Insurers planning to increase investment risk profiles

Written by Adam Cadle

05/06/2025

The majority (83%) of insurers and insurance asset managers believe the risk profiles of their investment portfolios will increase over the next 12 months, with 20% expecting a dramatic increase, a new global study from Ortec Finance has found.

Just 36% said risk profiles had increased in the past 12 months. More than half (54%) said risk profiles had stayed the same in the past year while 10% said risk profiles had decreased. The vast majority (91%) questioned said risks facing their investment portfolio were currently within agreed risk parameters.

Long-term liquidity risk is seen as the biggest risk to the portfolios the survey respondents manage by 55%, while 31% believe it is short-term liquidity with a further 14% saying long-term liquidity and short-term liquidity are roughly equal as risks.

The prospect of a recession is the biggest macroeconomic risk their investment portfolios face, ahead of a deterioration in liquidity conditions, and inflation ranked as the third biggest risk.

Credit market volatility is seen as the fourth biggest risk ahead of tariffs and the prospect of a trade war with monetary loosening and deflation ranked as the next biggest risks. Equity market volatility and geopolitical tensions are rated as the eighth and ninth biggest macroeconomic risks.

Hamish Bailey, managing director UK, and head of insurance & investment at Ortec Finance said: “What we’re hearing from insurers is an expectation to embrace more risk, despite identifying recession and liquidity as the most significant concerns. This suggests that both insurers and asset managers perceive these risks as having a relatively low probability of materialising. In this environment, tools like scenario analysis and balance sheet simulation are critical to making insightful, forward-looking assessments.”

Ortec Finance commissioned independent research company Pureprofile to interview 100 senior executives working in insurance asset management or in investment management firms supporting insurers in May 2025. Survey respondents are located in the UK, France, Germany, Switzerland, Hong Kong, Malaysia, Singapore and Norway. Collectively the organisations they work for manage around $10.48trn.

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