NU Online News Service, June 21, 5:14 p.m. – Large German life insurers and small, well-capitalized German life insurers in good markets should do well in the coming years, according to a new report from the London office of Moody’s Investors Service.
German life insurers have to find ways to cope with recent the stock market volatility, but sweeping pension reforms and the growing popularity in Germany of products similar to variable annuities should fuel strong long-term growth, Moody’s analysts write.
Because of weak investment returns and fierce competition for customers, German life insurers face some risk that investment returns could fail to match the minimum guaranteed rates, the analysts warn.
But, for the most part, the analysts say, German life insurers are managing their investment policies prudently.
Although overall conditions are favorable, expansion of the larger insurers could hurt small and midsize insurers without easily defended niche market strategies, the analysts conclude.