The first quarter of 2020 began very differently than how it ended. Last year marked an exceptional year for the global economy, notably the remarkable rise in equities—one of the best since the initial recovery from the Global Financial Crisis. In mid-January, this began to unravel.
This year’s report looks at market insights and trends, including continued progress in global Environmental, Social and Governance (ESG) implementation across the industry. The report also incorporates insights from various insurance industry leaders, as well as other topical findings. The title, Ready, Set, Reset, underscores insurers’ investment strategies amidst tumultuous times, and the ways in which their approaches evolve in anticipation of other market events and continued unknowns.
The ninth annual report released by GSAM Insurance Asset Management incorporates the views of 273 Chief Investment Officers (CIOs) and Chief Financial Officers (CFOs) representing over $13 trillion in global balance sheet assets, which accounts for around half of the global insurance industry.
In our pre-COVID Survey, CIOs indicated a continuation of recent trends: increases in private equity, private credit and securitized assets funded with reductions in cash, governments and hedge funds. Recent conversations indicate these trends continue, if not accelerate; the Survey tilt towards commercial mortgage loans and real estate assets will pause and need to be re-underwritten. Read More
CIOs described negligible long-term changes to their investment strategies as a result of market volatility and unprecedented world events. Most had already reduced their portfolio risks as a result of expensive valuations and anticipated credit cycle concerns. Read More
The events of 2020 allowed CIOs to accelerate decision-making in order to be nimble and capitalize on market dislocations. For most, this involved no change to governance, but rather enhanced communication and collaboration across the entire institution. Read More
Despite market events and recent volatility, CIOs believe the “public-to-private” trend will persist. CIOs cited illiquidity premiums, diversification benefits and financial repression in public markets to be among the factors sustaining this theme. Read More
Consistent with previous years, ESG continues to be a stronger investment consideration in Europe and Asia Pacific than in the Americas.
More respondents cited interest in insurtech investments, led by a marked year-over-year increase in the Americas and Europe. In 2019, Asia Pacific was an outlier exploring this type of investment, but over the past year, other regions have aligned with this investment interest. Despite the global growth, operational efficiency remains the most common motivation.