Global insurance firms are changing their investment practices amid swiftly shifting market conditions, with a focus on "resilient portfolio construction, liquidity management," and integrated technology, according to BlackRock's 11th annual Global Insurance Report released Tuesday.
Among other findings, the survey found that 79% of insurers plan to review their long-term strategic asset allocation and almost half (48%) will review their risk appetite thresholds this year. Moreover, some 60% of insurers said that inflation was their top market concern, with asset price volatility (59%) and liquidity (58%) coming in second and third in the list of concerns.
In an effort to diversify their portfolios, 87% of insurers plan to increase allocations to private investments over the next two years – on average, this amounted to a 3% increase compared to their current allocation.
Some 37% of insurers plan to increase their allocations to cash, and 31% will increase their allocations to fixed income.
The survey, conducted in June and July 2022, encompassed 370 insurance firms across 26 markets, representing almost $28 trillion in assets under management.
"The current investment landscape is a result of major upheaval over the past two years, and uncertainty is only expected to increase," said Charles Hatami, managing director and global head of BlackRock's financial institutions group and the financial markets advisory business, in a news release accompanying the report. "The insurance clients with whom we partner understand that innovation at scale and a nimble approach will be critical to navigate the complexity ahead."