Non-insurers pressure profits of European insurers: Moody’s
The European insurance sector faces challenges from non-insurance players which is likely to drive mergers and acquisitions (M&A) activity, according to a report by Moody’s.
"The profitability of the European insurance sector is increasingly pressured by non-insurers, such as asset managers in the life segment, or technology firms and reinsurers in the P&C segment,” said Benjamin Serra, a senior vice president at Moody's.
“As a response, insurers alter their business model and pursue growth opportunities, which will drive an increase in M&A activity, with cross-sector M&A becoming more frequent," Serra explained.
M&A typically reduces capital, increases leverage, and creates execution risk for insurers. Closed book transactions are also rising according to the agency.
The outlook for the European insurance sector is stable as solid economic growth supports insurance sales and interest rates will rise gradually, bolstering investment returns, Moody’s noted.
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