AMB Generali Holding AG

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AMB Generali Holding AG

Aachener und Münchener Allee 9
D-52074 Aachen
Telephone: (49) (241) 461-01
Fax: (49) (241) 461-1805
Web site:

Public Company
1825 as Aachener Feuerversicherungs-Aktiengesellschaft
Employees: 21,189
Sales: EUR 11.2 billion ($8.42 billion) (2001)
Stock Exchanges: Frankfurt am Main
Ticker Symbol: AMB
NAIC: 524113 Direct Life Insurance Carriers; 524114 Direct Health and Medical Insurance Carriers; 524126 Direct Property and Casualty Insurance Carriers; 524128 Other Direct Insurance (Except Life, Health, and Medical) Carriers; 524130 Reinsurance Carriers

AMB Generali Holding AG is the management holding company of Germanys third largest direct insurance group. Life insurance is the companys strongest business segment, which generates 60 percent of its annual premium income. AMB is Germanys second biggest life as well as property and casualty insurer and has a 5.5 percent market share in the countrys health insurance market. The AMB group consists of 14 insurance companies, a subsidiary that provides financial services for would-be homeowners called Bausparkasse, which has a 6.8 percent market share, an investment arm and several service units. In addition to the companys own sales force of 6,560 (5,204 full-time and 92,000 part-time agents), AMB has exclusive strategic distribution partnerships with Deutsche Vermögensberatung AG, a firm that gives financial advice to individuals and sells selected financial products through network marketing; and with Commerzbank, one of Germanys leading banks, whose service personnel offer AMB policies and financial services for homeowners at the banks branch offices. About one-fifth of new business by AMBs direct insurance arm COSMOS is generated over the Internet. AMB is controlled by Italian insurance group Assicurazioni Generali S.p.A., which holds about 65 percent of the companys share capital. The company is headquartered in Aachen, the westernmost German city on the border of Belgium and France.

A Charitable Insurer with the Approval of German Kings in the Early 1800s

In the early 19th century the old imperial city Aachen was occupied by Napoleon. Its merchants, especially in the textile trade, greatly benefited from their direct connection to Paris. After Napoleons defeat at Waterloo in 1815 Aachen became part of Prussia, the largest and most powerful German kingdom. Business slowed for the citys textile merchants and they were looking for new growth opportunities. One of them was David Hansemann, the owner of a wool shop. The store had earned the young man financial success and a reputation among the citys textile merchants. To make some extra money on the side, he became an investor in and agent for Germanys third fire insurer, Vaterländische Feuerversicherung, in 1923. When his request to raise the companys capital base was rejected, he decided to found his own fire insurance company.

The German insurance industry was still in its infancy at a time when the country was fragmented into more than 20 independent kingdoms, duchies, and independent cities. Whereas public fire insurers offered coverage exclusively for buildings, their content could only be covered by one of the 18 or so French, English, and Dutch fire insurers dominating the market in the Rhineland. Fraud on both the customers and insurers side was widespread. While some people tried to enrich themselves by over-insuring and then burning down their property, a number of insurance agents skimmed insurance premiums from their clients or did not pay anything in case of a casualty.

Hansemann wanted to clearly distinguish his insurance company from all others and came up with the idea to dedicate half of all profits to charitable causes. That was quite a revolutionary idea at a time when the emerging capitalist society brought about by industrialization created mass poverty and starvation for the lower classes, causing whole German villages to emigrate to America. In August 1824, 23 local investors and sponsors signed the bylaws of the newly founded Aachener Feuerversicherungs-Aktiengesellschaft, most of whom were from the citys textile industry. After Hansemann had overcome some resistance from the Prussian government, Prussian King Wilhelm III approved the enterprise in June 1825. While Ludwig von Seyffardt, the former general agent of a leading French insurance company in Aachen, became the companys general agent (comparable with todays CEO), Hansemann steered his enterprise from his post as director.

