Allianz keeps 2026 life insurance interest rates stable

The most popular form of private pension provision in Germany will offer stable interest rates next year.

Allianz, Germany's largest life insurer, is leaving the total interest rate on its policies unchanged for the coming year at 3.5% for traditional policies and 3.8% for newer policies with reduced guarantees.

"We are maintaining our overall interest rate at a high level," Volker Priebe, member of the board of Allianz Leben, said on Monday. "This is a sign of stability in a challenging environment."

With 10.7 million customers and 14 million policies, the Munich-based DAX-listed company is the German market leader in life insurance.

Although German industry has been caught in a prolonged crisis for several years, the financial sector has benefited from the end of the years-long zero interest rate phase over the past two years.

The total interest rate on life insurance policies consists of two or three components: the guaranteed interest rate and an annual profit participation make up the current interest rate; and a final profit participation is added at the end of the contract.

Allianz raised its current interest rate again relatively quickly after the end of the zero interest rate phase in 2022. Allianz will pay 2.7% for traditional life insurance policies next year and 2.8% for newer contracts.

Several other insurers were initially more cautious in this regard, but are now following suit.

Figures from the German Insurance Association (GDV) show there were 83.5 million life insurance policies in 2018, more than the population at that time (83 million).

However, the European Central Bank's zero interest rate policy until 2022 affected life insurers as well as banks and savings banks, driving up costs for companies and making the taking out of new policies less attractive.