The Signa Holding Insolvency: Impact on German Insurers and Investments

The insolvency of Signa Holding is causing waves that are also reaching Germany. The „Financial Times“ According to the report, German insurers, including Munich Re and Allianz, invested a total of more than three billion euros in René Benko’s real estate empire.

In total, Signa Holding had accumulated debts amounting to five billion euros by September of this year. According to insiders, the individual companies in the group have taken out more than ten billion euros in loans. Accordingly, further bankruptcies should follow over time.

A large part of Signa’s loans did not come from banks

However, due to the size and risky business model of the Signa Group, banks were not the only creditors, the Financial Times reports.

“Heavily regulated banks were unable or unwilling to do certain types of business due to their capital requirements, while insurance groups were drowning in cash in the era of ultra-low interest rates,” said an insider who requested anonymity.

The Dortmund insurer Signal Iduna lent the Signa Group almost one billion euros. Munich Re, Allianz and the insurance group R+V each provided around 700 million, 300 million and 500 million euros.

The level of collateral varied greatly from insurer to insurer

While Signal Iduna’s one billion euros were “largely” backed by collateral in the form of real estate in prime German city locations, around half of the 500 million euros that R+V made available was unsecured.

However, according to information from the financial supervisory authority Bafin, the different collateral levels do not pose any “significant threats”, especially for large German insurers such as Munich Re or Allianz, as the risk is low in relation to the respective total assets.

German insurer LVM acquired Signa shares

But the Signa bankruptcy is also affecting German insurers beyond the credit risk, the “Financial Times” reports. Individual creditors acquired shares in the Signa Group.

For example, the medium-sized German insurer LVM granted the Signa Group around 300 million in lightly secured loans and also purchased around 2.9 percent of the large Signa company Signa Prime Selection.

LVM declined to comment on the matter.

2023-12-12 21:19:52
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