Lufthansa to sell insurer Delvag and in-house broker Albatros

Lufthansa has put both its third-party insurer Delvag Versicherungs-AG and in-house insurance broker Albatros up for sale at the same time as the German airline group tests the competitive aviation market for its November renewal, The Insurer can reveal.

Lufthansa – which is being advised by Deloitte – has approached potential buyers, although the process may be complicated if a single buyer is required for both operations.

Albatros placed ~€300mn ($317.28mn) in GWP in 2022, according to Delvag’s annual report. It specialises in a number of different markets including aviation hull and liability and war, non-aviation liability, D&O, employment practices liability, property/business interruption and cyber.

Delvag writes a number of different classes including employee benefits, aviation, marine and transport, including motor and cargo.

Following a strategic realignment in 2020, its reinsurance arm Delvag Re was repositioned as the in-house captive writing Lufthansa Group risks only.

Delvag has an A- rating from AM Best with a stable outlook. Its full-year 2022 figures showed net earned premiums of €52.8mn, with underwriting reserves of €94.2mn.

The insurer undertook a loss portfolio transfer with Accredited Insurance (Europe) in 2021 for Delvag Re’s third-party reinsurance portfolio back years, which had ~€22mn of reserves.

The Cologne-based insurer can trace its roots back to 1924. It employs around 140 staff (300 including Albatros) and is led by senior director and CUO Tobias Winkler.

Also part of the senior leadership team is head of finance and accounting Martin Schmatz while Martin Gary is managing director of Albatros.

The prospective sale comes as part of Lufthansa’s strategy to spin off non-core parts of the group. This included the sale of the European arm of its catering business LSG Group to Swiss company Gategroup for €1.1bn in 2019 and the remainder to private equity firm Aurelius for an undisclosed fee earlier this year.

There have been a number of notable transactions involving German intermediaries this year, including private equity firm Castik Capital’s buy-in to Global Gruppe, Helvetia’s acquisition of Mobile Garantie Deutschland and Nordic Capital Evolution’s investment in commercial broker Helmsauer Group. Expansive UK broker Howden has also made six acquisitions across Germany and Switzerland this year.

Lufthansa renewal

The sale process coincides with the renewal of Lufthansa’s annual all risks and aviation war policies. Regarded as one of the largest airline accounts, the Lufthansa renewal includes the German airline together with over 30 different operators including subsidiaries Eurowings and Austrian Airlines together with affiliated airlines such as Turkish Airlines.

The airline account is thought to be worth at least $100mn in annual premiums and is led by Allianz (hull) and Lloyd’s insurer Atrium (war). Gallagher is the lead broker working alongside Albatros.

The fourth quarter is the busiest period for airline renewals with around 70 percent of the global fleet renewing. Hull/all risks pricing is expected to be ultra-competitive amid plentiful capacity, but increased pricing is expected for war, AV52 and aviation treaty.

Lufthansa, Delvag and Deloitte declined to comment.