Berlin, September 2026: Federally supervised health insurance funds have invested around €1.1 billion in financial assets where repayment is now at risk. Of this amount, approximately €400 million is already considered lost or severely written down in the funds’ accounts. Just over €700 million remains on the books, though a portion of this could also default. Loans for real estate projects account for around €900 million of the original investment volume, while another €200 million is tied up in debt securities. Consequently, a substantial amount of contribution-funded capital is at stake.
Health insurance funds financed risky real estate projects
Eleven federally regulated insurance funds invested in debt securities issued by Verius II and Verius III. In addition, twelve funds granted loans to real estate projects that were supposed to be backed by real estate assets. Nine funds even utilized both types of investment. The issue therefore goes beyond isolated poor decisions by a single insurer.
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However, the decisive turning point came with the shift in interest rates starting in 2022. Higher financing costs weighed on many real estate projects, while the values of numerous properties simultaneously fell. As a result, interest and principal payments stalled. Consequently, the Federal Office for Social Security anticipates further losses regarding the Verius securities.
400 million euros already lost or significantly written down
It is important to distinguish clearly between the different figures involved. The 1.1 billion euros represents the original volume of the problematic investments. Of this amount, health insurance funds had written off or significantly reduced the book value of approximately 400 million euros by the end of 2025. In economic terms, a substantial portion of the invested capital has thus already been lost.
Just over 700 million euros remains as residual value on the balance sheets. However, this sum is not in addition to the 1.1 billion euros; it represents the portion of those same investments that has not yet been written off. How much of this is actually recovered depends on repayments, property sales, restructuring efforts, and ongoing legal proceedings.
Risk of default also applies to the remaining 700 million
The 700-plus million euros still carried on the balance sheets are therefore by no means fully secured. Some insurance funds have already announced further write-downs for 2026. For certain investments, the remaining book value is significantly lower than the amount originally invested; further losses are therefore possible.
On the other hand, incoming payments could still limit the financial damage. Properties can be sold, and claims enforced through the courts. Consequently, the final loss cannot yet be quantified. What is certain, however, is that the current balance sheet figures already reflect a loss of approximately 400 million euros.
Regulators were aware of such investments years ago
The background to the case makes it particularly contentious. As early as 2017, the Federal Office’s audit division identified a real estate loan of this type held by a health insurance fund. An investment in “Verius II” also came to light for the first time in 2019. Between 2020 and 2022, regulators examined such debt instruments on several occasions.
At the time, however, there were no visible signs of actual defaults. Nevertheless, the authority recommended that the funds implement robust risk management practices. It was not until September 2023 that the Federal Office tightened its guidelines for such real estate financing arrangements. This shifts the focus not only to the individual investment decisions but also to the years of regulatory oversight.
Contribution funds were meant to be invested with a high degree of safety
Strict statutory rules apply to the investment of funds by health insurance providers. Social security institutions are required to invest their assets securely and maintain liquidity while generating an appropriate return. Despite this, investments that were formally permissible resulted in losses running into the hundreds of millions. Many of these transactions did not require prior regulatory approval.
Moreover, these losses coincide with an already strained financial situation for the statutory health insurance system. Expenditure on benefits is currently rising faster than revenue from contributions. Although the funds had recently managed to replenish their reserves to some extent, additional write-downs are once again eroding these buffers.
Federal government takes action on real estate loans
The federal government intends to ban one of the problematic investment types in the future. Real estate-backed promissory note loans are to be removed from the list of permissible investments starting in early 2027. However, the regulator is not currently planning to require general prior approval for complex investments.
Consequently, the final extent of the financial loss remains uncertain. Of the investments initially identified as problematic—totaling €1.1 billion—around €400 million have already been written off or significantly devalued on the balance sheet. Just over €700 million remains on the books. A further part of that, too, can be lost.