Hannover Re and HDI Global are merging their specialty insurance activities into a new joint venture to establish a EUR1bn premium commercial insurer, HDI Global Specialty.

The new entity is set to launch on 1 January 2019, and will write agency and specialty primary insurance business including errors and omissions, directors’ and officers’, sports and entertainment, aviation, offshore energy and animal lines.

As a first step, HDI Global, which is a subsidiary of the Talanx Group, will acquire the majority of shares in Hannover Re’s insurance arm, Inter Hannover, for EUR100mn. After the transaction has taken place, Inter Hannover will be renamed HDI Global Specialty SE and HDI Global will contribute its specialty portfolio to the new company.

Hannover Re – which is also part of Talanx –will own 49.8 percent of the new company, with HDI Global owning the remaining 50.2 percent.

Hannover Re chairman Ulrich Wallin said: “We have a number of reasons for bringing together the agency and specialty primary insurance business of Inter Hannover in the joint venture. This strengthens the focus on our core business in accordance with our strategy of “creating value through reinsurance”.

“At the same time, reinsuring the portfolio enables us to derive even more benefit from the growth opportunities available in specialty business. We can then make use of the capital that becomes available as a result to grow the business further.”

Dr Christian Hinsch, HDI Global chairman, added: “The speciality business has attractive above-average margins and is growing faster every year than classic industrial business.

“This highlights the demand and we want to benefit from that. We will provide our customers and broker partners with even more comprehensive service based know-how.”