German Banks Quietly Establish Reinsurers Amidst Regulatory Shifts

Deutsche Bank and Auxmoney, a Düsseldorf-based fintech, have both quietly established their own reinsurance companies, raising questions about the evolving landscape of consumer finance and risk management in Germany. This move comes amidst increasing scrutiny of residual debt insurance, a controversial product often bundled with installment loans.

Deutsche Bank’s DB Re SA and the Rise of Payment Protection Insurance

Deutsche Bank’s reinsurance arm, DB Re SA, has seen a significant surge in business related to payment protection insurance – also known as residual debt insurance – which protects borrowers against financial hardship due to death, unemployment, or illness. Remarkably, this business accounted for 48% of DB Re SA’s gross premiums in the 2024 financial year, despite only being initiated in 2023.

This timing is notable, occurring roughly a year after the German government capped brokerage commissions for residual debt insurance at 2.5% of the secured loan agreement. The rapid growth suggests a potential response to the new regulatory environment, allowing banks to retain more control over this revenue stream. Reuters reported on the renewed interest in consolidation within the German banking sector in January 2024, potentially influencing these strategic moves.

Auxmoney Follows Suit

Auxmoney, a rapidly growing consumer finance provider, has also established its own reinsurer in 2023, coinciding with DB Re SA’s entry into the installment loan reinsurance market. This parallel development indicates a broader trend within the industry to internalize risk management and potentially capitalize on the changing regulatory landscape.

Implications for the Consumer Finance Market

The establishment of in-house reinsurers by both a traditional bank and a fintech company signals a strategic shift in the German consumer finance market. By controlling the reinsurance process, these institutions may be able to optimize costs, manage risk more effectively and potentially offer more competitive loan products. However, it also raises questions about transparency and potential conflicts of interest, particularly concerning the pricing and sale of residual debt insurance, which has historically been criticized for being overpriced and non-transparent.

Commerzbank’s Financial Performance and Strategic Direction

Commerzbank, a leading bank for the German Mittelstand, reported a record operating result in 2025, exceeding its profit target and launching a share buyback program. Commerzbank plans to return €2.7 billion to its shareholders and propose an increased dividend of €1.10 per share. The bank is also actively involved in financing start-ups and companies in the defense and security sectors. Commerzbank also announced that Bernd Spalt, its CRO, will not seek an extension of his contract in 2026. Michael Kotzbauer, discussing investments and growth, stated that 2026 will be a decisive year for the bank. Commerzbank has approximately €400 billion in assets under management and serves around 24,000 corporate client groups.

Looking Ahead

The trend of banks establishing their own reinsurers is likely to continue as the financial industry adapts to evolving regulations and seeks greater control over risk management. Further scrutiny will be needed to ensure transparency and protect consumers from potentially exploitative practices related to residual debt insurance. The actions of Deutsche Bank and Auxmoney are indicative of a broader restructuring within the German financial sector, driven by both regulatory pressures and the pursuit of profitability.