CFOs expect moderate profit outlook and excess capital deployment, survey finds

By Navneeta Nandan

May 12 - (The Insurer) - Europe's (re)insurance chief financial officers are increasingly looking to deploy excess capital in 2025 despite a more modest profit outlook, a survey by Moody's Ratings has found.

Published on Monday, the survey results showed nearly 80% of the 22 CFOs questioned highlighted subdued economic growth as their most pressing concern in 2025.

Competitive pressure and geopolitical risk were also flagged as major concerns, cited by 50% and 45% of survey respondents, respectively. In response, an increased share of CFOs said they were planning to deploy excess capital, including for M&A.

This was despite a more moderate profit outlook, with the proportion of respondents expecting flat earnings rising to 43% from 24% in last year's survey. Around half of respondents said they expect modest profit growth of 5% to 10% this year, down from nearly two-thirds in 2024, with only 5% expecting profit growth above 10%.

The survey found CFOs are planning to re-invest excess capital in their own business and/or use it to increase regular dividend payments. The number of respondents considering M&A is also increasing, up to 42% from 30% in 2024.

On the investment side of the balance sheet, respondents said they are planning to increase their exposure to risky and illiquid assets, preferring infrastructure where 41% are looking to increase their exposure. Around 40% of respondents also want more exposure to private credit, particularly private asset-based and infrastructure lending, compared with 18% last year.

Technology investment also remains a priority for CFOs. Having invested heavily in AI, CFOs said investment in technological advancement for back-office functionality and improving customer experience is a priority or 2025.