Business Briefs

Mannheimer insolvency signals trouble for industry

One of Germany’s oldest insurance companies was left looking for a bailout plan on Thursday after the German insurance industry association (GdV) announced that a last-minute rescue initiative to raise €370 million ($426 million) from fellow insurers had failed. The Mannheimer Lebensversicherung AG, which has been struggling to stay afloat following significant losses on the capital markets last year, turned to the GdV – a cooperation of 110 insurance companies -- in the hopes of drumming up enough fresh cash to prevent it from being the first German insurer to go under in 50 years. The GdV, however, could not convince the necessary 90 percent of its members to back the rescue plan. It now looks as if Mannheimer will become the first German insurer to seek help from Protektor, the industry-backed safety net set up last year to protect policyholder’s investments in the event of an insurer’s insolvency. But Protektor so far only exists on paper, and with a start-up capital of just €3.2 million put forth by 10 insurers, its rescue funds remain rather limited. That’s not good news for the German government, which has been encouraging citizens to invest in equity-based life insurance plans rather than rely on state support for their retirement. A perceived weakness in the insurance industry could cause the public to lose confidence in the whole concept.

Deutsche Bahn to provide timetables for Connex

The Deutsche Bahn, Germany’s largest rail company, must include information from its competitor Connex in its long-distance timetables, according to a new ruling by the Berlin regional court on Thursday. From now on, the formerly state-owned Bahn is required to provide route plans and times for Connex via its Internet and telephone services. The ruling came after months of failed negotiations and Connex, a subsidiary of the French Vivendi corporation, took the Bahn to court claiming its monopoly over long-distance timetables reflected an unfair competition advantage. The Bahn rejected such arguments as unfounded. But the German Cartel Office, which had warned the Bahn of a possible investigation back in February, said the Bahn’s refusal to provide information on prices and timetables for Connex blocked efforts to open up the country’s rail system to more competitors. Connex, with its three routes, including the newly-opened Cologne-Rostock stretch, is the Deutsche Bahn’s only competitor in long-distance train travel.

Economy seen rebounding

After all the bad news about Germany’s economy, from rumors of deflation to signs of a recession, it now looks as if there might be light at the end of the tunnel. Six of the leading German economic research institutes said there are signs that the economy will improve by the end of the year. According to a survey of the institutes’ directors published in the Berliner Zeitung newspaper on Thursday, the majority of the experts are convinced the country will experience considerable economic growth in the coming year. They cited the government’s plans to reform health care and the pension plan as well as its steps to bring forward a tax cut as the source of the renewed optimism. The director of the Institute for Economic Research (IWH) in Halle, Rüdiger Pohl, was quoted as saying, "The reform agenda is being pushed through with momentum. Everyone is noticing that Germany is serious about its efforts to revitalize the economy."