Life insurers in Germany currently face major challenges:
- The prolonged low-interest rate phase is making it difficult to generate the necessary returns on the capital market.
- Through increased and tighter regulatory standards, business has become more complex while the scope for strategic and financial action has narrowed.
- An obvious modernisation and investment backlog, combined with rapidly advancing digitalisation requires substantial investments in IT.
- Due to the interest rate environment and shifting demographic patterns, new business is in decline. It is becoming more expensive to administer and manage the shrinking portfolios.
The insurers – in Germany still more than 80 in number – therefore face the question of how to put in place the necessary resources in terms of financing, balance sheet, and personnel. Along with the conventional ways of reducing costs and identifying efficiencies, they are increasingly weighing the option of withdrawing certain products and tariffs from the market and abandoning the corresponding business in those areas. This also makes it possible to reduce capacities in sales functions.
The key question: Should they continue to manage the now inactive and thus shrinking portfolios ("run-off") themselves? Or is it better to move to spin off such portfolios and transfer them to providers specialising in insurance portfolio management?
As a portfolio consolidator, the Viridium Group offers life insurers the opportunity to broaden their scope of action in a challenging environment. Insurers can therefore hand portfolios, which cannot be managed at the required level of profitability, or that will not be part of their core business in the future to specialists.