Bafin sees deficits in alternative investments

Frankfurt, Munich The German life insurers are changing their investment policy – and not entirely voluntarily. The industry’s long-running run on alternative investments such as infrastructure projects, credit financing or corporate investments is waning. The main reason is the rise in interest rates, which is making classic forms of investment such as government and corporate bonds more attractive again.

“The rise in interest rates reduces the pressure to find investment alternatives to fixed-income securities,” says Stephan Kalb, insurance expert at the rating agency Fitch. This also reduces the motivation of life insurers to deal with more complex systems.

The financial regulator Bafin should take note of such statements with benevolence. She recently followed the expansion of alternative investments and the associated risks critically. The supervisors recently complained in the in-house “Bafin-Journal” that the proportion of alternative investments in the total capital investments of insurers has even increased since the interest rate turnaround, but that the industry sometimes lacks the necessary specialist knowledge.