Corona charges life insurance companies

Corona charges life insurance companies

The corona crisis is having an impact on private retirement provision: the major european insurer allianz on friday reported a sharp drop in its life insurance sales this year, as competitors of the munich-based dax group had previously done.

In germany, the industry leader sold new life insurance policies worth 117 million euros in the third quarter, down almost 39 percent on the previous year. In the U.S. And also in italy, the decline was similar; the only increase was in the asia-pacific region.

Overall, allianz’s premium income in the life/health segment fell by 9.4 percent to 16.8 billion euros. The company attributed this, without elaboration, to covid-19 and "active steering". "You have to put things into perspective a bit," chief financial officer giulio terzariol said of the figures. Life insurance business had been particularly good in the previous year. "I am confident that we will see good numbers again (in this area) in the future."

Allianz is by no means alone in being hit by the international weakness in life insurance. This week, the french axa group – also a heavyweight – and, to a lesser extent, the dusseldorf-based ergo insurance company had already reported declines in sales in the life insurance segment.

In germany, life insurance is still a very widespread form of private retirement provision. According to the german insurance association, there were still 87 million life insurance policies in the federal republic in 2019 – more than the number of inhabitants. This is due to the fact that quite a few customers have completed more than one policy.

Even before corona, life insurance policies had lost their appeal because the european central bank’s zero interest rate policy is lowering the chances of returns and insurers are generally no longer agreeing to guaranteed interest rates for new policies.

At allianz, the corona pandemic hit several business areas hard, but the group still managed to increase its profit. Allianz did better than analysts expected in all business areas. Third-quarter sales fell from 33.4 billion euros to 31.4 billion euros, but in the end the group posted a net profit of almost 2.1 billion euros, almost six percent more than a year earlier. Nevertheless, management could not bring itself to make a new profit forecast. CEO oliver bate had withdrawn his original target of an operating profit of 11.5 to 12.5 billion euros at the end of april.

In the largest segment, property and casualty business, sales fell by 1.8 percent to 12.9 billion euros. The suffering industrial insurance company AGCS, whose costs exceed its income, contributed significantly to this. There was also a sharp corona-related slump at allianz partners, a subsidiary specializing in travel insurance. Since far fewer people travel, the associated insurance business naturally suffers as well.

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