FRANKFURT Jan 7 A professional body advising
German regulators on the insurance industry is set to back a
further cut in the guaranteed rate of interest that insurers are
allowed to offer on savings policies from 2015, as financial
pressure on life insurers grows.
The board of the DAV association of actuaries will recommend
that Germany's Finance Ministry impose a half point cut in the
guaranteed rate to 1.25 percent from the current 1.75 percent on
policies sold from Jan. 1, 2015, two sources familiar with the
board's decision told Reuters on Tuesday.
The guaranteed rate is 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 in the
first quarter 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.
The DAV left open the possibility of a smaller, quarter
point cut in the rate to 1.5 percent, should the interest rate
environment improve, and suggested their recommendation be
reviewed in the coming months, the sources said.
The DAV declined to comment but said it planned to make an
announcement on Wednesday.
(Reporting by Alexander Huebner and Klaus Lauer Writing by
Jonathan Gould; Editing by Tom Heneghan)