Interest rates no risk to German insurers-Bafin

FRANKFURT, Nov 16 (Reuters) - Low capital market interest rates pose no threat to German insurers over the near term, the head of insurance supervision at financial watchdog Bafin said on Monday. "I don't see a danger to German insurers or to the stability of the German insurance system over the next two years," Thomas Steffen said during a panel discussion on insurance at Euro Finance Week. However, Bafin is looking at the impact of a prolonged period of low interest rates, as Japan experienced in the 1990s, Steffen said. Bafin has held productive talks with Japanese insurance supervisors about that scenario, he said. Insurance companies invest money from policy holders in securities such as government and corporate bonds. When interest rates are low, it makes it difficult for insurers to meet their obligations to policy holders and still make a profit. Economists expect the European Central Bank to keep the benchmark interest rate at a historic low of 1 percent until the third quarter of next year. Bafin has just conducted national stress tests on German insurers and is evaluating the data it received from insurance companies at the start of the month. Separately, European insurance watchdog CEIOPS is carrying out stress tests on the bloc's 30 biggest insurers, with results due in the first quarter of 2010. Steffen said there had been no warning signs up to now in the data that Bafin is reviewing. "Risk is part of the business but the risks are manageable," Steffen said. "The stability of the system is not in danger." Keywords: GERMANY INSURANCE (Reporting by Jonathan Gould; Reuters Messaging: [e-mail]; [phone]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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