The two largest German reinsurers want to work together in some areas of capital investment.
Munich Re and Hannover Re have registered a joint venture with the Federal Cartel Office, according to a publication by the authority.
It is about the establishment of a “joint venture in order to selectively pursue investments in alternative asset classes in the field of capital investments,” spokesmen for both reinsurers explained on Wednesday in the same way when asked.
"It should also serve to improve diversification in a joint portfolio." They did not want to comment further.
Alternative asset classes are investments outside of the public capital markets, such as investments in large infrastructure projects, in private equity funds or in real estate.
Together, the reinsurers could make larger investments than alone.
In the years of low interest rates, these had become increasingly attractive for insurers and reinsurers in comparison, as they yield more interesting returns with higher risk.
In recent years, it has become increasingly common in the industry for special services to be provided by several providers in cooperation.
For insurers, who often have long investment horizons, illiquid asset classes fit very well into their investment portfolios.
Unlike asset managers, these must be optimally adapted to the obligation structure, i.e. the insurance risks for which they stand.
The industry is dependent on permanently flowing income.
In life insurance and liability policies, insurers must ensure that the maturity of the securities and the duration of the obligations match.