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GLOBAL INSURANCE REPORT 2019

Results for North America

BlackRock |Sep 20, 2019

Allocation intentions reflect positive sentiment and need
for resilience

The eighth Global Insurance Report from BlackRock includes responses from 70 North America-based senior executives on key topics in the insurance industry. Use the tabs below to navigate through the 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.

Investment sentiment in North America is the most positive of all the regions. However, a record-long expansion in the U.S. has left North American insurers concerned about weaker growth and credit risk when the extended cycle eventually comes to an end.

How would you describe your current outlook?

 North American responses describing current outlook

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 70 participants in North America.

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

North American responses outlining main macro and market risks

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 70 participants in North 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.

Risk appetite remains relatively healthy among North American insurers, but we see a focus on greater resilience exemplified by their intent to strengthen their cash buffers alongside targeting increases in private equity, real estate, and equities.

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

North American responses for changes in investment risk

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 70 participants in North America. 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?

North American responses regarding asset allocation.

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 70 participants in North 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.

North American insurers are the main drivers of an intended increase in exposure to investment grade corporate bonds. They also intend to allocate more than other regions to higher yielding segments such as securitized and high yield assets as well as emerging market debt. They are also the most likely to believe that additional alpha can be generated in fixed income markets, particularly via credit and yield curve positioning.

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

North American responses regarding asset allocation

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 70 participants in North 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?

North American responses on achieving additional alpha

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 70 participants in North America.

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.

Private markets play an increasingly central role in North American insurers’ portfolios. More than a quarter have private market allocations greater than 10% and a majority include private equity in strategic asset allocation decisions. Private equity, commercial real estate equity and multi-alternative solutions are the most likely asset classes to drive further increases.

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

North American responses for asset allocation to private market assets

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 70 participants in North America. Shown as expected changes (%) within strategic asset allocation (SAA). Responses grouped by % range.

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

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

Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 70 participants in North America.