German Life Insurers: A Portfolio in Decline
Well, folks, brace yourselves! November 18, 2024, might not be marked on your calendar as the day of reckoning for German life insurers—but it certainly should be! Last year, the contract portfolio of these insurers shrank faster than a balloon at a child’s birthday party! A whopping 53 out of the 78 players listed in the market report were in the red, and now that’s a shade darker than the black humor at a Jimmy Carr show.
A new trend: figures falling faster than my expectations for a blind date
According to the General Association of the German Insurance Industry (GDV), the portfolio of main insurance policies offered by these German life insurers plummeted by 0.5 percent to a staggering 81.4 million contracts. It seems like these insurers took ‘run-off’ to a whole new level—it’s like jumping off a cliff and hoping to fly, but they’d be happy to land in a pile of policies!
Now, one in three of the 78 market participants have managed to slip a banana peel under the industry trends and actually increase their numbers. Bravo! However, for the rest, it’s a bit like trying to win the lottery without buying a ticket—53 players recorded losses!
Axa and Zurich: The biggest losers on the block
When it comes to losses, you can bet your last euro that Axa Life Insurance AG is sitting at the top of the sad little table. They’ve lost nearly 890,000 policies, bringing their total down to approximately 1.54 million policies. And right behind them, Zurich Deutscher Herold Lebensversicherung AG has almost 715,000 fewer contracts to keep them company, falling to 2.01 million. It’s a bit like watching two former stars of a sitcom go broke after their show’s cancellation. Is there a life insurance version of “I’m still relevant?”
The main reason behind their impressive declines? Inventory transfers. Axa had previously thought it wise to transfer around 900,000 conventional life and pension insurance contracts to Ager Life Insurance AG—effectively giving half their portfolio away like they were Oprah saying, “You get a policy and YOU get a policy!”
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More players are getting in on the decline action
And it doesn’t stop at Axa and Zurich! Run-off companies like Ergo Lebensversicherung AG and Proxalto Life Insurance AG waved goodbye to a solid 180,000 contracts each. I mean, if you want to be in the insurance business, it might help to… you know, insure something?
Signal Iduna Lebensversicherung aG dropped nearly 80,000 policies, while the kaleidoscope of failures included Cosmos Life Insurance AG, R+V Lebensversicherung AG, Württembergische Lebensversicherung AG, and Provinzial Nordwest Lebensversicherung AG—all of them dropping more than 50,000 contracts each. It’s starting to sound like a game of musical chairs where the music never stops and everyone else just keeps losing more seats!
Relative losses: Gone but not forgotten
In terms of percentage losses, Axa and Zurich still lead the race, with a shocking 36.7 percent drop for Axa. The run-off companies are also doing their best to catch up, with significant losses like BY the Bayerische Vorsorge Lebensversicherung aG and Entis Life Insurance AG, each seeing a 8.5 percent decrease. What’s next? A reality show called “Germany’s Got Less Insurance?”
The Map Report: The insurance industry’s crystal ball
The Map Report Number 936 is your go-to guide for insurance industry gossip, available for a mere 495 euros. Inside, you’ll find 195 pages of data revealing the ups and downs, the do’s and don’ts of insurance, and the “what happened to him?” moments for nearly 78 life insurers. It’s like a treasure map leading straight to policy calamities!
For those eager to delve into the nitty-gritty, it includes everything from balance sheet figures to administrative cost ratios. I mean, who doesn’t love a good read to spice up their boring afternoon?
In conclusion, while life insurers might be grappling with their portfolios akin to a toddler with a spaghetti dinner, we can’t help but watch with a mix of schadenfreude and curiosity. Will they rise from the ashes, or are they doomed to be the punchline of the industry’s joke? Only time (and possibly a little insurance magic) will tell!
November 18, 2024 – The contract portfolio of German life insurers continued its downward trajectory last year, marking yet another decline. Among the 78 companies documented in the latest map report, an alarming 53 were unable to maintain profitable contracts, resulting in significant losses. Notably, Axa and Zurich experienced the steepest declines, largely attributed to substantial inventory transfers. Additionally, the run-off companies, including Ergo and Proxalto, faced severe losses. Bayerische Ärzte Leben aG and Entis experienced considerable percentage reductions but have been reinvigorated to re-enter the new business phase as BY die Bayerische.
