Argenta ownership switch being explored by Hannover Re, HDI Global Specialty
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Argenta ownership switch being explored by Hannover Re, HDI Global Specialty

Argenta London.jpg

Ultimate parent Talanx is exploring the option of transferring the ownership of Lloyd’s business Argenta from Hannover Re to HDI Global Specialty, as work continues in the group to pivot Hannover Re to a pure-play reinsurer, Insurance Insider can reveal.

Sources said that there is no engagement with external bidders and that a sale to any other party is unlikely, but diligence work to support an arms-length valuation is taking place that includes advisers.

Work is still in train and no deal has been agreed, but sources expect a resolution that would see Argenta sold to HDI Global Specialty.

In recent times Talanx has made moves to re-organise its businesses internally and separate its reinsurance and insurance activities, while making a push to expand its specialty insurance capabilities specifically.

HDI Global bought Hannover Re’s 49.8% stake in HDI Global Specialty, taking its share up to 100%, at the end of last year. At the time, Hannover Re said the agreement underscored its positioning as a pure reinsurer, and that the transaction freed up previously committed risk capital for future growth.

There is already a tie between the two insurance businesses after HDI Global Specialty agreed to provide 10% of the Funds at Lloyds for Argenta syndicate 2121 for the 2022 underwriting year.

Hannover Re first bought Argenta, which included the managing agent, Syndicate 2121 and members’ agency, in a deal struck in 2017 following a protracted sales process.

Reports at the time suggested the reinsurer paid £142.5mn ($194mn) for the business, while the then-CEO Ulrich Wallin said the carrier had been looking for additional access to international and London market business. In 2020, Syndicate 1221 wrote £587mn of gross premium and generated a combined ratio of 113%.

HDI Global and Hannover Re had first pooled their specialty operations – excluding Argenta - to form HDI Global Specialty in 2019, creating a joint venture targeting high-margin lines including E&O, D&O, legal expenses insurance, sports and entertainment, aviation, offshore energy and animal insurance.

It has grown from around EUR1bn ($1.1bn) in premium then to around EUR2.5bn as of the end of last year.

In November, Talanx said it was “significantly increasing its ambitions” for its primary insurance operations, with each of the industrial lines (which houses HDI Global), retail Germany and retail international divisions aiming for an ROE of 10% for 2025. This would bring these businesses in line with the reinsurance operation, Talanx said.

A spokesperson for the companies said: “HDI Global has agreed through its subsidiary HDI Global Specialty to provide 10% of the Funds at Lloyds for Argenta Syndicate 2121 for underwriting year 2022 subject to Lloyd’s approval. We are constantly exploring opportunities to further develop Argenta’s business within the Talanx group.”

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