Industrial insurer HDI 2016 results jump on tighter underwriting discipline

Germany-based industrial insurer HDI Global has tightened its underwriting discipline and saw its combined ratio and underwriting performance improve in 2016 as a result.

The Hannover Re sister company HDI improved net income by 86 percent to €236 million in 2016.

Through "balanced book" measures HDI aimed at improving the ratio of premiums to assumed risks in domestic fire, marine and motor fleet insurance. The underwriting scope for very severe risks was partly reduced and in some cases the terms and conditions of insurance and prices were also adjusted. At the same time, HDI increased the underwriting scope for risks of medium severity.

As a result of these measures, the combined ratio improved to 96.8 percent in 2016 compared to 99.2 percent in 2015. In 2014, the ratio was at 103.0 percent.

Also, the underwriting result improved to €73 million in 2016 compared to €18 million in the previous year.

"Last year, we achieved a very gratifying result in underwriting and non-underwriting business in spite of ongoing very intense price competition on international industrial insurance markets and the sustained low-interest environment," said Christian Hinsch, CEO of HDI Global.

Net investment income rose by 17.5 percent to €242 million despite low interest rates. The performance was, however, helped by one-offs in the previous year from amortisation and write-downs such as for Heta. Holders of bonds issued by Heta Asset Resolution, a banking group formerly named Hypo Alpe Adria, were hit by losses imposed by the Austrian Financial Market Authority.

HDI’s premium income remained unchanged year-on-year at €4.3 billion in 2016 despite the "balanced book" profitability enhancement measures, the company said. This was due to further growth in the foreign target markets. In particular, the HDI units in USA, Brazil, the UK and Switzerland reported significant premium growth.

HDI and Hannover Re are owned by Hannover-based Talanx.

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