Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

10444

Insurance CIOs look to diversify in light of weak market outlook

RELATED TOPICS​

Seeking yield in a time of prolonged low interest rates, insurers say they will diversify beyond traditional fixed income into higher return asset classes including high-yield debt, real estate, and emerging market debt.



In addition to seeking higher returns, insurers are focused on investing more in their risk management infrastructure in the near term.

These were among the key findings of the GSAM Insurance Asset Management Insurance CIO Survey, "Seeking Return in an Adverse Environment". GSAM Insurance Asset Management retained third-party research firm KRC Research to gather insight into the investment sentiment of CIOs and senior investment decision-makers at 152 insurers globally, representing USD3.8trn in invested assets.

"Between low rates, a changing regulatory environment and significant market volatility, it is clearly challenging for insurers to produce strong risk-adjusted returns," says Michael Siegel, GSAM’s global head of insurance asset management. "Our study shows that CIOs are addressing the adverse investment climate by rethinking asset allocation, and in many cases, diversifying into new asset classes while also enhancing their risk management systems."

The survey found that the sovereign debt crisis in Europe remains the predominant macroeconomic risk that concerns insurers.

Globally, 26 per cent of insurers expect to increase overall investment risk, while 14 per cent expect to reduce risk. Increased diversification and better risk management systems should mitigate the impact of higher risk investment strategies. Insurers intend to increase allocations to high yield (36 per cent), US investment grade corporates (35 per cent), real estate (34 per cent), emerging market debt (31 per cent), private equity (27 per cent), bank loans (25 per cent) and mezzanine debt (23 per cent).

The most significant portfolio reductions are planned for cash/short-term instruments (39 per cent) and European financial credit (24 per cent).

Over a quarter of respondents in the Americas and EMEA anticipate that deflation will be a concern in the next year. More than half of respondents across all markets expect inflation risk will be a concern in the next two to three years.

Latest News

The trading and investment platform eToro has extended its proxy voting feature to all stocks..
C8 Technologies, the London-based fintech founded by former BlueCrest Capital Management partners Mattias Eriksson and..
DWS has announced the latest development in its strategic growth push in Alternative Credit with..

Related Articles

Pension funds
UK defined benefit (DB) pension plan sponsors could have access to GBP 1.2 trillion in surplus assets over the next decade, industry research reveals...
UK defined benefit (DB) pension plan sponsors could have access to GBP 1.2 trillion in surplus assets over the next..
Tim Crawmer, Payden & Rygel
Tim Crawmer and Frasat Shah of Payden & Rygel write that higher yields are attracting more demand from investors. Also, given that equities had a strong year last year, big funds have taken some chips off the table in equities and put them into fixed income...
Tim Crawmer and Frasat Shah of Payden & Rygel write that higher yields are attracting more demand from investors. Also,..
Lady justice
Top marks for the Pensions Regulator (TPR) whose efforts to improve resilience in the UK pension funds’ liability-driven investment (LDI) strategies received glowing commendations from the Bank of England in its March report...
Top marks for the Pensions Regulator (TPR) whose efforts to improve resilience in the UK pension funds’ liability-driven investment (LDI)..
Pension funds
Four potential operators of pensions dashboards (Just Group, Legal & General, Moneyhub and Standard Life, part of Phoenix Group) are coming together to instigate a new industry coalition...
Four potential operators of pensions dashboards (Just Group, Legal & General, Moneyhub and Standard Life, part of Phoenix Group) are..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by