling the stake it will free up previously committed risk capital, making it available for future growth in the company’s core reinsurance business.
A key driver appears to be the opportunity Hannover Re sees in the global reinsurance market at this time, with conditions and pricing improved and growth potential increasing as a result.
Jean-Jacques Henchoz, Chief Executive Officer of Hannover Re explained, “The reinsurance market continues to see improved prices and conditions. By selling our stake we are freeing up capital for profitable growth in our core business.”
Hannover Re expects to continue benefiting from the strong-relationship it has cultivated with HDI, by remaining a key reinsurer to the company.
“Under our cooperation agreement we shall continue to support HDI Global Specialty with our expertise as a long-term reinsurance partner, which also means that we can still share substantially in the growth of the portfolio through our participation in the reinsurance programme,” Henchoz said.
By acquiring back the shares in itself, HDI Global is will further expand its specialty insurance business, also reducing complexity in what it sees as a strategic growth segment.
“With our acquisition of the remaining shares we are another step closer to achieving our goal of building one of the best and most profitable specialty insurers on the world market,” added Dr Edgar Puls, a member of the Board of Management of the Talanx Group and Chief Executive Officer of HDI Global SE. “Going forward, as the sole shareholder of HDI Global Specialty we will be able to act on our opportunities in this promising market even more easily and quickly than was previously the case. Among other things, we will be very flexible in our ability to decide on potential M&A projects and take appropriate action.”
HDI Global Specialty has grown its business since the join-venture came into effect in 2019, from more than EUR 1 billion of premiums in 2018 to currently EUR 2.5 billion today.
The refocusing of its commitment as a pure-play reinsurer becomes a point of differentiation for Hannover Re, given its largest competitors are all very active in building out more direct premium business under their commercial and specialty insurance arms.