Several health insurance funds and associations of statutory health insurance physicians are facing substantial combined losses from the Verius real estate fund. Known or claimed losses amount to at least 127 million euros. Affected parties include KKH, Pronova BKK, and several associations of statutory health insurance physicians. Additionally, BKK Gildemeister Seidensticker is seeking compensation for losses running into the millions. The fund financed real estate developers through subordinated claims that were difficult to sell. Consequently, courts are now examining whether providers and advisors adequately informed these institutions about the risks involved.
Real estate fund affects increasing number of healthcare institutions
The Association of Statutory Health Insurance Physicians of Baden-Württemberg anticipates losses of up to 44 million euros. Consequently, it has filed a lawsuit with the Frankfurt Regional Court against several parties involved in the investment product. These include Hauck Aufhäuser Lampe, Hauck Aufhäuser Fund Services, and the Swiss advisory firm Verius Capital. BKK Gildemeister Seidensticker has also joined the lawsuit; its losses are estimated at around six million euros.
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KKH, Pronova BKK, and the Association of Statutory Health Insurance Physicians of Hesse had already previously demanded a total of 77 million euros in damages. Together with the new cases, these claims amount to at least 127 million euros. However, the courts have not yet ruled on the allegations. The defendants reject the accusations, arguing that the executive boards of the affected institutions also bear responsibility.
Fund relied on subordinated loans for construction projects
The Verius fund had a volume of around 1.2 billion euros and financed projects in Germany and Austria. It invested primarily in subordinated debt securities issued by real estate developers. In the event of insolvency, such claims rank behind those of senior creditors; furthermore, they are difficult to sell during a crisis. Consequently, the shift in interest rates and the difficulties faced by many project developers significantly impacted the value of the investments.
Several institutions apparently did not invest directly in the real estate fund. Instead, they purchased debt securities with repayment terms linked to the fund’s returns. However, the plaintiffs state that, based on the documentation provided, they had classified the products as conservative. Their lawyer describes the arrangement as a complex securitization structure involving a high-risk mezzanine loan fund. The Frankfurt Regional Court must now determine whether the product description was misleading.
Law mandates highly secure investments
Hauck Aufhäuser Fund Services froze the fund as early as November 2022, with its liquidation subsequently commencing in October 2023. An expert assessment classified approximately 70 percent of the securities as being at risk of default. Furthermore, reports from the fund advisor reportedly contained gaps and inconsistencies; consequently, the plaintiffs are basing their claims in part on allegations of inadequate disclosure.
Social security institutions are prohibited from investing their reserves in the same manner as ordinary investors. Under Section 80 of the Social Code Book IV, the possibility of loss must be effectively ruled out; thus, safety and liquidity take precedence over additional returns. Nevertheless, there was apparently no requirement for prior regulatory approval for individual investments. The legal proceedings concerning the real estate fund therefore involve not only the potential liability of the providers but also the internal controls within health insurance funds and associations of statutory health insurance physicians.
Author: Blackout-News
Sources: Bild (14.07.26) – Handelsblatt (13.07.26) – Finanzmarktwelt (13.07.26)