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Towers Watson: CFOs Eye Capital Needs

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Life insurer chief financial officers may be shifting toward more use of economic capital principles when managing company capital.

About 67% of life company CFOs now say they are using regulatory or rating agency capital ratios to manage their overall business, up from 60% in January 2008, according to Towers Watson & Company, New York (NYSE:TW).

But only 45% of the life CFOs who participated in a Towers Watson survey said they will use regulatory and rating agency ratios to manage their companies over the next 12 months.

About 21% of the participating CFOs said they plan to make more use of the economic capital concept in the next year; about 10% are using that approach today.

Economic capital is the least amount of capital that a company needs to be able to absorb unforeseen losses in times of extreme stress, Towers Watson says.

Other Towers Watson survey findings:

- 77% of life CFOs said capital management practices are getting more attention at their companies today than they were in January 2008.

- 73% of CFOs predicted that their companies would be reporting a year-over-year increase in first-quarter net income.