On September 1, 1825, Aachener started operations and the 300 or so agents Hansemann had hired started selling fire insurance policies in the Rhineland as well as in Hamburg, Königsberg, and Danzig. Among the companys agents were a mayor and a liquor manufacturer whoas was common at the timesold insurance on the side. Seyffardt organized the business according to his know-how from the French insurer he had worked for and laid the groundwork for an efficient administration. Aacheners agents, however, were given more responsibility than was common elsewhere at the time, which enabled them to regulate their cases without consulting company headquarters, thereby keeping central administration slim. One of the first big fish caught by the company was the city of Aachen, which insured all furniture in the citys public buildings. Within one year Aacheners capital exceeded that of its three main competitors. The company came a long way until in 1934 it was able for the first time to contribute funds to the charitable organization it had set up. It took another five years until Aacheners shareholders saw their first regular dividend.

One of the agents Hansemann had hired for Aachener in 1825 was Friedrich Adolph Brüggemann, a city clerk in Magdeburg. It soon became apparent that he had a natural talent for this business. His territory was expanded more and more until he finally quit his job at city hall to become a full-time insurance agent. In 1831 Brüggemann took over Aacheners main agency in Berlin where his experience in dealing with city government officials worked to his advantage. He finally convinced the Prussian Ministry of the Interior to lift the limiting condition that Aachener was obliged to spend all its charitable contributions within the Prussian kingdoma major step for further expansion.

Aacheners next target was the Kingdom of Bavaria where the bad state of affairs in fire insurance made headlines. In 1834 Bavarias King Ludwig I approved Aachener as a domestic insurerunder the precondition that the firm change its name to Münchener und Aachener in the state and contribute its charitable funds directly to the kingdoms treasury. In the rest of Germany the company now called itself Aachener und Münchener. Riding on a wave of success, Aachener managed to gain approval in many other German kingdoms and grand duchies between 1834 and 1840, and its cash flow soared.

Becoming a Leading German Insurer and Conquering the World in the Second Half of the 19th Century

In May 1842 a fire destroyed large parts of Hamburg, one of Germanys biggest and wealthiest cities. Brüggemann did not hesitate to travel to the northern German trade capital to administer his cases in person within two weeks. The disaster cost the young insurance company a considerable sum: about one-third of its share capital of one million Taler. The incident confirmed Aacheners reputation, however, for quickly paying in cases of fire damage and the insurance company was overwhelmed by a run of new customers. Aacheners premium income almost doubled between 1841 and 1850 when the company reached a market share of 25 percent among fire insurers in Germany. When company founder Hansemann left the company to become Prussias finance minister, Brüggemann was elected Aacheners new director. In 1853 the company founded a reinsurance subsidiary, Aachener Rückversicherung, Germanys second reinsurer.

During the next two decades Aachener established itself firmly in the marketplace. The companys main clientele were private households, small businesses, and farm cooperatives that received part of Aacheners charitable funds in exchange for their members insurance. The steady flow of premium income allowed the company to build large financial reserves that made Aachener one of Germanys richest insurance companies. Aacheners capital was tripled and dividends rose from 10 percent in 1845 to 70 percent in 1878.

Company Perspectives:

Fehler! Textmarke nicht definiert. Security on the basis of success: AMB Group, which more than 175 years ago was founded as a regional fire insurance company, has grown to be the third largest German direct insurance group today. That success is substantially attributable to a strategic approach based on a partnership cooperation between insurance companies, building society and bank. The client obtains all services at one stop: detailed advice in all questions concerning financial services and all-round solutions tailored to his or her individual needs. By using the slogan of accumulated efficiency AMB Group has dedicated itself entirely to the idea of integrated financial services. The companies working today under the head of the AMB holding company offer the complete financial services range. Starting from life, health, property and casualty as well as legal expenses insurance over tailor-made housing finance to attractive banking products and other services, such as asset management for third parties. Up-to-date products in line with clients needs and qualified advice on a solid and secure basis made the Group one of the leading providers of integrated financial services in the German market. The coherence of this Group of companies, its conception and its being part of the worldwide operations of Generali Group are perfectly illustrated by the Lion of St. Mark. The Winged Lion symbolizes confidence, strength and dynamics. The success and the growth of the group are self-explanatory and provide clients with the security they have a right to expect.

