Opportunities arise for asset managers with specialist private-market/actively managed fixed income expertise

Written by Adam Cadle

18/03/2022

Europe’s insurers’ move away from traditional assets represents an opportunity for asset managers with specialist private-market expertise and strength in actively managed fixed income, according to Cerulli.

Expectations are that many insurers will cut their fixed-income allocations and increase their exposure to less traditional and more specialised assets, such as real assets and alternatives.

The European insurance industry has seen premium income decline and liabilities increase, the latter due largely to costs related to climate change and the coronavirus pandemic. The effects of the COVID-19 crisis and the war in Ukraine on prices, supply, and demand mean that insurance companies – heavily dependent on bonds to offset liabilities – must navigate a combination of risking inflation and low yields.

“Although the shift from core fixed income to alternative assets was underway before 2020, current conditions will accelerate the transition,” Cerulli managing director, Europe, André Schnurrenberger stated.

“Asset managers with a strong track record in actively managed fixed-income and private-market strategies are well placed to help insurers adjust to changing conditions.”

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