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Low Rates, Law Changes Squeeze German Carriers

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NU Online News Service, Feb. 8, 2005, 2:30 p.m. EST

A major rating agency is maintaining its negative outlook for the Germany life insurance industry.[@@]

German life insurers continue to face pressure from low interest rates and strict laws and regulations that limit insurers’ flexibility, according to Beatrice Braun, an analyst in the London office of Moody’s Investors Service.

A new German tax reform program, the “AltEinG” program, is supposed to encourage private employers and individuals to share some responsibility for covering the retirement costs of Germany’s baby boomers.

Although the AltEinG program could increase sales of individual annuities and group retirement savings products, the program also could hurt sales of endowment policies and force life insurers to compete harder with other types of financial services companies, Braun warns.