Insuring the Insurers

STEPHEN J. CARRERA/AP

STOCK TAKING: Everyone is feeling the pinch

The Stock Market's sickness made life insurance companies look decidedly mortal last week, as sliding share prices dragged the value of insurer assets dangerously close to what they potentially owe policyholders — the point at which they're technically insolvent.

The problem is especially critical in Germany, where the bull market had bestowed "quiet reserves" — unrealized and unrevealed gains — upon insurers, enabling them to entice new policyholders with offers of 6% annual returns. Now most of Germany's 130 or so mutual insurers are carrying "quiet liabilities." "They're sort of in a trap," says Commerzbank analyst Marc...

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