- The near-term investment outlook is bleak, with most insurers anticipating investment opportunities will deteriorate or remain the same in the next year.
- The sovereign debt crisis in Europe remains the predominant macroeconomic risk that concerns insurers.
- Insurers consider the prolonged low-yield environment to be the greatest investment risk to their portfolios, resulting in increased interest in higher-yielding asset classes.
- Globally, 26% of insurers expect to increase overall investment risk, while 14% 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%), US investment grade corporates (35%), real estate (34%), emerging market debt (31%), private equity (27%), bank loans (25%) and mezzanine debt (23%).
- The most significant portfolio reductions are planned for cash/short-term instruments (39%) and European financial credit (24%).
- 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 2-3 years.
Goldman Sachs Asset Management Study Shows Insurance CIOs Look To Diversify In Light Of Weak Market Outlook
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