German Insurers Resilient, But Continue to Face HeadwindsΣάββατο, 25 Οκτωβρίου 2014 00:17
LONDON--(BUSINESS WIRE)--While Germany’s economy is among the strongest in Europe, its insurance market will continue to cope with pressure points such as very low domestic bond yields
The Best’s Special Report on Germany’s insurance market, titled “German Insurers Resilient, But Continue to Face Headwinds” also cites weather-related flood losses and isolated record-level hail losses as factors that severely impacted non-life performance in 2013. Last year marked a record for non-life losses with more than two million claims filed.
Given the challenges of a protracted low rate environment for investment portfolios, non-life insurers in Germany have been increasing rates as a result of a heightened focus on technical income and underwriting profitability. Persistent low interest rates also have stressed the German life segment, particularly on traditional guaranteed life savings business. Life insurers also are feeling the weight of regulatory requirements to finance the “Zinszusatzreserve,” an additional interest rate reserve required to ensure life insurers can meet guaranteed returns.
“Companies have a variety of ways to finance the Zinszusatzreserve, including out of investment surplus, regular income, or through unrealised gains,” said Stefan Holzberger, managing director of analytics. “However, complying with the Zinszusatzreserve in a low rate environment will continue to put pressure on German life insurers’ balance sheets and earnings, particularly for smaller companies that are less diversified and more dependent on their life business.”