After two years with very high claims, Munich-based Versicherungskammer Group believes it is well positioned for the year that has just got underway. „2025 could be a really good financial year, provided that we move closer to geopolitical normalisation again,“ says CEO Frank Walthes in an interview with Börsen-Zeitung.

Chief Financial Officer Andreas Kolb notes that the primary insurer has made significant advance investments with an IT offensive. And Walthes also justifies the optimism on the grounds investments already made in planned product launches. In addition, new personnel are on board. Last year, Versicherungskammer increased the number of employees by around 300, despite a shortage of skilled labour and demographic challenges. In addition, the Management Board has been newly structured.

„We want to strengthen the Operations department,“ explains Walthes. In future, Management Board member Isabella Martorell Naßl will be responsible for all customer-orientated activities. Around a third of the almost 7,500 employees work in this area. Walthes' goal is that „operations should have a clearer impact on the business areas.“

The CEO confirms the goal of significantly increasing sales: „We see ourselves in the Champions League. Our goal is in future to generate premium income of around 10 billion euros," he says. The group wants to reach this level in 2027 or 2028. With the 2024 results, the company is back on target to achieve this goal and ensure profitable company growth.

Last year, premium income rose by just under 4% to more than 9 billion euros, Kolb explained, performing better than originally targeted. Previously, starting from 9.4 billion euros in 2020, it had had to accept declines in the gross premium income written category since the start of the pandemic, due to the falling single-premium business in life insurance.

Last year, property and casualty insurance was the driver. It increased its turnover by 9.2%. Around two-thirds of the increase in premiums was due to price adjustments.

Walthes also sees cooperation with sister companies from the public sector as likely to be a success factor in 2025, saying that "we are really well positioned for the new year.“ This applies, for example, to personal insurance, for which the Versicherungskammer has now established a separate department on the Executive Board.

In addition, an IT technology partnership has been established with the Provinzial Group under the leadership of the Versicherungskammer – 80% of the IT services of insurers from the savings bank sector are thus bundled: „Scaling is a key factor for us, and we do this best within the public sector camp," says Walthes. Mergers are not on the cards.

With regard to 2024, Walthes says that it was an extremely challenging financial year. Inflation had an impact on the earnings and cost structures. In addition, the Whitsun floods in Bavaria and Saarland led to high claims payments, after a hailstorm in Bad Bayersoien in Bavaria had driven up claims in the previous year.

As a result of the high premium growth and the slightly lower increase in claims expenses and costs, the combined ratio fell from 106% to around 103%, says Kolb. Claims expenditure (excluding VKB reinsurance), which was also driven by inflation, increased by around 6% from 2.56 billion euros in the previous year to 2.65 billion euros.

At around 380 million euros, the burden from natural catastrophes remained at the previous year's level. In a year with an average burden, Versicherungskammer would expect around 240 million euros.

Although the combined ratio was once again worse than 100%, Versicherungskammer believes that it has not been too hesitant to increase premiums. With a premium increase in the composite segment of just under 10% in each of the past two years, the company is relatively clearly positioned, says Walthes.

In car insurance, a net increase in the number of insured vehicles was recorded in 2024, reports Walthes. According to Kolb, the combined ratio fell from 113% to around 106%.

The CFO does not see any particular inflation in bodily injury claims; rather, spare parts prices and workshop costs are the cost drivers. Medical costs and care expenses have not risen exorbitantly.

As a result of the high claims and inflation-induced increase in insured sums, Versicherungskammer has readjusted its reinsurance structure, explains the CFO. The programmes have also been significantly expanded to 1.4 billion euros per individual accumulation event in the natural catastrophe sector (natural hazards).

In life insurance, single premiums fell by around 8% in 2024, meaning that total premium income fell slightly. The company is now satisfied with a base of around 840 million euros in single premiums per year. In 2023, surrenders in the institutional business would have led to increased benefits in life insurance, which would have declined again.

In health insurance, benefit expenses have risen more sharply. While competitors were expecting an average increase of up to 10%, the Versicherungskammer was expecting an increase of around 7%. The division had increased its premium income by 3.8%.

Earnings before taxes in 2024 will be in the region of 360 to 370 million euros, says Kolb. In the previous year, Versicherungskammer had reported 386 million euros.

In 2024, around 80 million euros was processed which Versicherungskammer invested in IT, in addition to the annual project expenditure of 70 to 80 million euros per year. An additional 250 million euros would be spent over five years. Ongoing costs, on the other hand, increased less strongly than the general price increases.

The Versicherungskammer Group received a tailwind from the investment result, which rose from 1.4 to 1.5 billion euros. According to Kolb, this corresponds to a net return of 2.3%. The entire stock market, the commodities sector and high-yield bonds performed very well. Last year, Versicherungskammer invested around 2.5 billion euros with an average return of well over 3%.

„As in the previous year, our property portfolio was less affected by market developments than the market as a whole,“ explains Kolb. In the commercial property sector, with a volume of around 2.5 billion euros, the decline in market value was around 7 to 8%, while the market recorded a decline of around 10%. In total, Versicherungskammer owns properties worth around 8 billion euros.