HDI Global
As Ned Holmes found out, HDI Global has a unique offering and its senior team are looking forward to long-term success
What are HDI Global’s origins? And how long have you been active in the captive market?
Dr Thomas Kuhnt: HDI Global (HDI) was formed 120 years ago by the German iron and steel industry. It started as a mutual group captive, so, in a way, captives are its heritage, just like some of the US carriers.
HDI began with conducting US-based programmes for German companies and their subsidiaries. It is now expanding into the local markets. Its group – the Talanx AG – is ranked number six in Europe for premiums, with roughly €54 billion (as of February 2023). Hannover Re, the third largest reinsurer in the world, is also part of this group.
Jelto Borgmann: HDI is not an insurer acting on the short-term. It has more than 100 years’ experience in the insurance industry and market, and entering the US market will be a great experience. HDI has the backing and we have the commitment — it is here to stay.
What is your offering for captives?
Kuhnt: Currently the largest captive provider in Germany, HDI acts as a one-stop shop, offering its clients the full range of insurance products and captive services.
It offers international fronting, claims handling, a strong risk engineering department, classic reinsurance quota share and excess of loss and risk financing solutions. In certain areas it partners with Hannover Re, as the latter is very advanced with risk financing solutions. In some regions it runs asset management solutions, driven by its captive investment manager.
HDI brings the full spectrum of solutions, which are tailored to the needs of our clients. We see ourselves as full-service providers; we are not in it to opportunistically front one day and then give it up due to cost pressures the next.
We are looking for long-term relationships with our partners.
If you choose HDI, you will have access to its very broad and long-established network. It has network partners that cover 175 countries, and owns operations in 39.
We cover some of the very ‘hard-to-do’ business in countries and regions where other companies are not present.
We have a lot of experience, given that we manage around 5000 international programmes.
The company’s scale allows us to see a lot of trends and innovation in different geographies, from which we can garner new ideas to maximise our captives.
Our expertise across professional fields means we can provide more comprehensive advice. Our staff bring the right experts to the table, which makes it easier to navigate the complex environments that captive and risk managers face.
Local proximity is really important to the company — we will always value local people, known to the local market, who can bring local expertise.
From your experience, what are the key factors to making a captive a long-term success?
Borgmann: Long-term thinking from the parent is vital. Captives should not work or be used opportunistically, you need long-term buy-in from the management on all sides.
It’s also important to use the captive in the risk management practices within the company. You can learn so much from the data that you collect. If you use that right, within the company’s processes, you will directly see the benefits and improve your risk quality.
Adequate capital is another key factor. To avoid going bankrupt or having to stop operations, you need enough capital. You don’t want to have to go back to the chief financial officer to ask for a capital injection — they’re unlikely to be amused!
To really make use of a captive tool, you have to look at different lines and diversify your portfolio. You have to do this with sufficient resources and you need strong partners to help the set-up and operation processes.
What differentiates HDI Global from other established players. What is your USP in the US market?
Borgmann: We harbour all the advantages of the Talanx group, which gives us a superior rating. In addition, with Hannover Re as part of our family we really can be a one-stop shop.
A lot of US companies have international operations in Mexico or Canada, and we can write a policy in these locations. That means clients can avoid writing it on a non-admitted basis, which meets compliance and saves a lot of tax. We have around 200 employees in the US — it’s not a small operation. They’re experienced people, able to provide the best service and best programme structures for captives.
Why is HDI Global’s in-house claims handling something for prospective clients to get excited about?
Kuhnt: A lot of the third-party administrators in the market are very good at frequency claims, but there aren’t many out there who can help with the very complex, large settlements and lawsuits that might end up in litigation. That’s our strength. In the large participation business, a lot of HDI’s competitors are comfortable following on large programmes that we lead, because they really trust our claims management expertise.
Borgmann: We have specific lawyers that are very familiar with the systems that look into the results and outcomes from the trials, so they know exactly when best to settle the loss or go down the route of litigation.
Jason Tyng’s appointment marks a move to build your presence in the US. Why now, and why Jason?
Kuhnt: His appointment is part of a wider service strategy as HDI expands its service offerings in multiple markets. The US is the largest captive market – we have been monitoring it for a while but wanted to make sure that we were ready, as it is demanding and competitive. We believe we are ready now.
We were also encouraged to enter the US markets by some of our clients. On a domestic, local-fronting level there are plenty of options. Companies are looking for alternatives in the US – especially ones that are assertive decision-makers, reliable and bring high-quality services. We know we can consistently deliver that.
Why Jason? We believe we need local talent and people who know how local markets work. We need those that have the network, broker relationships and the experience. We wanted a credible, proven, senior expert with experience: Jason has what it takes.
What are your targets for the US market over the next 12 months and beyond?
Borgmann: It’s important that we’re a Tier One fronting partner in the US. When people think about an international fronting partner, they need to have HDI in mind.
We have a strong footprint in the US energy sector and are known to all the big brokers, but they don’t always associate HDI with captive fronting — we want that to change.
We want to be recognised as a trusted partner with a good service offering and for them to send us their submissions.
Hopefully, that will come with significant growth of our captive book. Our global captive portfolio has grown quite significantly, and we feel our US offering can contribute to further growth in the future.
Ultimately, we want the clients to be happy with our solutions. In one to two years, we want them to tell us they’re glad HDI entered the market because they needed the services of a company such as ours.
What are your targets for the wider global market over the next 12 months?
Kuhnt: We want to grow our traditional fronting solutions, by which I mean we want to see double-digit growth. We also want to drive innovation. We are moving into the affinity-fronting space, with a trend toward embedded insurance. We are also looking at our risk financing solutions — how and when we offer virtual captives, structural reinsurance protections for captives and parametric solutions.”
