Year: 2012
Author: Kablau, Anke, Wedow, Michael
Applied Economics Quarterly, Vol. 58 (2012), Iss. 4 : pp. 279–298
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 (BRPs). 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.
JEL Classification: G14, G21, G28
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Journal Article Details
Publisher Name: Global Science Press
Language: English
DOI: https://doi.org/10.3790/aeq.58.4.279
Applied Economics Quarterly, Vol. 58 (2012), Iss. 4 : pp. 279–298
Published online: 2012-12
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 20
Author Details
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