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Ortec Finance study highlights insurers' readiness to tackle increased investment risks amidst growing concerns
Invest
Ortec Finance study highlights insurers' readiness to tackle increased investment risks amidst growing concerns
A new study conducted by Ortec Finance, a premier provider of risk and return management solutions for the financial sector, indicates a notable shift in the risk-taking attitude among insurers regarding their investment portfolios.
Ortec Finance study highlights insurers' readiness to tackle increased investment risks amidst growing concerns
A new study conducted by Ortec Finance, a premier provider of risk and return management solutions for the financial sector, indicates a notable shift in the risk-taking attitude among insurers regarding their investment portfolios.
The survey, which collated insights from investment management professionals across Life Insurers, London Markets (re)insurers, and investment managers serving insurance firms, has shown a marked increase in the risk tolerance over the past year. Specifically, 51% of the participants acknowledged an uptick in the risk profile of the funds under their management, as opposed to 41% who viewed a decline. Looking ahead, 59% of those surveyed predict a further escalation in risk levels within the next year, with 14% bracing for a significant surge.
This anticipated increase in risk appetite is mirrored in the projected changes to portfolio allocations over the coming 24 months. A notable majority, 81%, anticipate boosting their US equities allocation, and 80% foresee a similar uptick in investment-grade fixed income. When asked about the primary risks concerning their investment endeavors, respondents highlighted inflation (72%), stock market corrections (57%), and climate change (49%) as their top concerns. Other significant worries included geopolitical instability (39%), though fears of a recession seemed less prominent, with only 7% marking it as a concern.
The survey further delves into more nuanced risks insurers might confront in managing their portfolios over the next year. A substantial portion of those interviewed anticipate an increase in credit (74%), currency (72%), equity (68%), interest rate (65%), and liquidity (63%) risks by 2024.
Hamish Bailey, Managing Director UK and Head of Insurance & Investment at Ortec Finance, shared insights on the findings, stating, "our research shows many insurers are prepared to take on more risk when it comes to their investment portfolios, but they are also acutely aware of the challenges in doing so." He elaborated on the strategies insurers are adopting to navigate these challenges, such as expanding into diverse asset classes and utilizing enhanced scenario analysis, stress testing, and monitoring to anticipate and manage potential risk factors effectively.
Ortec Finance stands at the forefront, aiding insurers in addressing these challenges through a variety of services designed to tackle complex liabilities, navigate low yields, fulfil increasing demands for investment performance analysis, and assess climate change-related risks and opportunities. With offerings in asset liability management, asset allocation, risk management, economic scenario testing, and performance measurement & attribution, Ortec Finance is well-positioned to support insurers in these increasingly uncertain times. For more information, interested parties are encouraged to visit Ortec Finance’s website.
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