Abstract
The German insurance market is huge. In non-life it is second in size only to
the US and in life it is the
world’s fifth largest market. Like all
fully developed western markets it is relatively slow growing, but
this
market is so large that even small percentage increments are large in absolute
terms.
Germany is home to a number of the key players in reinsurance.
Munich Re is second only to Swiss Re
in absolute size. Hannover Re is the
second largest German reinsurer and the Berkshire Hathawayowned
Cologne Re
holds third place.
Like virtually all financial services companies
worldwide, the German insurers have been impacted by the
global financial
crisis. Talanx Group CEO Herbert K. Haas put it quite directly when he
commented:
that "in terms of our expected Group net income 2008 is a lost
year." In a press release issued on
December 2, the company said,
“The crisis on financial markets, which escalated markedly in
October,
has had a twofold impact on the Talanx Group: on the one hand,
through write-downs and disposal losses
on equities (€ 1.1 billion
on balance) and, on the other hand, through impairments on bonds issued by
banks and corporations that found themselves in difficulties as a consequence
of the crisis. An increased
default risk is to be anticipated on the
securities of such issuers. The resulting write-downs produced a
drag on
investment income in the order of € 160 million. An indirect effect of
the crisis on financial
markets is the considerable uncertainty prevailing
among consumers – both as regards the security of
investments and
the future economic trend.”
A distinctive feature of the German
landscape is the degree of integration within the financial services
industry. Germany pioneered the allfinanz concept and most of the main players
are members of groups
that include banking and investment management
arms.
This integration, that is so often a strength, in the present
circumstances has left the German insurers more
exposed to the impact of
what is primarily a banking crisis than many of their counterparts in
other
countries. Already market leader Allianz has felt the need to sell
off its Dresdner Bank subsidiary.
A number of the leading players are true
global titans. More of their revenues come from markets outside
Germany
(even if some of that premium is written in Germany) and they will be looking
to the emerging
international markets, rather than their home market, for
much of their future business development.
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