Insurers plan to up ramp up private market investments, BlackRock says

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Glasgow/New York (Businesshala) – Insurers plan to increase their allocation to private markets from 11% to 14% over the next two years, as they add more money to environmental-focused investment funds, BlackRock Inc executives said. Huh.

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Charles Hatami, global head of the financial institutions group at the world’s largest asset manager, described trends in an interview with Businesshala on Friday, based on a survey of 362 insurance executives that were collectively driving $27 trillion in assets .

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The results showed that the insurance industry’s risk embracing will continue even after the easing of interest rate disruptions from the pandemic, Hatami said. The survey found that in 2019, private market assets accounted for 7% of the total allocation.

“Insurance companies are adopting greater risk appetite,” Hatami said.

BlackRock manages more than $500 billion on behalf of insurance companies, or 5% of its total assets of $9.5 trillion.

Alternative assets such as infrastructure, private equity and hedge funds have become more attractive to investors in recent years as central bank money printing kept interest rates low and weak returns in the investment grade bond market.

BlackRock said 60% of all insurers plan to take on more risk by seeking higher-yield assets over the next two years, the highest level since the company tracked the information in 2015.

The survey also found that insurers almost uniformly said climate change will have a significant impact on portfolios, and they expect to increase their allocation for sustainable investments by about 30% over the next two years.

Hatami said infrastructure and renewable energy projects such as windfarms and solar power have seen a lot of new interest among insurers, who have invested money in products such as BlackRock’s new Global Infrastructure Debt Fund.

Given the low liquidity available in private markets, the survey also showed that 41% of insurers plan to increase their stock of cash – to pay for everything from house fires to car accidents and personal injury. the wanted.

Reporting by Simon Jessop in Glasgow and Ross Kerber in New York; Editing by David Gregorio

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