OLDWICK: AM Best is maintaining its market segment outlook on the German life insurance market at negative. Key supporting factors include the narrowing of margins between investment income and average minimum guarantees due to lower investment yields, the slow runoff of back books of business and the negative impact on earnings from the need to increase contributions to the Zinszusatzreserve.

A new Best’s Market Segment Report, titled, “Market Segment Outlook: Germany Life,” notes that these negative factors are partly moderated by the proactive response to the low interest rate environment, with insurers reducing guarantees and increasing the proportion of hybrid and unit-linked products in their portfolios, and advances in technological and digital capabilities supporting cost reduction.