Morgan Stanley warns of weak returns

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European insurers face a 40% fall in profits in the next five years due to their conservative investment strategies, according to Morgan Stanley.

The bank said that insurers should consider moving their allocations to securities with higher yields, according to The Financial Times.

Morgan Stanley added that insurers hold about €5.4 trillion (£4.6 trillion) of investment-grade bonds in assets across Europe.

Insurers get an average yield of 2.2% on new investments, the bank said.

The European Insurance and Occupational Pensions Authority has said that one in 10 insurers is at risk of financial trouble from consistently low interest rates.

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