Sat, Sep 5, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Asian Insurers: Adapting investment strategies to a changing world

Friday, November 01, 2013
Opalesque Industry Update - Opalesque Industry Update - Insurance companies globally are adopting new ways of thinking about their industry, as the markets in which they operate see significant long-term economic and regulatory changes, not to mention near-term volatility. BlackRock commissioned the Economist Intelligence Unit to survey more than 200 insurers around the world in May and July to find out more about the trends that are driving widespread change for our insurance clients, and what challenges they face in adapting their investment strategies.

In addition to having case studies based on in-depth interviews with global insurers and perspectives from BlackRock investment specialists, the survey results included 40 insurers from Asia Pacific, including China, Korea, Malaysia, the Philippines, Singapore and Taiwan.

Asian insurers are affected by the same market trends as their global counterparts, but their businesses are influenced by different domestic regulatory, cultural and economic factors. The summary below based on the global survey results reveals how actively Asian insurers have been preparing for change in their businesses, and indeed in several key respects, how they differ from insurance firms in other regions.

  • Focused on Long-term Change, Cost of Capital: Similar to their global counterparts, a significant majority of Asian insurers said change within their businesses is needed to produce adequate shareholder returns in the next three years. However, one of the primary drivers of change in Asia has been the increasing cost of capital, unlike other parts of the world that cited low investment yields. Nevertheless, the need to generate higher absolute returns is present in Asia.
  • Demand for Higher Yielding, Less Liquid Assets: Low rates are driving the majority of Asian insurers to increase exposure to high yield debt and allocating more to less liquid assets. Compared with almost every other insurer in the survey, firms in China, Korea and Taiwan indicated the strongest demand for hedge fund and real estate strategies.

  • Taking Action in the Near Term: Not only are Asian insurers ready to make strategic long-term changes to their investment strategies, they are also more willing than firms in the West to take near-term action tactically in the face of evolving market risks, such as the tapering of central bank asset purchases.

  • Increasing Use of ETFs: Changing markets and regulations are also driving insurers to explore new tools such as ETFs. 74% of Asian firms said they will likely increase their use of ETFs over the next three years and a majority acknowledged the need to learn more about using the instruments as part of an investment strategy.

  • Seeking Help on Risk Management: Asian insurers strongly believe that regulations are making them more risk averse and do not feel well-prepared, particularly in China and Southeast Asia.


PD

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: New Detroit-based CTA seeks to take advantage of coming volatility[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: An emerging manager has just set up his one-man shop in the city of Detroit. Synchronicity Futures,

  2. Cliff Asness attracts $360 million as liquid alternative funds hold up[more]

    From Bloomberg.com: As U.S. stocks suffered their worst month in more than three years in August, Clifford Asness’s managed futures fund was able to profit. Investors are taking notice. The $9.12 billion AQR Managed Futures Strategy Fund pulled in an estimated $360 million in net subscriptions last

  3. Opalesque Exclusive: When the SEC calls, fund managers need to get out of their own way[more]

    Bailey McCann, Opalesque New York: New pressure is hitting alternative investment funds from all angles. So far this month both hedge fund and private equity players have seen enforcement actions, and subsequent fines over fees, disclosures, and misleading statements. Citi one of the biggest

  4. Performance - Einhorn and Loeb's hedge funds both decline 5% in August, Some target-date funds miss in the market turmoil[more]

    Einhorn and Loeb's hedge funds both decline 5% in August From Reuters.com: Hedge fund billionaires David Einhorn and Daniel Loeb saw their main funds lose roughly 5 percent in August during a dramatic market sell off, two people familiar with their returns said on Monday. Einhorn's

  5. Fortress hedge fund manager David Dredge says markets trouble on the way[more]

    From AFR.com: David Dredge of global hedge fund Fortress has built a career studying, predicting and protecting against the world's major financial crises. The recent convulsions in global sharemarkets are "just the beginning" of a painful adjustment as money drains from the emerging market economie

 

banner