FRANKFURT May 23 Germany's financial regulator
supports a further cut in the guaranteed rate of interest that
the country's life insurers are allowed to offer on savings
policies from 2015, a move that would ease pressure on the
sector, a newspaper said on Friday.
The regulator, Bafin, has recommended to the German finance
ministry that the guaranteed rate be cut to 1.25 percent from
Jan. 1, 2015, from the current 1.75 percent, the Euro am Sonntag
newspaper reported, citing the watchdog's head of insurance
supervision, Felix Hufeld.
A quick decision on the cut was needed to help counteract
the drag on insurers from persistently low capital market
interest rates, the paper cited Hufeld as saying.
The finance ministry sets the guaranteed rate, which has
traditionally been a focus for consumers and a headline selling
point for life insurers.
Rock bottom capital market interest rates have slashed the
income insurers can earn from their investments in bonds and
other safe securities, making it increasingly onerous to fulfil
obligations to policy holders.
To ease the financial burden on insurers, Berlin has been
cutting the guaranteed rate, most recently in 2012. The finance
ministry is expected to unveil a package of measures soon to
relieve the sector further.
Big insurers with large reserves like Allianz have
argued for keeping the guaranteed rate steady, while smaller
insurers are struggling with guarantees as high as 4 percent on
policies sold up to the year 2000.
"If there are delays to the decision, it could cause
technical problems for insurers to put the reduction into
effect," Hufeld told the paper, which released its report ahead
of publication on Sunday.
The paper cited a finance ministry spokeswoman as saying
there was no set timetable for a decision.
A professional body representing Germany's actuaries earlier
this year proposed cutting the guaranteed rate to 1.25 percent
(Reporting by Jonathan Gould; Editing by Thomas Atkins and Mark