GLOBAL INSURANCE REPORT 2019

Results for Asia Pacific

BlackRock |Sep 20, 2019

Allocation intentions reflect cautious optimism with need
for diversification

The eighth Global Insurance Report from BlackRock includes responses from 110 Asia Pacific-based senior executives on key topics in the insurance industry. Use the tabs below to navigate through our key insights.

Constructive about the cycle

Global insurers are broadly positive on the current investment environment, but with a degree of caution. At a regional level, we see, however, important nuances.

Asia Pacific insurers are the least optimistic about the current investing environment, with weak global growth by far the biggest concern. This manifests itself in worries around financial market risk and asset price volatility, which they identify as a major driver of change, at a level that is well above that of other regions.

How would you describe your current outlook?

Asia Pacific responses describing current outlook

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 110 participants in Asia Pacific.

What do you consider to be the main macro & market risks to your firm’s investment strategy over the next 12-24 months?

Asia Pacific responses outlining main macro and market risks

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 110 participants in Asia Pacific.

Seeking portfolio resilience

Global insurers still maintain or extend risk exposures, but tread more carefully relative to 2018. At a regional level, we see, however, important nuances.

In line with their muted optimism, Asia Pacific-based insurers are the most conservative in their risk exposures, if we combine intentions to reduce or maintain current portfolio allocations. This relative caution seems correlated with those countries most affected by the U.S.-China trade tensions.

Over the next 12-24 months, how do you expect your firm’s appetite for investment risk to change?

Asia Pacific responses for changes in investment risk

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 110 participants in Asia Pacific. Note: Numbers may not add up to 100 due to rounding.

In the next 12-24 months, how do you anticipate changing your allocations to each of the following asset classes?

Asia Pacific responses regarding asset allocation

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 110 participants in Asia Pacific. Shown on Y axis as % of respondents in sample responding increase or decrease. Note: Numbers, including net percentages, may not add up to 100 due to rounding.

Optimizing fixed income

Globally, we see asset allocation intentions for fixed income that are broadly in line with last year, favoring investment grade corporate bonds, followed by ESG bonds and securitized assets.

Asia Pacific insurers’ preference for investment grade corporates may be partially driven by a more cautious market outlook, although at the same time we see relatively strong interest in high-yield corporates, second only to North America. This relatively consistent demand for investment grade credit may also reflect the lack of availability of locally issued fixed income, especially at longer durations.

In the next 12-24 months, how do you anticipate changing your allocations to each of the following asset classes?

Asia Pacific responses regarding asset allocation

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 110 participants in Asia Pacific. Shown on Y axis as % of respondents in sample responding increase or decrease. Note: Numbers may not add up to 100 due to rounding.

What do you believe to be the best way to achieve additional alpha?

Asia Pacific responses on achieving additional alpha

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 110 participants in Asia Pacific. Note: Numbers may not add up to 100 due to rounding.

Integrating private markets

Insurers across all regions and business lines look to bolster their exposure to private markets, with an anticipated mean increase of 2% over the next three years. In terms of asset class allocations, we see differing regional priorities.

The proportion of Asia Pacific-based insurers with an allocation of 10% or more in private markets is projected to grow by 13% over the next three years. These intended increases target private markets across the board, though real assets stand out as the main beneficiary of these new capital allocations.

What is the current and expected percentage of your overall portfolio allocated to private markets, now and in 2022?

Asia Pacific responses for asset allocation to private market assets

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 110 participants in Asia Pacific. Shown as expected changes (%) within strategic asset allocation (SAA). Responses grouped by % range. Note: Numbers may not add up to 100 due to rounding.

What are the top four factors driving and limiting private market allocations over the next 12-24 months?

Asia Pacific responses for factors and barriers driving allocation to private markets

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 110 participants in Asia Pacific. Note: Numbers may not add up to 100 due to rounding.