Bundesverband Alternative Investments e.V. (BAI)

A higher proportion of German insurers than other investors are invested in alternative asset classes and often already have more experience and specialized teams. However, due to the advanced stage of the build-up plan for alternatives portfolios, there are obstacles to further increases in allocation. Challenges include regulation, illiquidity, long-term capital commitment and valuation problems. Despite this, the outlook remains largely positive and regulation offers enough leeway for more insurance companies to continue to increase their allocation than reduce it.

Compared to their international competitors, German insurers tend to want to increase their allocation to infrastructure equity and debt, while they tend to reduce their exposure to real estate. Primary insurers and reinsurers pursue different approaches due to regulatory requirements and strategies: Reinsurers use more flexible rules for equity investments, such as in private equity, whereas primary insurers tend to focus on debt asset classes such as infrastructure debt and real estate debt in order to achieve stable returns.

BAI Managing Director Frank Dornseifer classifies the importance of insurance companies with regard to infrastructure: “The current and future allocation of insurance companies in the infrastructure segment is of great importance in two respects. On the one hand, the industry is clearly signaling that it is available as a relevant investor group for financing the sustainable transformation and energy transition. Secondly, it shows how important it is that current legislative procedures such as the Future Financing Act II, the Occupational Pensions Strengthening Act II and, of course, the Fund Market Strengthening Act are passed quickly. These are the basis for further and more efficient investment in infrastructure. Here, not only the old Ampel coalition, but also the opposition is called upon to contribute to constructive solutions, also so that the energy transition can succeed.”

Florian Bucher, BAI market analyst, observes: “In an international comparison, German insurers are increasingly focusing on infrastructure investments. This provides a solid basis for institutional investors to contribute to the digital and sustainable transformation of the German economy. However, it must be borne in mind that Germany is competing for investments on the global capital market and that German insurers' investments do not necessarily flow into German infrastructure projects. We must continue to make Germany more attractive as an investment location in order to better exploit the potential of German insurers' capital in the economic transformation in Germany.”

The BAI study “German Insurance Companies 2024: Sophisticated Investors in the Global Alternatives Market” can be downloaded via the following link: Link

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Press contact:
Bundesverband Alternative Investments e.V. (BAI)
RA Frank Dornseifer
Managing Director
Poppelsdorfer Allee 106
53115 Bonn
Tel.: +49 (0)228-96987-50
dornseifer@bvai.de
www.bvai.de
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