GLOBAL INSURANCE REPORT 2022

Adapt and thrive: Insurers seek opportunity in the changing world

Hello, I’m Charles Hatami, Global Head of BlackRock’s Financial Institutions Group and of the Financial Markets Advisory business.

I’m pleased to present to you our 11th annual Global Insurance Report titled “Adapt and thrive: Insurers seek opportunity in the changing world.”

For this year’s report, we surveyed 370 insurers worldwide, representing $28 trillion in global assets under management.

I would like to thank everyone who participated.

Times have changed.

The pandemic and Russia’s invasion of Ukraine - a tragic humanitarian crisis - have impacted economies globally.

The war has pressured the price of food, fuels, and other commodities, when supply chains were already disrupted because of Covid.

Central banks have prioritized lowering inflation.

They have signaled their intent to continue to raise interest rates until there are signs that inflation is on the right course.

With rates rising, bond returns have been negative.

This is actually one of the worst years in recent history with bonds and stocks performance both being negative.

It’s no surprise that inflation, liquidity, and market volatility are the main concerns to emerge from our 2022 global insurance survey.

So what are insurers doing to address these challenges?

79% percent of our survey respondents plan to review their strategic asset allocation in response to the new world.

And despite all the turmoil, insurers intend to maintain their risk appetite.

But they also plan to look beyond their traditional asset mix and increase their exposure to private markets.

Beyond higher yields, they understand that private assets can provide diversification in more volatile markets, albeit with higher liquidity risk.

Fixed income products are likely to remain core components of insurers’ portfolios - now with ample opportunities to achieve higher yields.

We see many looking to increase exposure to areas such as high yield bonds. 

The decision of how to allocate capital across public and private assets is complex - and as I mentioned, liquidity will be a key consideration again.

Today, more insurers also recognize that technology and sustainability are driving change across the industry.

Two-thirds of respondents identified these as major accelerating trends, up from 45% last year.

85% of respondents say they are likely or very likely to commit to specific climate objectives in their portfolios within the next two years.

When it comes to technology, a majority of our survey respondents have adopted automation techniques and predictive analytics, including machine learning and artificial intelligence.

They are using these across both insurance and investment management - recognizing that technology is a key driver of transformation, growth and efficiency. 

What comes through clearly from this year’s survey is that insurers are evolving to succeed.

Many are already taking action, and risks remain for those who are slow to respond.

The world has changed.

It’s time to adapt and thrive.

I hope you enjoy reading the 2022 Global Insurance Report. 

Find out how the changing world is shaping insurers’ actions and strategic thinking in BlackRock's 11th annual Global Insurance Report. 370 senior industry executives have shared their insights and perspectives, helping us to identify three key themes which we explore in the report.

Global overview

As the pandemic and Ukrainian war have sent inflation soaring, central banks have had to consider their response. Combating supply-driven inflation requires a different approach to the demand-driven problems of the past. Unsurprisingly, then, insurers have identified inflation, liquidity and market volatility as their key concerns in 2022.

How is this environment shaping insurers’ actions? Over three-quarters of respondents are planning to review their strategic asset allocation (SAA). Technology integration and embedding sustainability objectives are the other key trends that are set to accelerate.

 

Market backdrop

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What are the most serious macro considerations to your firm’s investment strategy over the next 12-24 months?

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What are the most serious macro considerations to your firm’s investment strategy over the next 12-24 months?

BlackRock’s Global Insurance Report 2022

Adapt and thrive: Insurers seek opportunity in the changing world

Discover the insights and perspectives of 370 industry executives in BlackRock’s 11th annual Global Insurance Report. Read their assessment of the key strategic trends shaping insurers’ response to the new global environment.
2022 GIR Report

Regional outlooks

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Europe

Geopolitical risk embedded in macro backdrop

Unlike last year, geopolitical risk now appears to be embedded in the macro backdrop rather than a key standalone risk for European respondents. In keeping with the global trend, inflation dynamics were the biggest economic surprise in the region.

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Asia Pacific

Regional geopolitical concern outweighs global trend

Respondents in Asia Pacific remain concerned about geopolitical risk, in sharp contrast to the global trend, where this particular risk seems to have become part of the macro backdrop.

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North America

It’s all about inflation

While inflation risk is a global concern, North American respondents were notably more anxious about this risk than respondents from other regions. In the same vein, more North American respondents were surprised by commodity prices than the global average.

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Latin America

Regional dynamics override global trends

Notably, respondents in Latin America were less concerned about inflation than the global average. By contrast, they were more concerned about ratings migrations and default, as well as spread risk.

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Investment risks

What has been the biggest economic surprise for you in 2022?

Forward planning

It’s clear that the investment landscape has become much more complex in the last 12 months, but tough times also provide opportunities for insurers to build stronger portfolios as long as they learn to adapt and thrive.

Quotation start

Over three-quarters of insurers intend to review their SAA in response to the new market environment.

Quotation end
Charles Hatami Charles Hatami Global Head of BlackRock’s Financial Institutions Group and Financial Markets Advisory

BlackRock’s Global Insurance Report 2022

Adapt and thrive: Insurers seek opportunity in the changing world

Discover the insights and perspectives of 370 industry executives in BlackRock’s 11th annual Global Insurance Report. Read their assessment of the key strategic trends shaping insurers’ response to the new global environment.
2022 GIR Report