germany eyes watchdog ruling on insurer
Insurers and bankers in Germany are anxiously awaiting a regulatory decision which could pave the way for a fresh wave of consolidation and shake up the country’s fragmented insurance market. The German regulator, BaFin is poring over the planned sale by Lloyd’s Banking Group of insurer Heidelberger Leben. Senior bankers say that if the regulator waves through the £ 250 million ( R4.5 billion) joint purchase, by private equity group Cinven and the reinsurer Hannover Re, it could kick- start consolidation in the German insurance market similar to that of the UK. The planned deal comes at a time of turmoil for the German insurance industry. Low interest rates are harming profits in a country where generous guaranteed rates are still paid to risk- averse consumers, who often depend on insurance products for a retirement income. BaFin recently indicated it would take an open mind to the idea of selling portfolios in run- off mode. But it has helped to scupper previous similar deals. An attempt by Nomura, the Japanese investment bank, to take over the German run- off life insurance assets of Delta Lloyd in 2012 failed after the Dutch insurer said negotiations with BaFin had been more difficult than expected.