Slowing global growth and the reintroduction of market volatility set the backdrop for this year’s GSAM Insurance Asset Management Survey, which reveals heightened credit cycle concerns, significant shifts in perceived risks and capped expectations for returns.
US recession is perceived to be a near-term event but not a 2019 event. This year’s title, Cautiously Opportunistic, underscores insurers’ approach to selectively taking risk in light of this view.
The eighth annual survey released by GSAM Insurance Asset Management incorporates the views of 307 Chief Investment Officers (CIOs) and Chief Financial Officers (CFOs) representing over $13 trillion in global balance sheet assets, which accounts for approximately half of the global insurance industry.
Respondents are divided on a US recession occurring in 2020 or 2021. Very few predict a recession this year.
In a marked change from the past two years, 85% of insurance investors now believe we are in the late stage of the credit cycle. Spread expectations have shifted towards moderately widen.
Credit quality deterioration is the top investment risk for insurers. Concern around rising interest rates was among the least prevalent risks in 2019, a pronounced reversal from its top rank in 2018.
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