...Sector Outlook Negative, Rating Outlook Stable The German life insurance sector faces low investment yields and pressure on earnings. These are the main factors behind Fitch Ratings' negative outlook on the sector. However, for the time being, Fitch believes these pressures are manageable and we have a stable rating outlook on the sector. Capital Under Pressure From Low Interest Rates Persistent low interest rates are reducing the capital buffers held by German life insurers. Between 2008 and 2014, these steadily declined, and Fitch expects capital to remain under pressure in 2015. The Zinszusatzreserve (ZZR), an additional reserving requirement introduced in 2011, further reduces current statutory solvency ratios, although it helps to protect companies in this prolonged period of low interest rates. But Guarantees Can be Met Despite the challenge of earning adequate returns on their investments, Fitch expects rated German life companies to meet policyholders' guarantees. The agency has...
