German health insurers face large losses from risky real-estate investments
A government response to a Greens inquiry reveals that many statutory health insurers and physicians' associations have made high-risk property-linked investments that are now underperforming or at risk of total loss.
In answer to a Kleine Anfrage from the Greens, the Federal Office for Social Security disclosed that many statutory health insurers and physicians' associations pursued high-risk real-estate-backed securities during the low-interest era, resulting in a wave of underperforming assets. These investments, including owner-secured bonds and loan securities, have been labeled “performance-impaired,” meaning they fall short of expected returns or risk total loss.
While exact loss figures remain uncertain, insurers have already written off a sizable portion of these holdings and anticipate further adjustments in 2026. Paula Piechotta of the Greens highlighted the lack of adequate control mechanisms and demanded a comprehensive inquiry. Legal analysis by André Große Vorholt of Luther noted cases where securities were backed by land vastly overvalued relative to market price.
The BAS, which became aware of such deals as early as 2017, only issued a warning in 2023, after several projects began to falter. The government now intends to review whether complex bond purchases should be restricted and has already decided to prohibit new loan-security investments by insurers from 1 January 2027.
