Magazine date:
Dec 2011 Fitch announced that the decision of the European Central Bank (ECB) to bring its key interest rate to 1.25% will strain the margins and incomes of life insurers should this low-interest period linger on. As a consequence, some life insurers will have to exhibit an excellent return on poor investments.
In Germany, State bonds yield 1.9% whereas policyholders who underwrite a new insurance contract get a warranted rate of 2.25%. In France, it is the other way round: warranted rates are 1% in average while return on investment is of 3.4%.