Mubasher: Global life insurance sector has a stable outlook, indicating the solid regulatory capital and relatively conservative investment portfolios of insurance companies which strive to adapt their products to a low interest rate environment, according to a report released by Moody's Investors Service on Tuesday.

“These factors offset the adverse impact of low interest rates on profitability and economic solvency,” vice president and senior credit officer at Moody’s, Dominic Simpson, said.

Low interest rates are major risks challenging the insurance industry after dropping to new low levels and “forcing life insurers to reinvest maturing assets at lower yields, weighing on their investment income, and increasing their appetite for higher-yielding, and higher risk assets,"

However, gross domestic product (GDP) and unemployment levels are still keeping the sector on track for growth, but the world’s economy is slowing down and not helping an increase in interest rates.

Insurance companies are shifting towards free-based, capital-light products that are less sensitive to interest rate changes, such as unit-linked and protection policies.

“Regulatory capitalization has benefited from robust equity markets and insurers' profitability, and will remain solid, with solvency ratios comfortably above regulatory minimums,” the report indiacated.

Life insurance sectors in Germany, Norway, and Taiwan are seen as the most exposed to low interest rates for an extended period of time.