Insurance: industry CFOs focus on managing capital.

• Author: Marshall, Jeffrey
• Position: BusinessBRIEFS

Seven of 10 North American life insurance company CFOs consider capital management to be a key concern for them today and expect that to continue over the next three to five years, according to a CFO survey of the Tillinghast business of Towers Perrin. The survey showed that CFOs' concerns about current and future availability of capital are driving nearly one-third (30 percent) of respondents to actively explore one or more alternatives for raising capital.

The survey, involving more than 70 life insurance CFOs, focused on issues related to managing and raising capital. Nearly all (93 percent) respondents said that maintaining and growing new business is a major source of demand on capital, followed by rating agency demands (59 percent), facilitating non-organic growth (56 percent) and regulatory issues (44 percent).

The survey found that many CFOs are actively considering nontraditional sources of managing capital, such as reinsurance and securitization. While authorized (57 percent) and offshore reinsurance (44 percent) are currently the most popular means of addressing capital needs, securitization is showing a dramatic increase in popularity. Only 4 percent of respondents currently use securitization to address capital needs, but 50 percent said they will consider it in the next two to three years, ranking it second only to...