Asset class
Structured products in Germany
A structured product held through a German insurance wrapper is not owned directly by the investor. It is a claim against the insurer, backed by assets recorded in a separate custody chain. Whether a wrapper's payout survives a refusal depends on how that chain was recorded, not on what the brochure promised.
Register and custody layer
Two layers sit between the investor and the underlying return. The insurance layer is a contractual claim against the insurer, recorded in the insurer's own policy register. The custody layer, where the structured note or fund units actually sit, is recorded separately, typically in a depot held by a custodian bank under German custody rules.
When a wrapper stops paying, the question is which layer failed. An insurer can suspend a policy while its custodian chain is intact, or the reverse can occur, where the chain is interrupted while the policy remains formally in force. Which forum has jurisdiction over either failure is set by the applicable procedural rules, not by where the policy was sold. That distinction can be checked before any claim is filed, and it is the starting point for a payment and redemption default review.
The document rarely handed over
Investors usually keep the policy schedule and a marketing summary of the underlying note. What is rarely handed over is the custody confirmation, the paper that states, at ISIN level, which entity held the underlying instrument on a given date, and whether that holding was segregated from the insurer's own assets.
Without that confirmation, it is not possible to establish whether a missed payment came from the underlying issuer, the custodian, or the insurer itself. That distinction is the one valuation disputes over structured products usually turn on, and it rarely surfaces until it is requested in writing.
What belongs in a pre-deal report
A pre-deal report on a German insurance wrapper checks at least the following.
- the custody statement covering the full period from subscription to the first missed or reduced payment
- the insurer's policy schedule set against the terms sheet of the underlying note
- whether foreign-issued documents relied on in the file are legalised for use in Germany; Germany applies the Apostille Convention, in force there since 13 February 1966, subject to a stated reservation and notification
- whether the custodian and the insurer are the same entity or two separate ones
A paid initial assessment reviews the file against these points before anything is sent to the insurer, the custodian, or a counterparty, and sets out plainly what the documents show and what they do not. Before instructing anyone to run that review, it is worth checking how to verify a law firm.