One of the companys major successes was its commitment to not only insure, but also to prevent fires. Part of its charitable funds were used to help organize municipal fire brigades and equip them with state-of-the-art water pumps. Not only did this practice lower the number of fires; it also gave the company lots of free publicity. Many city officials thanked Aachener publicly in newspaper ads for its generosity. About 120 such public endorsements were published in German newspapers in 1853 alone. Up until 1900 Aachener spent the large sum of 9.4 million marks, almost one-third of its charitable funds, on promoting fire fighting. In 1870 Aachener helped with a substantial donation to establish Aachen Technical College. After the new German Empire was formed in 1871, Aachener also gave a considerable amount of money to charities that cared for the many injured and invalids the French-German war caused. Another part of the companys charitable funds was donated to the victims of floods, fires, and other disasters.

In the middle of the 1860s, however, the companys fat years came to an end. Due to growing competition Aacheners revenues from insurance premiums grew only slightly between 1860 and 1870. Profits were shrinking. At the companys 50th anniversary in 1875 shareholders demanded that Aacheners charitable contributions be limited to 50 percent of income from premiums. Profits from capital investments were excluded from this policy. Until 1892 the policy was changed again twice, allowing a charitable contribution to be made only if the insurers profits reached a certain limit. Some disgruntled shareholders who were still unhappy with this policy left Aachener and founded their own insurance company, Aachen-Leipziger Versicherungs-Aktiengesellschaft. In 1878, after working for Aachener for more than 50 years, director Brüggemann died at age 81.

By the late 1870s Aachener was one of Germanys best-known insurance companies. One of its prominent customers was Chancellor Otto von Bismark, the founder of Germanys public health insurance. He was skeptical about private insurance companies, but insured his farm, Gut Varzin in Pomerania, with Aachener. The companys success, however, led to self-satisfaction and inner stagnation. While competition grew stronger in the farm sector, the beginning industrialization opened up a potential new market. But Aacheners agents resisted the challenge of building new relationships with the growing industrial clientele and starting from scratch in a market where they had not much experience in insuring industrial risks. Under the leadership of former Kölnische Rück director Fritz Schroder, who joined Aachener in 1896, the company intensified its marketing efforts and introduced a number of new policies that covered burglary, damaged water pipelines, and the interruption of the production process in manufacturing plants. Schröder, who was experienced in international reinsurance business, also initiated the companys international expansion. Aacheners first subsidiary overseas was set up in San Francisco in 1893. By 1900 the company was represented in 56 foreign offices on all continents, including two more offices in the United States in New York and Chicago, and some 25 in Asia, including Bangkok, Bombay, and Singapore. As a result, Aacheners premium income tripled between 1893 and 1913, with about half of the total generated abroad.

San Francisco Earthquake and World War I

On April 18, 1906, San Francisco was shaken by a strong earthquake and the resulting fires destroyed big parts of the city. Aacheners San Francisco branch had signed numerous fire policies in the city and paid approximately $3.5 million in damagesa huge sum at the time. All cases were regulated by the end of the same year and ate up Aacheners profits of two years.

Key Dates:

Prussian King Wilhelm III approves the foundation of fire insurance company Aachener Feuerversicherungs-Aktiengesellschaft.
The company is licensed in all of Germany.
General agencies are established in San Francisco, New York, and Chicago.
The company takes over insurers Thuringia, Aachen-Potsdamer Life Insurance, and Oldenburger.
The companys headquarters are moved temporarily to Erfurt during World War II.
Aachener acquires a stake in building society Badenia Bausparkasse AG; the company is renamed Aachener und Münchener Versicherung Aktiengesellschaft.
The German business of insurance company Cosmos Allgemeine Versicherung-AG is taken over.
A management holding company is created and named AMB Aachener und Münchener Beteili-gungs-AG.
A distribution partnership with financial service provider Deutsche Vermögensberatung is initiated.
AMB acquires a 25 percent share in life insurer Volksfürsorge Deutsche Lebensversicherung AG.
French insurer AGF announces ownership of 25 percent plus one share in AMB.
AMB takes over control of Volksfürsorge Holding AG.
The company sells its non-group reinsurance business.
Italian insurance group Assicurazioni Generali S.p.A. becomes AMBs majority shareholder.
The company is renamed AMB Generali Holding AG.

