Insurance: Helvetia sells German business

For decades, there was an iron rule: if a Swiss insurer wanted to overcome the narrowness of its home market and expand, it had to go to Germany. Austria and Italy were also possible options, but the most important foreign market remained the northern neighbor. Baloise, Helvetia, Swiss Life, Swiss Re and Zurich have been active in this country for many years.

But now enthusiasm for the German insurance market is waning. Helvetia, which has been active in Germany since 1862, is leaving the country and is looking for a buyer for its units in Frankfurt. Competitor Baloise is also under pressure from major shareholders to withdraw.

According to SZ information, Helvetia has received non-binding offers from several bidders in recent weeks. The basis was a presentation by the company and its investment bankers. This phase is now complete. In the coming days, the insurer will open the digital data room to selected interested parties. There they will be able to view the group's internal data and make a binding purchase offer on this basis. A Helvetia spokesman said that they do not comment on rumors.

The deal involves two subsidiaries and a branch, 800 employees and total premium income of around one billion euros. Helvetia Insurance, Helvetia Life Insurance and the branch's portfolio are to be sold.

The insurer Baloise, formerly active under the name Basler, is also considering withdrawing from Germany. The company's largest shareholder is the Swedish investment fund Cevian, which holds 9.4 percent. Cevian is known for actively interfering in the management of companies. Cevian boss Lars Förberg has been demanding for months that Baloise give up its German business. The Swiss already sold the direct insurer Friday to Allianz in October 2024. The business in Germany is simply not successful and probably never will be, said Förberg in an interview with the Neue Zürcher Zeitung .

From the perspective of large investors, the German market is highly profitable for insurance giants such as Allianz and Munich Re, but not very attractive for medium-sized and small insurers. Life insurance business is shrinking, and customers receive a comparatively high share of the profits. In property insurance, natural disasters such as the Ahr flood and high losses in car insurance have spoiled the balance sheets of many insurers. In addition, there is a high need for investment in IT modernization and a very active supervisory authority.

The German Helvetia Group is actually only delivering meager profits in Switzerland and is struggling with an expensive IT changeover. Fabian Rupprecht, CEO since the end of 2023, is currently trimming the Swiss group for higher profits and growing dividends. This includes cutting 500 of the group's approximately 14,000 jobs. Rupprecht is also under pressure from shareholders.

Helvetia is comparatively expensive for customers. The so-called acquisition costs ratio of Helvetia Leben - which are mainly commissions for agents - is 5.6 percent, significantly higher than the market average of 4.5 percent. This means that Helvetia customers have to pay 5.6 percent of all premiums that they are to pay over the next 20 or 30 years to take out a contract. On top of that, there are ongoing administration costs of a whopping 4.7 percent. The market average is much more modest at 2.5 percent.