Four Themes for Insurance Asset Management in 2021
February 2021 - 11 min read
Insurers have fared relatively well through the pandemic, but there is likely a long and uneven road to recovery ahead. With this in mind, there are four key themes worth considering for insurance company investors in the months to come.
- EFFICIENT DEPLOYMENT OF CAPITAL: Insurers face a unique challenge in that they must navigate regulatory capital requirements, which can have a material impact on the attractiveness of various asset classes. In our view, there continue to be opportunities for insurers to achieve their investment targets through the careful consideration of these constraints.
- PRIVATE ASSETS FOR YIELD ENHANCEMENT: Private assets can offer diversification as well as a potential illiquidity premium, while still maintaining credit quality. As private markets continue to grow in both size and diversity, we expect private debt, as well as securitized and structured assets, to become an even larger part of insurance portfolios.
- MULTI-ASSET STRATEGIES AND A BOTTOM-UP APPROACH: A bottom-up approach will be crucial within asset classes and sectors. But making relative value calls across an expanding line-up of asset platforms requires large, global teams with a comprehensive view across public and private markets—and the ability to quickly and efficiently capture opportunities and react to crises.
- ESG: From social unrest to natural disasters, 2020 brought with it a renewed focus on ESG issues—which, while growing in importance, must also be balanced with the investment goals of insurers’ portfolios.