Canadian Underwriter

Gerling group placed on bidding block as Deutsche Bank looks for exit

March 15, 2002   by Canadian Underwriter

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Cologne, Germany-based Gerling Versicherungs Beteiligungs A.G. which operates globally in the primary insurance, reinsurance and life sectors has been put up for sale by one of the company’s majority shareholders, Deutsche Bank, a statement released by the group says.
The troubled insurance group, which wrote total gross premiums of around US$8.5 billion for 2000, indicated earlier this year that its Gerling Global Reinsurance Group (GGRG) will likely post a loss of about US$450 million for the 2001 financial year. Gerling’s two majority shareholders, Deutsche Bank and Dr. Rolf Gerling, provided a capital injection of around US$265 million to the company about a week ago. This follows a similar cash infusion of US$360 million made this past December.
A joint statement released today by Rolf Gerling and Deutsche Bank says a major restructuring of the group is currently underway. As part of this process, the group’s GGRG chairman, Norbert Strohnschen has resigned. The statement adds, "the new chairman of the executive board [Gerling Group] and CEO, Dr. Heinrich Focke, will reconstructure the group’s portfolio and embark on a new strategic course".
As part of this restructuring process, Gerling says it will be looking for a "strategic partner" to acquire Deutsche Bank’s stakehold. The acquirer would also receive additional shareholding from Rolf Gerling, making the new partner the majority shareholder of the group’s holding company. "Both shareholders have agreed on finding a strategic partner to guarantee the long-term development of the group. Dr. Gerling and Deutsche Bank are willing to give the new partner the Deutsche Bank share and a further share, thus making him the majority shareholder of Gerling Holding."
Gerling has not indicated whether any potential suitors have been identified or approached. Nor has any detail been given to how the group’s restructuring will impact on its international subsidiary operations. Gerling says that about 40% of its revenue is generated from outside of Germany. Gerling operates in Canada through Gerling Canada Insurance Co., Gerling Global Reinsurance Co., and Gerling Global Life Insurance Co. Gerling Canada wrote about Cdn$46.5 million in premium for 2000, posting an underwriting profit of Cdn$756,000. Gerling Global Reinsurance wrote Cdn$59.5 million in premium for last year at a Cdn$5 million underwriting loss. A statement has not yet been released by the Canadian operations to how the prospective sale of their parent company will affect the group’s position in Canada.

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