Unlike other reinsurers, Deutsche Rück had traditionally been limited to a single line of business. As a pure property reinsurer for its German shareholders, it was unable to offset risk through other lines of business or regions. To diversify its risks, it therefore ventured abroad in the mid-1970s. 

Inflation and Energy Crisis: Car-free Sundays in the 1970s

At the beginning of the 1970s, the economic miracle came to an end. At that time, Germany experienced its first major recession with the oil crisis. 

In Search of Growth 

For the first time since its foundation, Deutsche Rück’s premium income declined in 1975. Business from abroad, the thinking went, promised not only better risk diversification but was also expected to stimulate growth. Under its Chairman of the Board Gerhard Hasse, Deutsche Rück therefore ventured into the London market.  

In 1976, it agreed to acquire a majority stake in the reinsurer “Doric Reinsurance Company”. In addition, it assumed a substantial volume of US reinsurance business via the London underwriting agency “Intercommunity Re” and through a London broker. Finally, it also took a stake in the newly established US reinsurer “United Americas”. 

Piccadilly Circus in London, 1975

Doric Re’s premium income in £ million

Deutsche Rück was not alone in pursuing its expansion strategy: Numerous other German primary insurers and reinsurers ventured abroad in search of new growth. 

Premium income of Doric Re (in £ millions)

International Business Grows Rapidly 

At first, the plan appeared to be working: Doric Re – equipped with substantial capital by Deutsche Rück – increased its premium income twentyfold between 1976 and 1980. International business accounted for approximately 20 per cent of total premium income. This corresponded to approximately 20 per cent of total premium income. The number of employees also increased by 25 per cent as a result of the international expansion. However, Deutsche Rück’s capitalisation remained unchanged. This would soon prove to be a problem.