Gauging the impact of a low-interest rate environment on German life insurers
AbstractA low interest rate environment can pose a key risk to the life insurance sector. A deteriorating return on investment holdings jeopardizes the guaranteed return on life insurance contracts. In this paper, we examine the effect of low interest rates on German life insurers by applying various adverse scenarios to a simple model of life insurers' balance sheets. A low return on investment can lead to a depletion of the bonus and rebate provisions. As a result, life insurers resilience may deteriorate. By way of this analysis, we can model approximately when the bonus and rebate provisions will be depleted. --
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Bibliographic InfoPaper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 2: Banking and Financial Studies with number 2011,02.
Date of creation: 2011
Date of revision:
Life insurance; low-interest rate environment; financial stability;
Other versions of this item:
- Anke Kablau & Michael Wedow, 2012. "Gauging the Impact of a Low Interest Rate Environment on German Life Insurers," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, Duncker & Humblot, Berlin, vol. 58(4), pages 279-298.
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
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- Ansgar Belke, 2013.
"Impact of a Low Interest Rate Environment – Global Liquidity Spillovers and the Search-for-yield,"
ROME Working Papers, ROME Network
201305, ROME Network.
- Ansgar Belke, 2013. "Impact of a Low Interest Rate Environment - Global Liquidity Spillovers and the Search-for-yield," Ruhr Economic Papers, Rheinisch-WestfÃ¤lisches Institut fÃ¼r Wirtschaftsforschung, Ruhr-UniversitÃ¤t Bochum, UniversitÃ¤t Dortmund, UniversitÃ¤t Duisburg-Essen 0429, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Berdin, Elia & Gründl, Helmut, 2014. "The effects of a low interest rate environment on life insurers," ICIR Working Paper Series 15/14, International Center for Insurance Regulation (ICIR), Goethe University Frankfurt.
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