OREANDA-NEWS. September 28, 2015. Fitch Ratings says in a new report that the pressures of low investment yields are the main factor for the negative outlook for the German life insurance sector. However, for the time being, Fitch believes these pressures are manageable and has a Stable Rating Outlook on the sector, but continued low interest rates, with further pressure on capital and earnings, could lead to a change in Rating Outlook to Negative.

Persistent low interest rates are eroding the capital buffers held by German life insurers and Fitch expects capital to remain under pressure in 2015. The Zinszusatzreserve, an additional reserving requirement introduced in 2011, increases insurers' capital buffers but weakens current statutory solvency ratios. On the other hand the new Life Insurance Reform Act brought some relief, as insurers are now allowed to fully retain unrealised capital gains on bond portfolios upon the expiry or cancellation of policies.

The 'German Life Insurance Dashboard - Autumn 2015' is available at www.fitchratings.com or by clicking on the link above.