Three-Quarters of Insurers Invest in Private Markets or Plan to Do So as Firms Put Excess Cash to Work, According to Mercer-Oliver Wyman Global Insurance Survey
10 Avril 2024 - 4:00PM
Business Wire
Mercer and Oliver Wyman, businesses of Marsh McLennan (NYSE:
MMC), today released their 2024 Global Insurance Survey. Drawing on
insights of more than 80 insurers globally, the survey highlights
their investment and portfolio positioning plans for 2024 and
beyond.
Private debt at the forefront of continued advance into
private markets
The survey reinforces the degree to which private markets
allocations have become a mainstay of insurance portfolios. Almost
three-quarters (73%) of insurers currently invest in private
markets or plan to do so in 2024, and nearly four in 10 (39%)
intend to increase their private markets allocations. A third (32%)
of insurers intend to increase asset allocations to private debt
this year, up from 27% in 2023. However, the cost and complexity of
both investment instruments and manager selection remain the most
prevalent headwinds to increasing allocations among those already
invested.
“With elevated interest rates and fixed income volatility, as
well as considerable uncertainty around inflation, many insurers
are reevaluating their investment frameworks and assessing ways to
put excess cash to work. Allocations to private debt strategies are
in focus for a significant proportion of insurers as they seek
access to the enhanced income, diversification, and structural
protection benefits afforded by the asset class,” said Amit Popat,
Mercer’s Global Head of Financial Institutions.
For insurers with no current private market allocations, the
most cited hurdles include liquidity constraints, a lack of
resources to assess investment opportunities, and the complexity of
investment instruments.
Market volatility is most prominent headwind
Market volatility (61%) is the most cited challenge to insurers’
investment frameworks over the next 12 months, prompting many to
reevaluate their fixed income strategies. Sixty percent of insurers
cite optimizing their core fixed income portfolio as the top
investment opportunity for the year ahead, followed by diversifying
portfolios away from traditional asset classes (51%) and utilizing
illiquidity as a driver of returns (37%).
Steps taken to increase cash allocations in 2023 are set to pull
back this year. Just 7% of insurers plan to increase cash in 2024,
whereas 27% plan to reduce exposure. In that vein, nearly half
(49%) of insurers report excess liquidity in their portfolios.
Meeting evolving regulatory requirements is the most cited
operational challenge for insurers (61%) in 2024, although data
management is another key concern. Insurers also regard accounting
and regulatory intrusion (39%) as the greatest challenge to
implementing investment decisions across portfolios.
“The market experience of the past year, which didn't pan out
exactly as many had expected, has reinforced the need for insurers
to maintain a solid core while also maintaining agility to respond
to and capitalize on evolving market risks and opportunities,” said
Joshua Zwick, Head of Oliver Wyman’s Asset Management Practice.
Evolution of sustainable investment approaches
A far greater proportion of insurers in the UK (100%), Europe
(80%) and Asia (75%) are incorporating sustainability
considerations into their investment processes relative to peers in
the US (41%, down from 71% a year ago) and Canada (42%). Net-zero
target-setting is not yet widespread, although life insurers are
leading the way.
More than two-thirds (68%) of insurers globally report
incorporating sustainable investment factors in their investment
decision-making, although this has fallen from the 83% that
reported doing so last year.
Stakeholder preferences and regulatory/political expectations
are the most cited reasons for incorporating sustainability factors
into investment decision-making, although risk reduction is another
prominent driver behind adoption.
Click here to learn more and download the survey.
About Marsh McLennan
Marsh McLennan (NYSE: MMC) is the world’s leading professional
services firm in the areas of risk, strategy and people. The
Company’s more than 85,000 colleagues advise clients in over 130
countries. With annual revenue of $23 billion, Marsh McLennan helps
clients navigate an increasingly dynamic and complex environment
through four market-leading businesses. Marsh provides data-driven
risk advisory services and insurance solutions to commercial and
consumer clients. Guy Carpenter develops advanced risk, reinsurance
and capital strategies that help clients grow profitably and pursue
emerging opportunities. Mercer delivers advice and
technology-driven solutions that help organizations redefine the
world of work, reshape retirement and investment outcomes, and
unlock health and wellbeing for a changing workforce. Oliver Wyman
serves as a critical strategic, economic and brand advisor to
private sector and governmental clients. For more information,
visit marshmclennan.com, or follow us on LinkedIn and X.
Click here to read our important notices.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240410494541/en/
Media Contact: Amelia Woltering Marsh McLennan +1 347 703
5358 Amelia.Woltering@mmc.com
Marsh and McLennan Compa... (NYSE:MMC)
Graphique Historique de l'Action
De Avr 2024 à Mai 2024
Marsh and McLennan Compa... (NYSE:MMC)
Graphique Historique de l'Action
De Mai 2023 à Mai 2024