It was a pleasant summer evening when Nikolaus von Bomhard, chief executive officer of the Munich reassurance group Munich RE, invited journalists to meet in the company’s lush garden, but the picture painted by the chairman of the world’s largest reassurance group was exceedingly bleak.
Calling liquidity in the markets “breathtaking,” Mr. von Bomhard said, “Monetary and financial policy weapons are currently losing their impact.”
Munich RE has never been shy about its opposition to low interest economic policies, he said, but there is a point where the disadvantages are greater than the benefits. “We are close to this point in Europe,” he said.
The European Central Bank lowered its prime rate in June to an all-time low of 0.15 percent. The bank’s remedial measures are controversial, especially in the insurance industry. Insurers are looking to invest billions on behalf of their customers, but they see few lucrative investment opportunities, while the low interest policy has meant tangible losses for German savers.