The group is looking for ways to outsource the management of old life insurance portfolios to specialized companies.
Munich Allianz is transferring an old portfolio of Swiss life insurances to the reinsurer Resolution Re. The group announced on Thursday afternoon. The portfolio, which has not been sold for a long time, has a provision volume of around four billion Swiss francs.
Resolution Re, which specializes in the acquisition and management of old life insurance portfolios, assumes market and liability risks, while Allianz remains responsible for the policies towards customers.
Already at the weekend it became known that Allianz is also looking for new solutions for its insurance portfolios in the USA. Established houses there are trying to restructure their holdings under the heading of “Life-Backbook-Transactions”. The situation is similar to that in Europe, where life insurers have also given up portfolios in the past.
The reasons lie primarily in the high capital requirements that insurers have to maintain according to the regulations for the sometimes high-interest contracts.
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Similar plans in the US
As in Switzerland, according to market rumors, there are no plans to sell an Allianz portfolio of old portfolios in the USA, but only to obtain coverage through a reinsurer. This would then release capital.
The business model of the receiving reinsurer is based on the model of guaranteeing the life insurer a fixed interest rate, but using more flexible investment options to achieve a return that goes beyond that and thus to generate a profit.
In this case, however, Allianz would remain the point of contact for customers. CEO Oliver Bäte had already announced such plans in an analyst round for the second quarter. “So we are pursuing the strategy and are committed to capitalizing on this backbook. But in a way that ensures that all stakeholders are treated fairly, ”he said at the time.
It was only in April that Allianz in Belgium handed over a package of around 90,000 life insurance contracts to the reinsurer Monument Re. In addition, it was said that Allianz wants to concentrate there in the future on new types of life insurance, which should tie up less capital. On the German home market, Allianz had repeatedly ruled out the issue of life insurance policies. “We now generally intend to systematically reduce risk capital consumption and volatility over the next few years and at the same time increase earnings,” Bäte announced to analysts after the second quarter.
In the USA, in addition to reinsurers, which are often based in Bermuda, private equity houses are also interested in the portfolios of life insurers. They manage more than 160 million policies. Well-known names such as Apollo, KKR, Blackstone or Carlyle are considered interested parties.
In the context of the alliance, it is emphasized that the plans to surrender US life insurance policies have nothing to do with the current investigations of the US judiciary. Because of the high losses of so-called structured alpha funds at the beginning of the corona crisis, 25 institutional investors are currently suing the Allianz subsidiary AGI. The damage could amount to as much as six billion dollars.
More: Interview with Allianz boss Bäte: “Germany’s business model is at stake”