Publication details

The influence of a low interest rate on life insurance companies



Year of publication 2016
Type Article in Proceedings
Conference European Financial System 2016, Proceedings of the 13th Internatonal Scientific Conference,
MU Faculty or unit

Faculty of Economics and Administration

Field Management and administrative
Keywords Life insurance; Low interest rates; Guaranteed returns
Description A protracted period of low interest rate threatens the stability of the life insurance industry, especially in the countries, where life insurance with comparatively high guaranteed returns disposed in the past represents a major portion of the total portfolio. The aim of this paper is to provide an introduction to evaluation of the effects of the actual low interest rate period on the balance sheet of a representative life insurance company. Firstly the balance sheet of insurance companies is introduced. We show the valuation of the assets and liabilities. Then the Solvency Capital Requirement and risk margin is defined. Finally the solvency situation of insurers is valuated.
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