Gerling Re to remain in Canada despite U.S. withdrawal

Gerling Global Reinsurance Co. (GGR) will continue to operate in Canada despite the recent announcement made by the company’s Germany-based parent Gerling Versicherungs Beteiligungs A.G. that the group will be pulling out of the reinsurance business in the U.S., says John Kartechner president of the Canadian GGR. The media announcement, which indicated that Gerling will focus its reinsurance interests within the European market, caused a wave of customer and broker concern from Australia to locally, he confirms.

Kartechner says GGR remains committed to the Canadian market, and suggested that the troubled Gerling Global Reinsurance Group (GGRG) may be ready to reveal a long-term solution to its capital ails by early September of this year. Gerling’s major stakeholders indicated in March that they were in search of a “strategic partner” to take a majority shareholding in the financial services group. They also expressed an interest in selling off the group’s reinsurance interests. Subsequently, rating agency Standard and Poor’s reduced its rating of the global GGR to “A-minus”. The Canadian GGR wrote net premiums of $74.5 million for the 2001 financial year, producing an underwriting loss of $4.75 million.

Kartechner says letters have been distributed to Canadian clients and brokers explaining that the recent press statement regarding the U.S. withdrawal had originally been written in German and poorly translated, resulting in a misconception that GGR will only operate in Europe. The group will, however, cease writing new business through its U.S.-based Gerling Global Reinsurance Corp. of America (GGRCA) and continue to administer existing treaties. The “lock down” on GGRCA will not impact on Gerling’s primary insurance business in the U.S., the statement says.