EMEA-based insurers cite green/impact bonds as favoured asset class; Americas/Asia investors target private equity

Written by Adam Cadle

04/04/2022

Increased allocations to green or impact bonds are most expected among insurers in the EMEA region over the next 12 months, latest research has shown, while insurers in the Americas and Asia are expected to choose private equity as their favoured asset class.

Goldman Sachs Asset Management’s eleventh annual global insurance survey, which surveyed 328 insurance company participants, representing over $13trn in global balance sheet assets, found that 59% of investors in EMEA expect to increase allocations to green and impact bonds. In the Americas and Asia, 53% of investors expected to increase allocations to private equity.

Additional key areas where global insurers plan to increase their allocation over the next 12 motnhs include middle market corporate loans (37%), infrastructure debt (36%), real estate equity (31%), infrastructure equity (30%) and US investment grade private placements (30%).

Globally, 92% of investors said they now consider ESG throughout the investment process, nearly a three-fold increase from 2017 (32%), and more than one-in-five (21%) say it is now a primary investment consideration.

More than half (55%) of global insurers expect ESG considerations to have a large impact on asset allocation decisions over the nest few years, ranking in equal importance to regulatory capital requirements for the first time. Consolidation continues to be a growing trend among global insurers, and nearly all insurers (96%) expect transactions to continue at their current pace or accelerate.

Investments in insurtech rose across all regions, with operational efficiency being the top driver for the fourth consecutive year. As the crypto market continues to mature, 11% of American insurers say they are invested in or are considering investing in cryptocurrencies, compared to 6% of Asian insurers and just 1% of European insurers.

The survey found that in a sharp reversal from the past two years, insurers now see rising inflations and tighter monetary policy as the largest threats to their portfolios, with rising interest rates displacing low yields as the primary investment risk cited by insurers.

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