Re/insurer CFOs temper profit hopes amid low growth and geopolitical strain – Moody’s

Low economic growth, intense market competition and mounting geopolitical tension have emerged as the top concerns for chief financial officers (CFOs) at European re/insurance firms, Moody’s Ratings has found in its latest annual CFO survey.

Nearly 80% of respondents named sluggish growth as their most pressing issue for the year ahead, the rating agency revealed.

“Europe’s economic growth remains subdued and the recovery looks set to be slow,” the report stated, adding that “the economic outlook is tilted to the downside because of geopolitical and trade tensions, evolving security arrangements, and global policy uncertainty.”

Some fifty percent of CFOs cited competitive pressure, while 45% highlighted geopolitical risk — a proportion that is expected to have risen further following US tariff announcements and NATO uncertainty in April.

“The proportion of CFOs expecting stable earnings in 2025 has risen to 43% from 24% in 2024,” Moody’s reported.

At the same time, only 48% forecast modest profit growth of 5-10%, down from 64% last year, while just 5% anticipate growth above that level.

Despite the more cautious outlook, confidence in future performance remains underpinned by investment returns and resilient demand.

“Nearly 65% of respondents expect improved investment results to bolster operating performance in 2025,” the report said.

Capital allocation and M&A rise

Over half of CFOs surveyed said they plan to deploy excess capital in 2025 — up from 41% the previous year — with 50% planning to reinvest in their businesses or increase dividends.

Appetite for mergers and acquisitions (M&A) has grown in parallel, the study suggested.

“Forty-seven percent of all respondents said they were considering M&A within the next two years, with all viewing themselves as potential buyers,” Moody’s said.

The ratings firm pointed to recent high-profile transactions — including Ageas’s planned acquisition of esure and a consortium-led buyout of Viridium — as signs the market is warming to strategic deals, particularly those that “enhance scale, create opportunities for profitable growth, achieve cost efficiencies or leverage synergies.”

Regulatory reforms could also influence capital deployment, according to Moody’s.

“Nearly 40% of respondents anticipate a moderate increase in their Solvency II ratios” following upcoming EU adjustments, the report noted.

Selective risk appetite and technology focus

Carriers are expected to increase exposure to riskier asset classes, but cautiously.

“While more respondents expect to raise their exposure to risky and illiquid assets than in our previous survey, the increase will be selective,” Moody’s said.

Infrastructure equity remains the top pick among illiquid assets, with 41% of CFOs planning to increase allocations.

Interest in private credit has jumped sharply: “Nearly 40% of respondents also want more exposure to private credit, particularly private asset-based and infrastructure lending, up from 18% last year.”

Private equity allocations are also on the rise, with one-third of CFOs planning to increase exposure, up from just 9% in 2024.

Meanwhile, sampled re/insurers continue to prioritise digital transformation, according to Moody’s

“Sixty-two percent of respondents see investment in digital consumer engagement systems as a key priority,” according to Moody’s.

Spending on artificial intelligence and advanced analytics will remain moderate following earlier heavy investment, but CFOs expect significant benefits from generative AI.

“Sixty percent of respondents expect GenAI to have a substantial positive impact on customer experience, and half expect a similar impact on claims management,” the report concluded.