NU Online News Service, Feb. 24, 12:44 p.m. – The German life insurance industry is strong enough to survive the current slump in stock prices, but many small and midsize insurers are suffering from the effects of the slump, according to a commentary from analysts in the London office of Moody’s Investors Service.

A rebound in stock prices might not help, because German life insurers have reacted to the slump by selling much of their stock, the analysts write.

Germany regulators have tried to ease the effects of short-term market fluctuations on statutory capital levels by changing valuation rules. But the changes could let insurers put off dealing with capital problems by carrying “significant” unrealized losses on their books, the analysts warn.

Some German life insurers have used aggressive bonus-rate programs to build market share. In the medium term, the analysts write, the damage the programs do to capital levels could outweigh the benefits of the new sales that the programs generate.