German insurers’ solvency ‘very stable’
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German insurers are comfortable and secure with their capital position despite the current fluctuations on the financial markets, according to the country’s insurance trade body.
"German insurers are very stable," said Jörg Asmussen, general manager of the German Insurance Association (GDV), as the association revealed industry figures based on data by BaFin, the German regulator, and its own analysis on Wednesday.
Asmussen added: "Our calculations show that companies have sufficient equity to cushion financial market fluctuations and high inflation."
He said at the end of 2022, the ratios for life insurers with transitional measures averaged 510% to 530%, up from 450% in the previous year. Transitional measures on technical provisions were designed to help smooth the capital impact of Solvency II over a period of 16 years.
“One reason for the further increase in solvency ratios is the higher interest rate level, which is having a positive effect on life insurers,” said GDV.
Without taking transitional measures into account, the figure was estimated to be between 270% and 290% - up from 262% in 2021.
In the non-life sector, GDV said the situation remained stable with a value of 270% to 280% at the end of 2022, compared with 277% the year before. The association said higher interest rates “have had a relieving effect on insurers' provisions”.
Under Solvency II, re/insurers are required to hold eligible own funds at least equal to their solvency capital requirement at all times. The solvency ratio is the ratio of own funds to the SCR of an insurer. Firms need a minimum of 100% to meet all their obligations.
How might Europe’s Solvency II review affect insurers’ SCR ratios?
