Life ins­urance figu­res 2018

Life insu­rers’ capi­tal invest­ments are gro­wing con­sis­tently

Life insurers are making long-term capital market investments to cover their obligations to clients. Even in the prevailing low interest rate environment the book value of capital investments increased to just over EUR 905 billion in 2017. Including unit-linked life insurance as well as “Pensionsfonds” and “Pensionskassen”, two common forms of occupational retirement provision in Germany, the investment volume even came to EUR 1.06 trillion.

Life insurers newly invested a total of EUR 172.6 billion (excl. Pensionskassen and Pensionsfonds). Of that sum – known as gross new investment – EUR 148.9 billion comprised reinvested capital, for example redemptions or payment of matured bonds. Life insurers’ net new investment thus came to EUR 23.7 billion.

Investments flowing mainly into the private sector

Approximately two-thirds of capital investments were in the private sector, mainly in the form of equities, corporate bonds and real estate. Private households also received a large loan volume, especially for property purchases.

A third of the invested capital went to the public sector. In addition to the federal government (Bund), beneficiaries included regional authorities and public institutions, such as the Kreditanstalt für Wiederaufbau, a government-owned development bank.

Average capital return is slightly up

In keeping with the long-term business model and regulatory requirements, new capital investments were mainly in fixed-income bonds and investment funds. The average return for all capital investments was slightly up in 2017 at 3.52% (2016: 3.35%) – a remarkable result given the persistently low interest rates.  

Net interest on capital investments, comprising current interest income and accounting profits from the sale of securities came to 4.49% in 2017 (2016: 4.36%). This high figure most likely stems from the release of valuation reserves, including the financing of the Zinszusatzreserve (additional interest rate reserve).

For more information on these figures and other data please consult our GDV publication “Die deutsche Lebensversicherung in Zahlen 2018” (German life insurance figures 2018) available for download.

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