GLOBAL INSURANCE REPORT 2019

Results for Latin America

BlackRock |Sep 20, 2019

Allocation intentions reflect strong positive sentiment and
risk appetite

The eighth Global Insurance Report from BlackRock includes responses from 30 Latin America-based senior executives on key topics in the insurance industry. Use the tabs below to navigate through our themes.

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.

Latin America-based insurers’ positive outlook is somewhat balanced by their concerns about asset price volatility and, to a lesser extent, rate risk. In line with their European counterparts, they see environmental risk as an important driver of change, third only after technology and financial market risk.

How would you describe your current outlook?

Latin American responses describing current outlook

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America.

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

Latin American responses outlining main macro and market risks

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America.

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.

There is a strong intention to increase risk exposures among Latin American insurers – the highest of all regions. We find that this, alongside fixed income, translates into a strong focus on private markets, with the main target areas being private equity real assets and real estate.

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

Latin American responses for changes in investment risk

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America.

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

Latin American responses regarding asset allocation

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America. 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.

ESG and investment grade corporates stand out as a strong favorite for intended capital allocation. Views on emerging market debt among Latin America-based insurers are split, with almost as many insurers reducing as increasing their allocations. Overall, Latin American insurers favor higher risk exposures and believe that additional alpha can be generated from fixed income markets, similarly to their North American counterparts.

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

Latin American responses regarding asset allocation

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America. 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?

Latin American responses on achieving additional alpha

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America. 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.

Latin America-based insurers will have the highest proportion of private market exposures above 10% by 2022 if they stick to their current asset allocation intentions. Private equity is by far the primary destination, and capital efficiency is cited as the main driver of these intended allocation increases.

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

Latin American responses for asset allocation to private market assets

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America. 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?

Latin American responses for factors and barriers driving allocation to private markets

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America.