Navigating 'Normalised Uncertainty'
Insurers look to alternatives in preparation for the investment challenges ahead
In order to provide insurers with an insight into how their peers are reacting to these changes and to refine our understanding of how the sector is grappling with the challenges facing it, AXA IM commissioned an independent market research institute to conduct telephone interviews, supported by online questionnaires, with senior executives and investment decision-makers at over 120 insurers of varying sizes in France, Germany and the UK.
The interviews were carried out between September and November 2016 and thus capture well respondents’ sentiment about Solvency II, Brexit and their investment plans for 2017.
The four key takeaways are outlined below:
The consequences of low interest rates remain the major challenge for insurers, with a large majority of respondents looking for new and alternative ways to face this challenge in 2017.
of insurers cite low interest rates as a major challenge
Solvency II is emblematic of a paradigm shift in insurers’ investment decision-making: Besides financial and accounting considerations, regulatory factors have become a key determinant of the investment strategy.
of insurers say Solvency II has reduced the duration gap of their portfolios
2017 looks set to be the year of alternatives. The asset classes to which insurers plan to increase their allocations the most are in the alternative and illiquid spectrum, in particular structured products, infrastructure equity and debt, and real estate.
of insurers view alternative asset classes as a key toolkit
Compared to other institutional investors, insurers’ foray into responsible investing is still relatively young. This could, however, accelerate if tightening regulation provides additional impetus.
see regulation as the key driver for implementing a RI/ESG approach