Insurers’ conservative investments threaten returns
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Insurers’ stringent capital requirements mean much of their assets are cash or in investment grade, making it difficult to increase returns, according to mallowstreet’s proprietary research.
Achieving required returns and spreads, especially in policyholder assets, is the most common investment challenge chosen by nearly half (47%) of UK insurers surveyed in mallowstreet’s Insurance Report 2023.
“Risk aversion and capital requirements have left many insurers invested in investment grade and cash – and unsure how to achieve required returns,” Ally Georgieva, head of insight at mallowstreet and author of the report, says.
A slightly smaller proportion (42%) of insurers worry about making efficient use of capital, while 32% pick hedge inflation risk as a top challenge.
How is the sector’s conservative approach reflected on their asset allocations?
The report, which surveyed investment experts from 20 UK insurers in Q1 this year, examines risk appetite, current and future allocations, as well as the key challenges facing the industry.
For more information about the report, please contact Ally Georgieva (albena.georgieva@mallowstreet.com).
