Run off

from Wikipedia, the free encyclopedia

Run-off refers to the cessation of new business and the cost-effective continuation of old portfolios (old contracts). This applies to insurance companies , in particular property and life insurers ; run-offs are also common in banking; these are also referred to as settlement banks.

Business model (insurance)

In the event of a run-off, the respective insurance company terminates its business activity, i.e. no longer accepts new customers, and transfers its insurance portfolio to another company (portfolio transfer). When the portfolio is transferred, customers get a new contract partner. An alternative to this is to sell the entire insurance company to one investor (change of ownership). The contractual partner remains the same, only the ownership structure changes. In both cases one speaks of an external run-off. A so-called internal run-off occurs when the insurance company officially or at least effectively ceases its new customer business, but does not transfer the portfolio to a third party but continues it itself. The companies that take over insurance companies or their portfolios by way of run-offs are called run-off companies.

The main cause of the run-offs that have been carried out in Germany since the 2010s is, in particular, the ongoing phase of low interest rates, which makes it difficult for endowment insurance providers to generate the promised returns. But also extensive modernization requirements, especially in the IT area, and increased regulatory requirements make it increasingly difficult for companies to generate the necessary funds for given guarantee promises and attractive surpluses. From an economic point of view, it can therefore make sense to discontinue business with new customers or to completely transfer the life insurance division to specialists. The business strategy of the run-off companies is to continue the insurance contracts they have taken over with significantly lower administrative costs. The insured must share in the cost savings; this is regulated by the minimum allocation regulation .

Run-off companies in Germany

There are currently three portfolio managers active in the German life insurance market:

year insurer contracts Capital assets Run-off platform comment source
2014 Heidelberg life insurance 600,000 € 5.2 billion
Logo Viridium Group.jpg
 Source ,
2014 Skandia life insurance 400,000 € 4.9 billion Source ,
2017 Protector life insurance 100,000 € 1.8 billion Continuation as Entis Lebensversicherung ,
which looks after around 85,000 life insurance contracts from
the former Mannheimer Lebensversicherung AG		 source
2019 Generali life 3,850,000 € 44.6 billion Continuation as Proxalto life insurance source
2015 Delta Lloyd Germany 350,000 € 4.6 billion Athora Formerly Berlinische Lebens-Versicherungs Gesellschaft ,
initially continued as Athene Lebensversicherung,
renamed Athora Lebensversicherung in 2018 		source
2015 Basel life 120,000 € 2.6 billion
Frankfurter Leben Logo.png
 Continuation as a Frankfurt life insurance company source
2017 ARAG life insurance 322,000 € 2.8 billion Continuation as Frankfurt Munich Life Insurance source
2018 Pension fund Pro BAV ( Axa Germany ) 260,000 € 3.0 billion source
2018 Prudentia Pension Fund (COFRA Group) 50,000 € 1.8 billion source
2019 Nuremberg civil servants life insurance AG ( none ) Handling on your own source

Run-offs in Germany require the approval of the Federal Financial Supervisory Authority (BaFin). BaFin grants approval if the interests of the insured persons concerned are preserved and the run-off company proves that it can permanently meet the obligations from the insurance contracts. The run-off companies are subject to German insurance supervisory law even after the change of ownership or portfolio transfer.

The Association of Insureds regards the run-offs of German endowment insurers as a “turning point” and fears “great dangers” for customers. The return targeted by the run-off companies can only be achieved if, in return, as many surpluses as possible are withheld from the insured. However, BaFin does not sufficiently represent the interest of customers in a high profit participation . Spiegel Online commented that the customers are no longer economically attractive to the insurance company and are therefore "deported". Both private and company pension schemes in Germany threatened to “collapse”.

But there are also other opinions among consumer advocates. "It doesn't have to be a bad deal for consumers to get away from someone who is already fed up with them and to someone who really wants the customer," said Lars Gatschke, insurance expert at the Federal Association of Consumer Organizations . In principle, reselling the contracts should not change anything for the customers.

BaFin took the planned run-off of Generali as an opportunity to present the strict requirements for a company sale.

literature

  • Marco Ritter: Run-off in life insurance . 1st edition. Volk und Wissen Verlag, Leipzig 2014, ISBN 978-3-89952-802-2 .
  • Kay slotted spoon, Hannah Wesker: Run-Off. Protection of customers in life insurance. In: BaFin-Journal 2/2018, pp. 12-17.

Web links

Individual evidence

  1. ↑ Bundestag printed paper 19/1514 of April 3, 2018
  2. ↑ Earthquake in German life insurance endangers the retirement provisions of 10 million insured persons. Association of Insured Persons , September 28, 2017, accessed on March 28, 2019 (press release).
  3. ^ Anne Seith: Sale of four million life insurance policies: The slow decline of private old-age provision. In: Spiegel Online . July 6, 2018, accessed October 7, 2018 .
  4. ↑ Carsten Hertz: Turning point for life insured persons: What the Generali deal means for the industry. In Handelsblatt , April 29, 2019
  5. ↑ Strict requirements for a company sale. BaFin , July 5, 2018, accessed on March 28, 2019 (press release).