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Laxman Pai, Opalesque Asia: The life/annuity and property/casualty insurance segments increased their exposures to hedge funds, leading to an overall 6% increase in insurance industry investments in 2020.
According to the latest AM Best report, during 2020 the hedge fund market did not fall as far as the public markets and recovered more quickly and efficiently.
Several qualities made hedge funds attractive to investors during the pandemic, including risk diversification and a low correlation to other asset classes. The hedge fund industry still lost approximately $44.5 billion in asset flows in 2020, according to the report, but that is nearly half the amount pulled out in 2019.
Asset flows were positive under multi-strategy, with an addition of $9.5 billion, and a $2.9 billion increase in equity strategy allocations-the two strategies most popular among insurers. Although the number of insurers' hedge fund holdings continued to decline in 2020, the book-adjusted/carrying value (BACV) increased for the first time since 2015, to $12.3 billion in 2020 from $11.6 billion in 2019.
The life/annuity segment raised its dollar exposure in hedge funds 5.8%, to $5.4 billion, and the property/casualty segment, 5.5%, to $6.6 billion. However, the health segment continued to pull back on its modest concentration in these investments, leaving with approximately $320 million in holdings, compared with $490 million in 2019.
Twenty rating units accounted for 87.7% of ...................... To view our full article Click here
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