In its latest Global Insurance Report, BlackRock highlights that insurers are increasingly concerned about regulatory developments and rising geopolitical tensions, with 68% and 61% of respondents respectively citing these as significant macro risks.
As 2024 approaches, upcoming elections are expected to create further uncertainty in policymaking. When assessing the economic outlook, a substantial majority—86% of respondents in Europe, the Middle East, and Africa (EMEA) and 87% in North America—believe central banks will successfully navigate a soft landing as inflation moderates. Conversely, in Asia Pacific, 76% anticipate enduring high inflation coupled with robust economic resilience, while views in Latin America are more divided, with only 18% expecting a hard landing.
Interest rate risk (69%) and liquidity risk (52%) remain top market concerns. Higher interest rates have bolstered investment yields, prompting insurers to increase allocations in both public and private markets. Public fixed income continues to be a cornerstone of investment portfolios, while private markets, particularly private debt, are gaining traction. Insurers are also exploring non-bank lending opportunities, spurred by regulatory shifts and heightened competition for bank funding.
Remarkably, 99% of insurers have established transition objectives within their investment portfolios, indicating a strong commitment to transition finance. This involves mobilizing capital and collaborating with asset managers to provide blended finance solutions.
Moreover, the global infrastructure financing gap offers insurers significant investment opportunities in both traditional and digital infrastructure, with clean energy and transition technologies identified as primary targets for those looking to enhance their low-carbon transition strategies.
A notable 40% of respondents stress the importance of having investment partners who comprehend both the insurance industry and its operational framework, which they consider crucial for achieving success in today’s complex landscape.
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