The German government has introduced legislation designed to ease the rules on the valuation of their equity investments for German insurers, who have been exposed both to increased claims resulting from the Sept. 11 attacks in the U.S., and declining values in the securities markets.
Currently insurers are required to value investments at their lowest historical levels. Under the new proposals, which will be made retroactive to September 30, they will be able to value than at an average over time, rather than at their absolute lows. This brings the German insurance industry into line with the rules applicable to German banks, and achieves a long-term goal.
German insurers can hold up to 30 percent of their assets in equities, but usually the figure is around 20 percent. In recent years the surging stock market lured many portfolio managers to put more than this into equities. After t
he events of Sept. 11, many smaller insurers were under threat of having to sell assets at fire sale prices in order to maintain their required solvency ratios, making the rule change a more urgent concern.
Topics Carriers
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