In the following four decades, however, man-made disasters shook the company. When World War I broke out in August 1914, Aacheners international expansionwith the exception of North and South Americacame to a sudden halt. In October 1914 Adolf Harbers replaced deceased director Fritz Schröder. In the first war year Aachener had to cover enormous damages from burned cities and villages in Eastern Prussia after Russian attacks. In 1915 the company added coverage of fire damages caused by explosions of bombs to its fire policies to retain its customers. The companys burglary insurance branch wrote huge losses in the later war years, when food became scarce and crime rose. When the United States entered the war in 1917 Aachener transferred its American business to Japanese insurer Tokyo Marine. The government put increasing pressure on the company to insure ammunition factories at unprofitable premiums, while the number of large damages to be covered rose substantially in 1917 and 1918. The forced takeover of industrial risks changed the companys insurance portfolio. The percentage of industry coverage rose from about one-third in 1913 to 50 percent in 1918, while premium income decreased by 20 percent between 1913 and 1917. At the same time the companys female workforce grew from almost zero in 1914 to 60 percent four years later, due to the rising number of men drafted to fight in the war.

Hyperinflation and Depression in the 1920s

In November 1918 Germany and its allies were defeated. The German Kaiserreich ceased to exist and was replaced by the first German republic, established in the city of Weimar. According to the Versailles Treaty, Aachener not only lost its business in large parts of former Prussia and in the areas bordering France, Belgium, and Luxembourg, but suddenly found itself abroad under French administration. Business travel and communication with the companys branch offices in Germany were difficult. It took until 1930 before the last soldiers left the Rhineland and the Saar. After lengthy negotiations Aachener managed to retain parts of its confiscated capital holdings in the United States. The toughest test for the company, though, was the rallying inflation that overtook Germany in the early 1920s. Aacheners 99th year in business was its craziest to date. Due to hyperinflation, a buildings worth in 1914 had climbed to 1,800 billion its worth in November 1923. While the companys employees had to carry their salaries home in baskets, the calculation of insurance premiums became impossible with damage cost jumping hundredfold in the course of a day. And while the worth of the companys capital base lessened, Aacheners employees made space in their offices to store food. At the end of 1923 the German government replaced 500 trillion Papiermark with one Rentenmark. Despite huge losses, Aachener survived the chaos, due to its large reserves, partly in Swiss franks, and its considerable real estate.

The mid-1920s marked the beginning of a period of bankruptcies, mergers and acquisitions, and partnerships in Germanys insurance industry. Aachener took over the insurers Thuringia, Aachen-Potsdamer Life Insurance, and Oldenburger, which comprised the new Aachener und Münchener Group. Aachener also joined the Rheinische Gruppe, a group of insurers that founded the reinsurance company Unitas in 1920. During the decade the automobile became increasingly popular in Germany and Aachener added auto insurance to its services. Other novelties included the movie theater and broken-glass insurance.

The worldwide economic depression that followed the New York Stock Exchange crash of October 1929 hit the German insurance industry with some delay in 1931. During the following four years Aacheners premium revenues dropped by one-fifth. While many businesses went bankrupt and unemployment soared, violent fights between radicals from the political left and right erupted in the streets. In January 1933 Adolf Hitler was appointed Germanys new chancellor and his National Socialist party eventually drove the country into another devastating war.

The Nazi Years and World War II

In 1935 Walter Schmidt, the former CEO of Cologne Re, resumed Aacheners leadership and steered the company through the Nazi years, World War II, and the postwar reconstruction period. To combat mass unemployment the National Socialist government required businesses to create more jobs. Hence, despite decreasing premium income caused by the ongoing depression, the company offered 100 new positions. The Nazis also demanded that auto insurance premiums be cut to encourage demand for cars and pressed fire insurers to jointly insure important industries at no profit. When thousands of Jewish stores and synagogues were burned down by violent Nazis on November 9, 1938, the government forbid insurers to pay damages to Jewish customers (with the exception of Jews living abroad). Shortly after that, Jews were no longer allowed to drive in Germany and some insurers withheld auto insurance premiums that had already been paid. In 1997 Aachener and other German insurance companies were sued by survivors of the Holocaust, for withholding payments. The companys remaining files from that period, however, did not indicate any fraud.

