FRANKFURT (dpa-AFX) - Financial regulator Bafin is urging life insurers to be prudent in the face of soaring inflation. "Companies should be prepared for new customer business not going as planned," Germany's top insurance supervisor Frank Grund told news agencies dpa and dpa-AFX. Cancellations of existing policies or premium waivers by customers could not be ruled out either, he said, because consumers needed money for other things.

"However, we have not yet seen the really big wave of cancellations. Nevertheless, companies should ensure sufficient liquidity management," Grund said.

At the moment, he said, 15 of the total of about 80 life insurers are under intensified supervision. "I expect that number to drop significantly in the foreseeable future," Grund said. At present, he said, no life insurer would have to make use of the transitional measures of the European supervisory framework Solvency II. On the contrary, companies are already complying with the requirements, which will not become mandatory until 2032.

According to Grund, the situation of pension funds remains more difficult. "For a good 30 of the more than 130 funds, we are somewhat more intensely concerned." According to the insurance supervisor, pension funds could benefit more from rising interest rates in the medium term if funds released are reinvested at higher rates. Pensionskassen have had a harder time than life insurers during the interest rate slump because they offer only lifetime guarantees and cannot switch to other products./mar/DP/men