Solvency II creating advantages for German life insurers, claims Berendsen

The arrival of Solvency II could be positive for German life insurers, according to Caspar Berendsen, partner, financial services at European private equity firm Cinven.

Berendsen told delegates at the SZ (Süddeutsche Zeitung) conference, titled ‘Run-Off 2016: New Dynamic in the Market’, which took place in Hamburg, Germany, this week, that the German life insurance run-off market was facing a number of problems, both old and new.

The old problems included the continuing issue of low German government bond yields, low interest rates leading to low amounts of new business and finally information technology problems in the form of old legacy systems that make it hard to transfer old information onto new systems.

Berendsen also identified a new problem, which was that the impending arrival of Solvency II in 2015 had introduced a level of uncertainty in the market that had led to lower share prices for life insurance companies all over Europe.

However, he stressed that Solvency II could bring in a number of answers for these questions. These included the fact that consolidation might create a greater scale of operations in terms of IT investment, that asset management could benefit from greater illiquidity, that there could be benefits from the management of the solvency capital requirement of life insurers and finally that Solvency II can bring in a radical focus on core cashflow.

According to Berendsen all of the above could bring strong policyholder benefits and therefore be a direct benefit for the market. He concluded that there are significant opportunities for investors in life insurance companies in the post-Solvency II world.