European insurers such as Allianz SE and Axa SA are shifting investments into the loan market, taking business from banks that are being forced to increase capital and meet tougher regulations, Moody’s Investors Service said.

The insurance companies are moving away from investing in bonds into alternative products such as loans after interest rates fell, reducing returns from buying debt, Moody’s analyst Benjamin Serra told reporters in Frankfurt today.

“Banking regulation implies that banks are deleveraging, which creates opportunities for insurance companies to replace banks,” he said.

Insurance companies in France have started offering corporate loans and firms in Germany are lending for infrastructure and renewable energy, Serra said. In the U.K., investments focus on commercial real estate and infrastructure loans and Dutch insurers are set to increase exposure to mortgages, Moody’s said.

Insurers are chasing higher returns after yields from bonds fell below the rates firms guarantee clients on some life insurance and pension products. Meanwhile, banks are setting aside capital to meet more stringent regulations amid a review of the balance sheets of the continent’s 128 biggest lenders by the European Central Bank.