Insurers are expecting more attractive investment opportunities across the board this year compared to last year but are concerned that risk levels will increase, according to a new global study from Ortec Finance.
The study shows investors are optimistic about fixed income, equities, and private markets.
This includes around 83% of insurers and their investment managers, who say the attractiveness of investment opportunities in fixed income will increase this year compared with last year, including 46% expecting a substantial improvement.
In private markets, 80% believe investment opportunities will be more attractive this year compared with last year, including 17% who anticipate a dramatic improvement.
In equity markets, 74% expect an improvement although only 3% think it will be substantial.
The study also shows the outlook reflected in expectations for equity risk in the insurance portfolios they manage, with 75% expecting anincrease over the next 12 months. That includes 16% expecting a dramatic rise while 23% foresee no change and just 2% expect a decrease.
When it comes to credit risk, nearly half (45%) expect a dramatic increase in their portfolios, with another 45% anticipating a slight rise over the 12 months. None of the respondents expect credit risk to decline, with 10% believingit will remain unchanged.
Hamish Bailey, Managing Director UK, and Head of Insurance & Investment at Ortec Finance, said: “It would seem that investment managers in the insurance industry are more optimistic about investment opportunities across both private and public markets this year compared to last year.
“Fixed income stands out as the most attractive area, but there is also confidence in private assets and the equity market,although optimism in the equity market is more subdued.
“The rise in the number of attractive investment opportunities is accompanied by rising risk levels in equity and credit markets, and underline the need for robust risk management.”
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