During the first years of World War II Aacheners business soared. In 1939 the company took over the German business of British insurer Liverpool andfollowing the German troopsgradually expanded its business activities into the occupied territories, including Poland, Czechoslovakia, The Netherlands, Belgium, and France. To finance its war effort, the German government required insurance companies in 1939 to invest two-thirds of their capital investments into government bonds. In 1942 the percentage was raised to 75 percent. As had happened in World War I, however, the bonds became worthless with the end of the Nazi rule.

By summer 1944 half of Aacheners employees were women who, again, replaced the men fighting in the war. When the war returned to Germany in 1943, Aachener suffered large damages of its office buildings in many cities. After several bombs had destroyed most of the companys headquarters, and after the Western allies started marching toward Germanys western border, Aachener moved headquarters to Erfurt, where the companys subsidiary Thuringia was located, in September 1944. In March 1945 Aacheners management moved once again, to Bad Kissingen in Bavaria.

PostWar Boom and Globalization in the Second Half of the 20th Century

With Germanys defeat in World War II Aacheners fire insurance business decreased by about 40 percent. Many of its farm clients were located in the eastern part of the country, which was occupied by Soviet troops. A few years after the war the whole insurance industry was nationalized in the Soviet sector. This development drove many insurers from eastern Germany to the West, where competition for the smaller insurance pie became more intense. After the currency reform of 1948 in the three western zones, however, West Germany entered its legendary postwar economic miracle years. In the following decade Aacheners premium income tripled, and doubled again between 1960 and 1970. As the Volkswagen Bug conquered West Germanys streets, auto insurance replaced fire insurance as Aacheners most important type of property and casualty insurance.

Under Reimer Schmidt, who became Aacheners CEO in 1968, the company reorganized its shareholdings. As the Rheinische Gruppe was dissolved, Aachener gave up its shares in various property insurers in exchange for a 25 percent share in Cologne Re. The company also acquired a majority share in life insurer Volkshilfe Lebensversicherung, which was merged with its own life insurance division to form Aachener und Münchener Leben. In 1970 the company abandoned its traditional name in Bavaria and started using its new name Aachener und Münchener Versicherung AG in all of West Germany. In the same year the company acquired private insurer Central Krankenversicherung and a share in Badenia Bausparkasse, a financial service provider for homeowners. The 1970s were characterized by increasing prices caused by the first oil price shock in 1973. A rising number of damages and a fear of inflation drove insurance premiums and cost up during the decade. Aachener, which for the first time since 1906 reported a loss from insurance business in 1970, reorganized its operative business and introduced electronic data processing to cut cost. In the middle of the decade the company started cooperating with Kompass Allgemeine Vermögensberatung, a financial consulting firm that started selling insurance policies for Aachener for a commission. A similar partnership was initiated with Deutsche Vermögensberatung in 1983. The additional sales force of 20,000 financial consultants brought in more than one quarter of Aacheners new business during the 1980s and 1990s, especially in the life insurance segment, and especially in former East Germany after the two German states were reunited in 1990. In 1979 a new holding company, AMB Aachener und Münchener Beteiligungs-Aktiengesellschaft, was founded to head the companys main operations, including Aachener und Münchener Versicherung, Aachener und Münchener Leben, Thuringia, Central Kranken, Cosmos Leben, and Cosmos Allgemeine.

In 1987 AMB took over BfG Bank für Gemeinwirtschaft, a community bank, in order to pursue the so-called Allfinanz strategy. The concept that came into fashion in the rapidly consolidating financial markets intended to offer the whole range of financial services, including insurance, asset management, and other traditional banking products, by one institution. This move, however, turned out to be an unfortunate investment that cost AMB a lot of money. In 1992 the company sold a 25 percent share in BfG to French Crédit Lyonnais. In 1999 Swedish bank group SEB acquired AMBs remaining 25 percent.

A more favorable move was the 1993 takeover of Volksfürsorge Holding AG, a major German direct insurer. The combined premium income of the two made AMB Germanys second largest life insurer and number four among the countrys property and casualty insurers. While AMBs top management was contemplating a new strategy for the company, an unexpected threat developed quietly, escalated and finally ended in AMBs loss of independence.

