Investment income for property and casualty insurers worldwide will remain under pressure even as the likelihood of “prolonged” low interest rates diminishes, Moody’s Investors Service says.

Decline estimates range from $US5-$US15 billion ($6.73-$20.19 billion) this year, which could affect the industry’s bottom line by 5-10%.

“Because interest rates remain very low, insurers continue to reinvest at yields that are lower than their current investment returns,” the ratings agency says. “Therefore, insurers’ investment returns will continue to decline [this year], and possibly beyond.”

The impact on life insurers will be more acute, with predictions of $US20-$US40 billion ($26.93-$53.85 billion) lower investment income this year as the industry relies more on yields to generate returns.

However, the effect on life insurers’ net profits will be more muted, with the decline mostly passed on to policyholders through reduced credit rates.

Moody’s says life insurers in Australia have “lower risk to profitability” amid prolonged low interest rates, along with counterparts in the UK, Mexico, Ireland and Brazil.

The US Federal Reserve held its benchmark rate steady last week following a quarter-percentage-point rise at its previous meeting in March. Economists expect the US central bank to raise rates later this year as economic growth strengthens.