According to the General Association of the German Insurance Industry eV (GDV), the main insurance policy portfolio among German life insurers decreased by 0.5 percent, dwindling to a total of 81.4 million policies last year. This marks a continued downward trend in a market grappling with challenges.
Axa and Zurich Deutscher Herold with the biggest losses
The most significant reductions in policy numbers were recorded by Axa Life Insurance AG, which saw a decrease of 890,000 policies, bringing its total down to 1.54 million. Similarly, the Zurich Deutscher Herold Lebensversicherung AG lost nearly 715,000, reducing its total to 2.01 million contracts.
For both Axa and Zurich, the substantial inventory transfers initiated last year were primary contributors to these drastic declines. Midway through 2023, Axa transferred approximately 900,000 conventional life and pension insurance contracts from the former DBV Winterthur Leben portfolio to Ager Life Insurance AG, with the intention of selling these contracts to Athora Life Insurance AG.
In the case of Zurich Deutscher Herold, the company’s strategy involved transferring a significant portion of classic policies, around 700,000 contracts, to the Viridium Group. However, it was announced at the end of January 2024 that this anticipated deal would not materialize.
Other actors with significant reductions
In addition to Axa and Zurich, other run-off companies also faced notable declines in their policy portfolios. Both Ergo Lebensversicherung AG and Proxalto Life Insurance AG reported reductions exceeding 180,000 policies each. This suggests a broader trend among such companies struggling with their existing contracts.
Moreover, Signal Iduna Lebensversicherung aG, which has ceased new business operations, saw a decrease of nearly 80,000 policies. Five other market participants also reported losses exceeding 50,000 policies each, with Cosmos Life Insurance AG, R+V Lebensversicherung AG, Württembergische Lebensversicherung AG, and Provinzial Nordwest Lebensversicherung AG also falling into this category.
The life insurers with the largest relative losses
In terms of relative losses, Axa’s portfolio decreased by a staggering 36.7 percent, while Zurich Deutscher Herold also encountered significant percentage losses. Other companies experiencing notable declines included run-off firms making their return to new business, with BY die Bayerische and Entis reporting declines of 8.5 percent each. The Bayerische Vorsorge Lebensversicherung aG fell below 113,000 policies, while Entis Life Insurance AG dropped to under 56,000.
Athora Life Insurance AG recorded a 7.7 percent decline, reducing its total to 163,000 policies, whereas Victoria Life Insurance Ltd saw a decrease of 6.3 percent, resulting in 653,000 policies. Furthermore, Frankfurt Munich Life Insurance AG, Proxalto, Cosmos, Ergo, and Signal Iduna aG each faced losses of nearly six percent.
Map report: reference option
Map report number 936 – “Balance rating of German life insurers 2023” is published by Franke and Bornberg GmbH. This comprehensive report spans 195 pages and not only features detailed ratings but also provides insightful overviews of approximately two dozen critical balance sheet metrics for the fiscal year 2023 from up to 78 insurers.
Beyond the contract portfolio data, the report includes essential administrative cost ratios as of 11/12/2024. The magazine can be purchased as an e-paper for a net price of 495 euros, accessible through the Order page from Franke and Bornberg.
How can life insurance companies in Germany adapt to mitigate the impact of declining policy numbers?
E category of significant losses.
Conclusion: The Future of Life Insurance in Germany
The declining trend in the German life insurance sector raises several questions about the future viability of these companies and the services they offer. As they continue to face challenges such as aging portfolios and low interest rates, the reduction in policy numbers reflects a broader struggle within the industry. The severe inventory transfers at major players like Axa and Zurich underline the industry’s urgency to streamline operations and manage unsustainable contracts.
Whether these insurers can successfully pivot to regain their footing or if they will continue to grapple with lost contracts remains to be seen. The ongoing consolidation and focus on profitability suggest that the landscape will change significantly in the coming years. Moreover, with consumers becoming increasingly aware of their options, companies will need to innovate and adapt if they wish to remain relevant in the evolving market.
As we witness this transition phase, industry analysts and stakeholders will be keeping a close eye on developments, particularly how these insurance firms respond to their shrinking portfolios and shifting consumer demands. The eventual outcome may redefine the life insurance narrative in Germany and potentially beyond.
