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- October 1, 2012: Vol. 6, Number 9

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There’s a New Fund in Town: German Insurance Companies Are Looking at Debt Funds to Provide a Solution to More than One Problem

by Nathalie Grenewitz and Harald Kuhn

1 German insurance companies have a big problem. They need to generate sufficient profits in order to meet their long-term liabilities vis-à-vis their policyholders. How can they achieve this in a time of decreasing interest rates, tumbling stock markets and general economic malaise? The shining beacon on the horizon, promising decent returns and salvation: debt funds. Debt funds not only seem to be able to resolve German insurance companies’ lack of secure and yet profitable investments. These funds also show some promise in resolving other problems and obstacles faced by German insurance companies in their search for investments that generate higher yields, namely Solvency II and an ongoing worldwide credit crunch. Debt funds, as an investment type, are still fairly new for German insurance companies, but on taking a closer look they seem to be emerging in the German market as one of the big trends for the future. ROCK AND HARD PLACE

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