Italian insurance giant Generali is looking at offers to unload all of its life-insurance policies in Germany in what would be the country’s biggest “runoff” deal ever. Some four million policies with an assured sum of €40 billion could be sold off to a specialist investor for something like €1 billion. If Generali goes ahead, its retreat from its legacy policies could accelerate an industry trend, as German life insurers creak under the pressure of low interest rates and old people fear for their retirement savings.
“A decision will come probably before the summer,” Giovanni Liverani, head of Generali’s operations in Germany, told Handelsblatt. Athene, Viridium and Frankfurter Leben are among the specialized runoff platforms interested in buying the policies, according to industry sources.
These days, as interest rates have been near zero for years, life insurers have increasingly been missing their targets on the returns they promised or guaranteed to policyholders. This has forced the insurers to abandon giving guarantees in new policies. It has also prompted them to offload their older, and now unprofitable, policies to specialists who exploit economies of scale to “run off” – wind down – these legacy policies.
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