Insurance companies in Central and Eastern Europe (CEE) have become accustomed to low interest rates, which have recently declined steadily from the much higher levels in the first years after the end of the Communist era. During the last several months, macroeconomic and political factors have led to much higher interest rates across all European economies, including CEE. In this short thought piece, we discuss some of the issues and possible responses, including:
- Impact on Solvency II position
- How old, dormant asset-liability management issues can come back to life
- New opportunities with participating products
Challenges and opportunities for CEE insurers in the “Brave New World” of higher interest rates
The radical change in the interest rate environment has many implications for CEE insurers, presenting challenges and opportunities not seen for years.