Mon, Jun 29, 2026
A A A
Welcome Guest
Free Trial RSS pod
Get FREE trial access to our award winning publications
Alternative Market Briefing

Insurers' pullback from hedge fund investments continues for a fourth-straight year

Tuesday, June 02, 2020

Laxman Pai, Opalesque Asia:

U.S. insurers for a fourth straight year reduced their hedge fund investments, to $12 billion in 2019 from $25 billion in 2015.

According to a report by A.M. Best Company, hedge fund holdings went from 1,500 positions to about 900.

Only 10% of A.M.Best's rated universe invests in hedge funds. Long/short equity dropped by $2 billion and multi-strategy dropped by $600 million in 2019, said the U.S.-based credit rating agency for the insurance industry.

Jason Hopper, the associate director, AM Best, addressed why the industry has reduced its hedge fund holdings: "Over the years, hedge funds have become a little less attractive compared with some other investments, given the returns."

"Returns haven't been favorable enough to meet the high fees, as well as the regulatory capital stream imposed by capital charges. … Not only is book adjusted carrying value declining, but the number of holdings has declined as well," he added.

Hopper also highlighted where companies are reallocating the funds that previously had been placed into hedge funds.

"I do not want to necessarily say that money previously going to hedge funds is now distinctly going to some other investment asset class. I do not think that is necessarily the case, but hedge funds are an alternative type of investment."

With the COVID-19-driven market disruptions, Hopper spoke about what AM Best expects on hedge fund investments.

"It is what meets the needs of specific ......................

To view our full article Click here

Previous Opalesque Exclusives                                  
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Other Voices: Nvidia extraordinary growth and the challenge of sustaining demanding valuations over time[more]

    Antonio Di Giacomo, Senior Market Analyst at XS.com, writes: Nvidia has established itself as one of the most extraordinary growth companies in the global technology sector. Over the past two fiscal years, its revenues have risen from levels close to $60 billion annually to well above $120 billi

  2. Secondaries take center stage: What the 2026 PE landscape means for GPs and investors[more]

    Matthias Knab, Opalesque for New Managers: The 2026 edition of Dechert's Global Private Equity Outlook - "Signs of a Gradual Thaw" - marks a notable shift in industry sentiment. After years of compr

  3. And, finally: Time to share it with the people[more]

    From Newsoftheweird: Leavenworth, Washington, has become a tourist destination because of the Bavarian theme businesses have adopted there, NPR reported. One shop, the Leavenworth Nutcracker Museum, houses the world's largest nutcracker collection, thanks to 101-year-old Arlene Wagner. Wagner sta

  4. Opalesque Exclusive: Private Markets Evergreen Funds - An Insider's View[more]

    Matthias Knab, Opalesque for New Managers: Private Markets Evergreen Funds: What Investors Need to Know Before They Dive In The democratization of private markets is well underway. Structural barriers t

  5. Opalesque Exclusive: Governance, Scale, and Boutique Resilience in a Consolidating Hedge Fund Industry[more]

    Matthias Knab, Opalesque for New Managers: The hedge fund industry has undergone significant consolidation in recent years, with capital increasingly concentrated among large multi-strategy platforms. Yet boutique m