Mini rates: 34 life insurers threaten financial problems

More than every third life insurer in Germany could face financial difficulties. This is confirmed by BaFin Financial Inspectorate DER SPIEGEL. The reason is the low interest rates for years.

  Germany's life insurers have been suffering from low interest rates for years. For many companies, the problems go so far that the BaFin Financial Supervisory Authority has put them under the so-called "intensified supervision".

  According to a previously unpublished evaluation report by the Ministry of Finance, which is available to SPIEGEL, 34 of a total of 87 life insurers in Germany are currently subject to this intensified supervision. This concerns "companies which, according to the annual forecast, find that they may have financial difficulties in the medium to long term". A BaFin spokeswoman confirmed the numbers on request.

  

The ministry report, which is supposed to serve the evaluation of a reform law passed in 2014, does not name the companies concerned. All in all, the ministry states that although the "risk potential of the low-interest environment" has tended to increase, the life insurers examined "plan to provide the promised benefits and meet all regulatory requirements". The measures adopted in the law would have contributed to this.

  
Industry sees no cause for concern

  

Life insurers suffer from years of low interest rates because they invest their clients' money largely in fixed income securities. These papers are throwing less and less interest – but at the same time, insurers must continue to meet the high interest-rate promise they made to their customers years ago. This brings some companies, at least in a difficult situation.

  If a company is placed under "intensified supervision" by the BaFin, it must report to the authority every six months on the current situation and prospects. It's about making sure companies meet their obligations to their customers. The Finance Ministry said on Wednesday that it was all about identifying future difficulties. An intensified supervision does not mean that financial problems exist.

  

From the perspective of the industry, there is no cause for concern for the insured. All life insurers could meet the legal requirements, "said the German Insurance Association (GDV)." In the current low-interest phase, it is up to the BaFin to look closely. "However, we are not aware of the criteria under which the Bafin carries out intensified supervision. "
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