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June 11 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings says in a new report that German life insurers will continue to face the challenge of low investment margins, even if interest rates start to rise.
Fitch does not see the downward trend in investment income being quickly reversed, as new investment yields will likely remain below the yields of maturing bonds for several years. However, the agency believes German life insurers will be able to meet their policyholder minimum guarantees for a prolonged period, even if low investment yields persist. Hence the Rating Outlook for the German life insurance sector remains Stable even though the sector outlook, an indication of fundamental trends, is negative.
Fitch expects new business to grow moderately in 2014, supported by product innovations. This follows a decline in regular-premium new business in 2013 after new sales had been boosted by one-off factors in the previous two years, namely, a planned reduction in the guaranteed rate in 2011 and the introduction of unisex tariffs in 2012.
The report, entitled ‘German Life Insurance Dashboard: 2014’, is available at www.fitchratings.com.
Link to Fitch Ratings’ Report: German Life Insurance Dashboard: 2014