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Searching for better returns

Sep 13, 2018
By BlackRock

Now in its seventh edition, the 2018 BlackRock Global Insurance Report summarises the key findings gained from surveying 372 senior executives in the insurance and reinsurance industry across 27 countries. The findings from the survey undertaken on our behalf by the Economist Intelligence Unit during July-August 2018, are complemented by insights from 12 in-depth interviews with leading insurance investors. As well as assessing trends in investor sentiment and the outlook for investment strategy, the report explores how insurers increasingly take into account environmental, social and governance (ESG) considerations.

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Key insights

Insurers worldwide see increased investment returns as a key tool to boost overall business profitability. First identified last year, this trend is now accompanied by a marked change in insurers’ willingness to take risk. Given the size of insurers’ investment portfolios globally, this is an important shift that will affect markets everywhere.

Growing appetite for risk exposure
Almost half (47%) of insurers surveyed plan to increase portfolio risk exposure over the next one to two years, compared to a low of 9% in 2017, and this across virtually all asset classes, with private markets increasingly viewed as mainstream.
Less concern about macro and market risks
Geo-political developments and changing regulations stood out as critical macro risks and drivers of change for insurers in 2017. This year these concerns have abated with insurers considering a wider range of factors, with concerns about environmental risk increasing the most.
Increased importance of ESG
The survey results and interviews highlight how quickly ESG is moving up insurers’ priorities list ― for instance, 83% view having an ESG investment policy as either very or extremely important. We explore this in great detail in our report.
Continued quest for investment efficiency
We see a continuing drive towards greater investment efficiency, particularly in relation to private market assets, with 98% outsourcing some, or all, of their allocations. Our in-depth interviews suggest insurers are also concerned about optimising their overall portfolios.

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Source: BlackRock Global Insurance Survey July-August 2018