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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.
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.
Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America.
Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America.
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 and real assets.
Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America.
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.
Globally, we see asset allocation intentions for fixed income that are broadly in line with last year, favouring investment grade corporate bonds, followed by ESG bonds and securitized assets.
ESG and investment grade corporates stand out as a strong favourite 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 favour higher risk exposures and believe that additional alpha can be generated from fixed income markets, similarly to their North American counterparts.
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.
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.
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.
Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America. Shown as expected changes (%) within strategic asset allocation (SAA). Responses grouped by % range. Note: Numbers may not add up to 100 due to rounding.
Source: BlackRock Global Insurance Survey, July-August 2019. Responses from 30 participants in Latin America.