78% of insurers confident their asset managers can navigate COVID-19 crisis

Written by Adam Cadle

01/07/2020

Seventy-eight per cent of insurers are confident their asset managers can navigate the current financial crisis caused by COVID-19, according to a survey published by State Street Corporation.

State Street said the crisis has fuelled the appetite of insurers for alternative asset classes, particularly in private credit and private equity. In the short term, 33% plan to increase their allocation to private credit and 28% in private equity. Alternatively, 10% expect to decrease their allocation to private credit and 13% within private equity.

State Street's head of asset owner and official institutions, sector solutions EMEA Angela Summonte said: “With traditional fixed income strategies generating lower returns, we are observing insurance companies increase allocations into this asset class at an accelerated pace. We’re seeing an uptick in insurance firms coming to us for our alternative asset servicing capabilities and differentiated skill sets, as well as our broader technology offering. We believe the current COVID-19 crisis will further intensify the move towards alternatives.”

More than a third (36%) of insurers expect to increase their allocation to actively managed investments in the short-term, compared to one in ten who anticipate it will fall.

State Street added that insurers have faced a variety of investment challenges during the crisis, and the survey found respondents have faced difficulties around security valuations %(39%); liquidity challenges (36%); and cash forecasting (25%).

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