Use of capital tops business priorities of insurer CFOs: Towers Watson study
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Chief financial officers of North American property/casualty insurers say capital utilization is their top business priority, according to a survey released Tuesday by Towers Watson & Co.
Preparing for the Own Risk and Solvency Assessment requirements and monitoring progress toward the renewal of the federal terrorism insurance backstop also ranked high on their list of business priorities, according to the new “P&C Insurance CFO Study.” ORSA is an internal process undertaken by an insurer or insurance group to assess the adequacy of its risk management and current and prospective solvency positions under normal and severe stress scenarios.
Fifty-four percent of the respondents said mergers and acquisitions would be the most likely use of capital for the broader industry, while 34% noted expansion into new segments and geographies.
But when it came to their own companies, only 11% of insurer CFOs surveyed said their firms would utilize capital for M&A transactions, and just 20% would use it for business expansion.
Instead, 49% of respondents said their companies were far more likely to deploy capital for internal investments such as core data systems and infrastructure, 40% said data and analytics, 31% said new product development, and an equal percentage said building talent and skills within the company.
In addition, while all respondents identified capital utilization issues as important, 86% identified ORSA and 80% called renewal of the terrorism insurance program as important to their companies.
Towers Watson’s seventh North American P&C CFO Survey included 35 CFO participants from both commercial and personal lines insurers as well as reinsurers.
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