FRANKFURT, April 20 Some bigger German life
insurance companies could find themselves struggling if low
interest rates persist, according to comments made by the
country's top insurance regulator in an interview with a
Rock bottom capital market interest rates in Europe have
slashed the income insurers can earn from their investments in
bonds and other safe securities, making it increasingly
difficult to fulfil obligations to policy holders.
There are 93 mainly small life insurers in Germany of which
many are struggling because of low interest rates. But Felix
Hufeld, head of insurance supervision at financial regulator
Bafin, said many small insurers were in fact doing well and that
their larger counterparts may be suffering.
"There are many smaller insurers that are on a very solid
footing, but there may also be larger ones, who, through a
combination of incorrect investment policies, high costs and
high guarantees, have much work ahead of them," he told German
paper Welt am Sonntag.
"If we continue to have ultra low interest rates, this will
affect life insurers. To believe anything else would be a
mistake," he was further quoted as saying. He added that
insurers should reduce their costs further to make up for lower
Germany's finance ministry said last month it was planning
measures to support life insurers that are struggling, such as
capping agent commissions and allowing greater flexibility on
The biggest life insurer in Germany is Allianz
with approximately 15 percent of the market share, and which has
previously said that its business model can withstand prolonged
periods of low interest rates.
(Reporting by Victoria Bryan; Editing by Raissa Kasolowsky)