Despite increasingly lower rates and higher volatility, the overall sentiment among Asia Pacific insurers is positive, though many are looking to diversify their asset mix.
The risk appetite among Asia Pacific insurers is lower than the year before, partly due to the evolving regulatory landscape, and many are looking to diversify their assets by moving into income-generating private markets assets and investment-grade fixed income to build resilience, according to a new study by BlackRock on insurers' investment portfolios.
The eighth edition of the Global Insurance Report, titled «Re-engineering for Resilience,» surveys 360 senior insurance executives worldwide, representing $16 trillion in assets.
Among the respondents, 78 percent were positive about the current investment outlook and 56 percent are not expecting a recession before 2022. In addition, 83 percent felt it was still possible to generate alpha in fixed income, but are placing more emphasis on resilience, and 60 percent said they plan to increase allocations in less correlated private market opportunities in the next three years.
Asia-Pacific Sentiment
«On average, global insurers expect to increase their private market allocations as a proportion of their total portfolio from 6.6 percet to 8.5 percent over the next three years. This trend is even more pronounced in Asia, with a clear preference for income-generating private market assets,» noted Kimberly Kim, head of BlackRock’s Financial Institutions Group for Asia Pacific.
Two-thirds of insurers indicated they plan to integrate sustainability considerations into their investment process, while 58 percent of Asia Pacific insurers said they made enhancements to their environmental, sustainability and governance (ESG) policy since 2018. However, over three-quarters of all respondents felt that integrating ESG considerations meant compromising on other investment goals.
