The financial strength of German life insurers is mainly determined by their returns achieved on the capital markets as well as their profit margin of their insurance business. Customers are looking for financially strong ensurers providing them with a high level of profit participation – in addition to covering the guaranteed interest rated and the sums insured. Given that consumers invest an important portion of their income in life insurance, they are looking for a long-term relationship with insurance partners having good financial health. Insurance brokers, advising their customers on the choice of the life insurer are required to compare life insurers before giving advice. Our ranking provides such an independent benchmark analysis.
Measuring Financial Health.
To quantify a life insurer’s financial health we use the Economic Capital Ratio. It is simply the company’s available capital divided by its assets. This ratio enables us to rank and compare insurers of different size. Indeed, it is not the size that matters, but whether the insurer has the financial means to be resilient in adverse situations. Computing the economic capital of a life insurer is the core of RealRate’s computational model. Picking the most important information from the annual business reports, we transform those accounting values to economic market values. This approach is especially important for German life insurers since their statutory accounting relies on book values often being quite different from fair market values. In addition, their business model and corresponding accounting is difficult and deviates from other industries. The Economic Capital Ratio is a forward-looking key ratio capturing financial health in just one figure.
The RealRate ranking of German life insurers from 10/2019 is available. The ranking is based on the annual reports of the balance sheet year 2018. The order of the ranking is based on the economic equity ratio. This measures the financial strength that results when the published commercial balance sheet is revalued at fair market values.
The winner was New Bavarian official life insurance. It has a very good equity base under commercial law and a very positive risk and other result. HUK-COBURG life insurance was pushed into second place. Itzehoer Lebensversicherung took third place.
The German life insurance market is worth over €100 billion with over 30 million active policies.
The brilliant thing about RealRate is that they deliver 100% fair and independent ratings, joining together expert knowledge and cutting edge artificial intelligence. When one looks at the AI used in more detail, we can see that it’s totally unbiased and uses only audited public data.back to Ranking Area