Axa Art Versicherung is top German non-life investor

Channels: SAA/ALM, Managers, Outsourcing, Risk, Regulation

Companies: BaFin, Axa Art Versicherung AG, Oldenburgische Landesbrandkasse, HDI Haftpflicht, Bayerische Hausbesitzer Versicherungsgesellschaft, Axa Investment Managers, Basler Versicherung

Germany’s non-life insurers generated a running yield on their investments of 2.8% last year, undershooting the 3.4% recorded by the country’s life underwriters

Axa Art Versicherung topped the 206-strong field of non-life firms, with a running yield of 19.4%.

It was followed by three more that each beat 10%.

A running yield is the income from an investment divided by that investment’s market price.

These were Oldenburgische Landesbrandkasse (17%), HDI Haftpflicht (14.9%) and Bayerische Hausbesitzer (10.5%).

In its solvency and financial condition report for 2017, Axa Art Versicherung put its performance largely down to investments in seven related entities, which comprised about half of its €214m general account. Without these, the 2017 running yield would have been just 2.6%, it said. Axa Art Versicherung outsources much of its investment management to the group affiliate Axa Investment Managers (Deutschland).

Bayersiche Hausbesitzer’s SFCR explained its own result, of 10.5%, from allocating a higher proportion of its general account to property than “is usual in the broader market”. Bayerische Hausbesitzer seeks first and foremost “the greatest possible security” in its investments, saleability and “always sufficient liquidity”. Bayerische Hausbesitzer’s gross returns on property in 2017 were 55%. That fell to a still-creditable 16.6% once the costs associated with those investments were accounted for, however.

The median running yield was 2.4%.

When, as here, the median result (2.4%) is lower than the average (2.8%), it means more entities undershot the average than overshot it. Only 79 of the 206 German non-life insurers beat the average.

All the insurers’ investment results were published in the annual report about primary insurers in 2017 by their regulator BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht). The supervisor published its summary of the year earlier this week.

Another eight insurers made more than 5%. Happily none posted a negative running yield.

It was a different case when the measure of ‘Reinverzinsung’, which gauges returns while also accounting for the costs of managing and selling investments, was applied.

By that measure 10 underwriters scored negative returns during 2017.

But four topped 10%. Axa Art Versicherung came out on top, again, with 19.6%, while Basler Versicherung made 17.4%, HDI Haftpflicht returned 14.7% and Oldenburgische Brandkasse made 11.9%.

The average Reinverzinsung was 2.6%.

David Walker