(Bloomberg) -- Europe’s life insurers are faced with an “unsustainable business model” after interest rates slumped across the continent, International Monetary Fund economists said.

Low yields on government bonds mean euro-area life insurance firms are suffering from more severe stress than they incurred in recent tests by regulatory authorities, when almost a quarter were unable to meet requirements, analysts including Reinout De Bock and Andrea Maechler said in a report dated Tuesday.

It is unclear how many insurers no longer meet regulators’ requirements and how quickly their number will increase, according to the report.

Capital requirements under the Solvency II regime may not be realistic under industry-wide stress, the analysts said.

Insurers in Germany and Sweden are particularly challenged as they offer long-term policies without holding assets of a corresponding duration, they said.

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