The insurance markets of the 1990s were more and more dominated by large international players with immense financial reserves. After the member countries of the European Union had created a joint market, competition among large European insurers intensified. In 1992 French insurance conglomerate Assurances Générales de France (AGF) announced that it had secretly acquired 25 percent plus one share of AMB shares from various individual shareholders. A group of some bigger AMB shareholders, however, including Allianz, Dresdner Bank, and Munich Re prevented the recognition of AGFs voting rights. Although AGF was denied any influence in AMB, it did not want to give up its shares in the company. Finally, in 1998, the conflict was resolved when AGF itself became the target of a takeover. Germanys insurer Allianz AG and Italian insurer Assicurazioni Generali S.p.A., two of the worlds largest direct insurers, were both interested in controlling AGF. In 1998 the two made a deal: Allianz got AGF in exchange for the two companies combined shares in AMB. Generali also acquired the AMB shares formerly held by Munich Re and Dresdner Bank and thereby gained control over Aachener und Münchener. In 1999 AMB entered a strategic partnership with Germanys Commerzbank, in which Generali also held an interest. The bank agreed to sell AMB insurance policies in its branch offices and the all round finance concept finally turned into a success. In 2000 AMB took over Generalis German subsidiary Generali Lloyd and in 2001 changed its name to AMB Generali Holding AG. By that time, AMB had become Germanys third largest direct insurance group.

Principal Subsidiaries

Aachener und Münchener Versicherung AG; Thuringia Versicherung AG; Volksfürsorge Deutsche Sachversicherung AG; AdvoCard Rechtsschutsversicherung AG; COSMOS Versicherung AG; Generali Lloyd Versicherung AG; Aachener und Münchener Lebensversicherung AG; Volksfürsorge Lebensversicherung AG; COSMOS Lebens Versicherung-AG; Generali Lloyd Lebensversicherung AG; Dialog Lebensversicherungs-AG; CENTRAL Krankenversicherung AG; COSMOS Krankenversicherung AG; Volksfürsorge Krankenversicherung AG; AMB Generali Finanzanlagen-Management GmbH; AM Generali Invest Kapitalanlagegesellschaft mbH; AMB Generali Immobilien GmbH (Germany); Deutsche Bausparkasse Badenia AG; AMB Generali Informatik Services GmbH; Deutsche Vermögensberatung AG (49.9%).

Principal Competitors

Allianz AG; ERGO Versicherungsgruppe AG; HDI V.a.G.

Further Reading

AMB baut die Marktposition aus, Frankfurter Allgemeine Zeitung, April 4, 2001, p. 20.

AMB-Tochtergesellschaften verlassen die Börse, Frankfurter Allgemeine Zeitung, April 10, 2002, p. 24.

AMB wechselt den Vorstand aus, Süddeutsche Zeitung, October 13, 1992, p. 26.

AM-Gruppe durch Generali Lloyd gestärkt, Börsen-Zeitung, May 11, 2000, p. 8.

AM-Versicherungen rücken zusammen, Frankfurter Allgemeine Zeitung, July 29, 1999, p. 20.

Bartu, Friedemann, Handschlag zwischen Allianz und Generali, Neue Zürcher Zeitung, December 22, 1997, p. 13.

Das Unternehmergespräch, Frankfurter Allgemeine Zeitung, December 28, 1998, p. 20.

Generali reduziert AMB-Beteiligung, Börsen-Zeitung, January 10, 2001, p. 8.

Kaske übergibt eine gutbestellte AMB, Börsen-Zeitung, July 17, 1997, p. 11.

Surminski, Marc, Von der Wohltätigen Gesellschaft zum Versicherungskonzern, Perspektiven (special edition, 175 Jahre Aachener und Münchener Versicherung Aktiengesellschaft), May 2000, p. 59.

Turbulente Hauptversammlung in Aachen, Süddeutsche Zeitung, December 31, 1992.

Wilhelm I., König von Preussen, genehmigte die Gründung, Frankfurter Allgemeine Zeitung, September 21, 1993, p. 27.

Wolfgang Kaske geht in den Ruhestand, Frankfurter Allgemeine Zeitung, December 24, 1997, p. 16.

Evelyn Hauser