Life insurers eye Asia deals to boost profit - Moody's
January 29, 2013 4:49 AM EST
European and U.S. life insurers will seek takeovers in booming Asia and put more money into riskier assets this year to bolster flagging profits, Moody's said on Monday.
The outlook for developed world life insurers is negative, Moody's said in its annual overview of the sector, with investment income under pressure from rock-bottom rates, and sales wilting as stagnant economies force consumers to retrench.
Life insurers will likely respond by buying up rivals in faster-growing emerging markets, and by increasing their investment in riskier assets that yield higher returns, Moody's said.
Recent emerging market acquisitions by European insurers include Prudential's takeover of Thailand's Thanachart Life in November last year, and Zurich Insurance Group's
Insurers seeking to boost their investment returns could put more money into equities, infrastructure or direct commercial loans.
Sovereign and corporate bonds, traditionally seen as low risk, accounted for 62 percent of European life insurers' investment portfolios at the end of 2011, according to Moody's.
Central banks in the United States and Europe slashed interest rates close to zero to prop up the economy in the wake of the 2008 banking crisis, dragging down bond yields, and eating into insurers' investment income.
Life insurers in Germany and France, whose best-selling products are savings policies that offer customers guaranteed minimum returns, have been hardest hit. Many are cutting their guarantees and trying to sell more alternative products where investment risk is borne by the customer.
U.S. and European life insurers face a further threat this year from potential sovereign debt crises, amid lingering worries over the creditworthiness of peripheral euro zone countries, Moody's said.
Last year, Moody's downgraded the credit rating of Spanish and Italian insurers, and also changed the outlook for pan-European players Allianz, Axa and Aviva to negative, reflecting their heavy exposure to bonds issued by critically-indebted euro zone nations.
(Reporting by Myles Neligan; Editing by David Cowell)
Most Popular Slideshows
- Still The World Champions: Team USA Overpowers Serbia, 129-92 To Win 2014 FIBA World Cup [PHOTOS]
- After Win Over Maidana, Mayweather Says He Is Prepared To Negotiate A Fight With Pacquiao
- From Fat To Fit: Celebrities Who Were Overweight Before They Became The Beauties That They Are
- Kendall Jenner Could Be Next Victoria's Secret Angel [PHOTOS]
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- iOS 8 Release Date Of Sept 17 Has Arrived: Update Begins At 10AM Pacific Time, Upgrade Your iDevices With iOS 7.1.2 First To Install iOS 8
- Pregnant Kate Middleton May Call Off Malta Trip Due To Sickness: Royal Couple Will Move To Anmer Hall Residence
- Apple iPad Air 2, iPad Mini 3 October Release Date Roundup: Freshly Leaked Protective Case Debuts Unique Vent Alongside Camera
- Why Samsung Galaxy S5 Is Not The Best Smartphone To Purchase Now? If You Still Want To, Wait For A Month To Get It Cheap
- Ukraine Crisis: Poland Denies Supplying Weapons To Kiev
- Google Nexus 8 Release Date Countdown Begins Oct 8: 8 Killer Specs and Features to Expect
- Malaysia Airlines Flight MF 370: Indonesian Police Chief Claims He Knows What Happened To Missing Jet