By Andreas Kissler
BERLIN (Dow Jones) — According to the General Association of the German Insurance Industry (GDV), the additional interest reserve built up by life insurers since 2011 due to the low interest rates on the capital market will fall in 2022 for the first time since it was established eleven years ago. “The additional interest reserve was around 96 billion euros at the end of 2021,” said GDV CEO Jörg Asmussen. “This year it is expected to decrease by around 3 billion euros to around 93 billion euros.”
According to the GDV, the insurers had built up a large interest buffer for the guaranteed interest of the customers: In the past few years, life insurers have set aside amounts in the double-digit billions every year across the industry. With a stable or rising reference interest rate, life insurers could now gradually liquidate the additional interest reserve that they have formed. Whether and how quickly the additional interest reserve can be reduced in the future depends on the general interest rate level on the capital market, the amount of the guaranteed insurance benefits with actuarial interest above the reference interest rate and the term of the portfolio of insurance policies relevant to the reserve.
Contact the author: [email protected]
DJG/tank/apo
(END) Dow Jones Newswires
October 06, 2022 03:35 ET (07:35 GMT)