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Alternative Market Briefing

U.S. insurers pull back from hedge fund investments third consecutive year

Friday, July 12, 2019

Laxman Pai, Opalesque Asia:

For a third consecutive year, the U.S. insurance industry as a whole pulled back from hedge fund investments, by roughly $2bn in 2018 to $14.4bn.

The the life/annuity segment reporting a year-over-year reduction of investments in hedge funds by more than 18%, making it the largest among the major industry segments to pull back.

According to an AM Best special report, the life/annuity segment cut its hedge fund holdings to $5.8bn in 2018 from $7.0bn in the previous year, and from $14.2bn in 2015.

The property/casualty segment also shrank its hedge fund investments for a third year, pulling back 7.6% to $8.1bn in 2018 from $8.8bn in 2017, said the new Best's Special Report, titled, "Life Insurers Continue to Reduce Hedge Fund Investments".

The property/casualty segment also shrank its hedge fund investments for a third year, pulling back 7.6% to $8.1bn in 2018 from $8.8bn in 2017. The health segment's holdings remained steady, at approximately $600m.

The decline in hedge funds holdings is due to strategic investment decisions rather than any nuanced reclassification. The pullback has been widespread, as more than one and a half times the number of companies decreased holdings than increased.

On a gross basis, companies that reduced their holdings did so by almost $2.7bn, while those that increased did so by just $673m.

Hedge funds held predominantly by larger organizations

Companies in the largest f......................

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