As uncertainties surrounding the coronavirus pandemic have begun to wane, global insurers have become more open to adding risk to their investment portfolios, according to a survey released Wednesday.
Goldman Sachs Asset Management's 10th annual insurance survey revealed that 34% of insurers said they plan to increase the overall risk in their investment portfolios, vs. 8% that said they plan to decrease their overall risk exposure. By contrast, last year's survey showed that 30% of insurers expected to increase overall risk, while 17% planned to decrease.
The move towards increasing risk will likely be done by shifting cash into higher risk asset classes such as private equity, middle-market corporate loans and infrastructure debt allocations.
For the fifth year in a row, consideration of environmental, social and governance factors in investments has grown. Globally, 13% of respondents said ESG is a primary concern, up 4 percentage points from last year.
Meanwhile, 83% of survey respondents said they evaluated ESG in their investment processes, compared to 32% just four years ago. The growth is largely due to increased adoption in the Americas.
When asked to identify the top asset classes where they plan to increase allocations, 37% of global insurers said private equity, followed by middle-market corporate loans (34%), infrastructure debt (31%), and collateralized loan obligations (29%).