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Laxman Pai, Opalesque Asia: Three-quarters (75%) of global insurers say it is essential to invest in alternatives to diversify risk as returns from bonds insufficient to match liabilities, said Natixis Survey.
However, the complexity and regulatory constraints associated with alternatives prompt 72% of insurance investors to delegate some portfolio management to external managers.
The global survey of insurance CIOs and investment team members also revealed three-quarters are struggling to balance alpha generation with the cost of capital in a low-yield environment.
"Insurers are willing to take on liquidity risk in pursuit of higher yields, but 64% say it is increasingly challenging to generate alpha while meeting regulatory requirements, including those designed to protect them from insolvency in the wake of the crisis," said the survey.
Natixis surveyed 200 Chief Investment Officers (CIOs) and investment team members at life, property and casualty and reinsurance firms around the world on the challenges they are facing in today's market environment.
Low-rate environment is the main challenge
84% of insurers say the low-rate environment is the main challenge to their organization, followed by meeting long-term return assumptions (81%) and complying with new regulations (76%).
"Insurers have been squeezed by the low-yield environment over the last decade. The likes of private debt, private equity, and other alternative investments...................... To view our full article Click here
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