Marketing To German Insurance Investors: A Summary

German insurers have historically been conservative investors that are highly exposed to fixed-income investments. Until recently, low interest rates motivated insurers to increase allocations to private markets and other higher return strategies. However, this low interest rate environment no longer exists.

Given their high exposure to fixed-interest-bearing securities, as interest rates rose, German insurers saw a decrease in the market value of their capital investments. Allianz and Munich Re, for example, saw a decrease of 18% and 11% respectively in the value of their financial assets from CY21 to CY22. As valuations for private funds did not experience the same adjustment, insurers became overweight on private assets. The denominator effect paired with the newfound attractiveness of traditional fixed income, has led to a slowdown in commitments to private funds.