The German insurance industry rebounded effectively from the global economic downturn, although growth has been limited by underwriting conditions and catastrophe losses, according to a Moody's Investors Service analysis.

Moody's, which released its new "industry scorecard" on the German insurance industry, said, "Although the German insurance industry was affected by the economic downturn through capital deterioration and reduced profitability, it proved to be resilient compared with other German financial institutions and insurers in other jurisdictions."

The rating agency credited the industry's resilience to strong pre-crisis capitalization levels, conservative investment portfolios and strong reserving practices.

However, Moody's noted that some roadblocks to profitability remain. "More negatively," said Paul Oates, Moody's vice president and senior analyst for the German insurance industry, "underwriting conditions in both life and non-life insurance have impacted profitability. This is driven by depressed yields on life-guaranteed products and intense competition in the motor market."

Blake Foster, Moody's associate analyst for the German insurance industry, added, "German insurers' exposure to a higher-than-average number of natural catastrophes in [the 2010 first half], the limited potential for growth in this mature market, and the difficulty in maintaining a high-quality sales force as part of an insurers' distribution proposition add to these pressures."

Moody's said the German insurance market is the world's fifth largest by premium volume, and the second largest in the non-life segment.