FITCH expects run-off deals in in the German life insurance market to increase

The announcement of the GENERALI - VIRIDIUM transaction, the largest run-off deal in Germany to date, covering traditional-business reserves of about EUR 37 billion, reinforced FITCH's expectation that disposal of closed funds will be a growing theme in the German life insurance market, the agency said.

FITCH forecast that run-off specialists will manage more than half of closed life business in Germany by 2022, compared with about 25% currently, as insurers start to find the costs of managing shrinking portfolios an increasing burden. Run-off specialists such as VIRIDIUM can manage closed portfolios more efficiently by acquiring and integrating portfolios from several insurers to generate economies of scale.

As traditional saving products with long-term investment guarantees have become less profitable and more capital intensive due to low investment yields and higher capital requirements under Solvency II, many German life insurers have stopped offering them and put their portfolios into run-off. About EUR 130 billion of Germany's EUR 1 trillion life sector is in run-off, and FITCH thinks this could grow to EUR 180 billion by 2022.

The Italian insurance group GENERALI put GENERALI Leben into run-off in 1Q2018 as part of a restructuring of its German operations. GENERALI Leben is the group's largest German life entity, with traditional-business reserves of about EUR37 billion. The sale to VIRIDIUM is likely to be credit positive for GENERALI, reducing its exposure to interest rate risk and marginally strengthening its capital position. GENERALI says the transaction will add about 2.6 pp to its Solvency II ratio (end-2017: 207%). The group will still have a strong position in Germany, through GENERALI Deutschland, focusing on unit-linked, hybrid and protection products.

FITCH does not rate GENERALI Leben, but it said that its 'A-'/Stable Insurer Financial Strength ratings on GENERALI and GENERALI Deutschland will not be affected by the deal and remain constrained at two notches above the Italian sovereign rating (BBB/Stable). (See "FITCH Affirms GENERALI's IFS at 'A-'; Outlook Stable", published on 3 July 2018.)

Follow XPRIMM Publications on LinkedIn, for more data on the insurance and financial industry.

Share |

Related articles

LIVE from Monte Carlo: The 62nd edition of the "Rendez-Vous de Septembre"

The 62nd edition of the "Rendez-Vous de Septembre", the annual traditional meeting of reinsurers starts Sunday in Monte Carlo. XPRIMM Publications covering the CEE, SEE and CIS insurance markets are available at the XPRIMM stand in Fairmont Hotel, as well as at the most important venues in Monte Carlo.

2018-09-13

ICAR 2018 registrations opened; top professionals in the fields of re/insurance, claims adjusting, risks modelling on the speakers list

"Various macro trends keep manifesting themselves: the digital age, longevity, ecological breakdown and increased protectionism are some of the key topics. While these changes can threat an established business model, macro trends can also be used to widen a commercial playground and explore different fields of profit," says Angelika WERNER, Expert Atmospheric Perils, Property Underwriting EMEA, Swiss Re.

2018-09-13

PERILS takes over CRESTA secretariat

PERILS, the independent Zurich-based organization providing industrywide catastrophe insurance data, has announced that it has taken over responsibility for the ongoing management of the CRESTA Secretariat. The Secretariat was previously managed on a rotational basis by Munich Re and Swiss Re.

2018-09-11

ON THE MOVE

TOP EVENT

photodune-3834701-laughing-girl-xs

LIVE from Monte Carlo: The 62nd edition of the "Rendez-Vous de Septembre"

The 62nd edition of the "Rendez-Vous de Septembre", the annual traditional meeting of reinsurers starts Sunday in Monte Carlo. XPRIMM Publications covering the CEE, SEE and CIS insurance markets are available at the XPRIMM stand in Fairmont Hotel, as well as at the most important venues in Monte Carlo.

13.09.2018

Willis Re - Market still soft, but functional

Despite the high losses from 2017 the reinsurance market is still soft, James KENT, Global Chief Executive Officer (CEO) of Willis Re stated at a press briefing in Monte Carlo.

10.09.2018

AIR launches severe thunderstorm model

Catastrophe risk modeling firm AIR Worldwide released a new severe thunderstorm model for Europe. Together with AIR's Extratropical Cyclone Model for Europe and European flood models, this new model now allows for a comprehensive assessment of atmospheric risk in this region.

10.09.2018

See all