Low interest rates remained the single biggest worry for the industry,according to the survey based on responses from 18 insurers, including many of the largest European multinationals.
"With large European insurers reporting solid levels of capital one year after the Solvency II regime took effect, CFOs are turning their attention toward the deployment of excess capital. Over 40% of CFOs surveyed are now looking for ways to deploy this surplus, up from just over 10% in 2016, with M&A and share buybacks the main options available to them," says Antonello Aquino, Associate Managing Director at Moody's.
One third of survey respondents named prolonged low interest rates as the top challenge in 2017, down only slightly from last year, as insurers are still forced to reinvest maturing assets at lower rates of return than historical level. There is some increasing appetite for illiquid assets, with around 30% of respondents anticipating increasing exposure to real estate, private placements, infrastructure and mortgages/loans. Insurers have shifted gradually towards higher-yielding assets in response to low interest rates, a trend Moody's expects to continue.
Around 90% of respondents said they had made investments in technology to improve customers' access to their services, make greater use of "Big Data" and improve back office functionality.
Insurers' next investment focus will likely be Artificial Intelligence and the Internet of Things,
which refers to the interconnection via the Internet of computing devices embedded in everyday objects.
Insurance CFOs do not expect to issue large volume of debt in the next 24 months, with 44% of survey respondents saying that they expect to issue only sufficient debt to cover refinancing needs.
Click on the title to view the Moody's report, "European Insurance: Insurers Ready to Deploy Excess Capital in 2017, CFO Survey Shows," The rating agency's report is an update to the markets and does not constitute a rating action.
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