European life insurers face unsustainable business model

(Bloomberg) — Europe’s life insurers are faced with an “unsustainable business model” after interest rates slumped across the continent, International Monetary Fund economists said.

Low yields on government bonds mean euro-area life insurance firms are suffering from more severe stress than they incurred in recent tests by regulatory authorities, when almost a quarter were unable to meet requirements, analysts including Reinout De Bock and Andrea Maechler said in a report dated Tuesday.

It is unclear how many insurers no longer meet regulators’ requirements and how quickly their number will increase, according to the report.