The vast majority of global insurers are looking to raise exposure to private assets for asset-liability matching and to bolster income, according to a survey by US asset management giant BlackRock Inc.
The company polled 410 insurance firms across 32 markets, including 29% in Asia Pacific, earlier this year on their investment strategies and found that 91% plan to increase investments in private assets over the next two years.
The share was an even higher 96% for Asia Pacific respondents, BlackRock says in a statement on October 16.
Some 41% of all respondents plan to increase allocation to opportunistic private debt, 40% to private placements, 39% to direct lending, and 34% to infrastructure debt.
“This asset class can support insurance investment objectives for those needing long-term assets to support long-term liabilities, as well as increasing investment income through illiquidity rather than other investment characteristic,” BlackRock says.
Mark Erickson, global head of BlackRock’s financial institutions group, observed greater demand for private market assets among insurers in recent years because of diversification and increased income generation from the investments.
Meanwhile, the survey found that the top concerns for respondents were regulatory developments, cited by 68%, and rising geopolitical tensions, picked by 61%.
“Insurers face unique challenges when evaluating strategic asset allocation to alternative investments, including regulatory issues, liquidity needs, and higher capital charges,” says Kimberly Kim, BlackRock’s head of financial institutional group, Asia Pacific. “An important part of our work with insurance clients is helping them navigate these short-term complexities while working toward the best possible long-term portfolio outcomes.”
