Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/44600
Authors: 
Kablau, Anke
Wedow, Michael
Year of Publication: 
2011
Series/Report no.: 
Discussion Paper Series 2: Banking and Financial Studies 2011,02
Abstract: 
A 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.
Subjects: 
Life insurance
low-interest rate environment
financial stability
JEL: 
G14
G21
G28
ISBN: 
978-3-86558-681-0
Document Type: 
Working Paper

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