Local brokers are hoping the sale of German insurer Gerling won’t further restrict the local market if a company already operating here buys the company and absorbs it. What’s much preferred here and overseas is the idea of a major investor stepping in and keeping the company as an independent operation.

Felix Zaccar, Gerling Australia MD and MD and CEO of the company’s Asia-Pacific operations, said yesterday the decision to sell the company is a logical one. Like many insurers, Gerling Versicherungs-Beteiligungs AG needs to refinance its operations. But it has only two owners – Rolf Gerling with 65.5% and Deutsche Bank with the rest.

Post-September 11, Gerling needs to recapitalise, which makes the need for a wider ownership base more clear. “Rolf Gerling has acknowledged that one person can’t – and shouldn’t have to – manage the financial downside of the market when you’re dealing with a company of this size,” Mr Zaccar said. “We’ve grown a lot in the past 10 years.”

It has indeed. Cologne-based Gerling is the 15^th largest player in the Australian insurance market, with $126 million premium income in 2000. Specialising in the large industrial sector, Gerling is also the fifth-largest reinsurer, with a premium income of $154 million. It’s the sixth-largest global reinsurer and the second-largest credit insurer. Its global premium income in 2000 was about $18 billion. Last month Gerling Global Re Chairman Norbert Strohschen resigned after reporting a 2001 loss of about $848 million.

Local brokers’ sentiments – that the local insurer market is already small enough and the loss of Gerling wouldn’t be welcome – is shared around the world. Reports from Europe say most intermediaries want an independent investor to buy the company.

Deutsche Bank has been trying to pull out of its insurance holdings for some time, and there are few indications that a buyer has appeared with chequebook in hand since the company was put on the block last month. “Lots of people are hoping it’ll be an investor who keeps the company independent,” Mr Zaccar said, although he declined to share his views on what the best options might be. “This is a very positive move by the company’s owners. It wasn’t a matter of capital; it’s much more to do with wanting to give the company the ability to keep growing internationally and become a major player.”

Standard & Poor’s said in New York that the decision to sell the company “creates a significant degree of uncertainty regarding the Gerling group’s future ownership structure and strategic direction”. While S&P’s reaffirmed its A+ rating, AM Best knocked it down a point to A- from A.

In another move which Mr Zaccar said is not related to the latest ownership moves, Gerling Australia MD Kevin Kinsella left the company late last month.