German insurers may struggle to meet capital needs
Wednesday, 05 13 2015, Category: Insurance and Reinsurance, Country: Germany
German insurers may struggle to meet new Solvency II minimum capital requirements, supervisor Bafin warned on Tuesday, saying it was preparing to regulate some companies more closely should low interest rates weigh further on the sector.
"German insurers will successfully enter the world of Solvency II only with considerable efforts," Bafin head Felix Hufeld said. "Should rates remain so low, we'll have to take more companies under man-to-man coverage."
With yields on some government bonds -- staple investments for insurers -- in negative territory, the International Monetary Fund (IMF) warned in April of "high and rising" danger to weaker mid-sized European life insurers.
Calling for urgent action to tackle the issue, it cited 2014 data from the European insurance regulator showing 24 percent of the region's insurers may not be able to meet new minimum capital requirements if interest rates remain low for a protracted period of time.