Most Insurers Plan to Increase Shares of Private Equity Investments Via Investing.com

• 91% of respondents intend to increase investment in private property over the next two years
• 60 percent of insurers are looking at clean energy infrastructure investments for low carbon transition goals
• Respondents see the importance of technology in the key challenges of private asset modeling (53%) and regulatory capital integration (51%)

NEW YORK–(BUSINESS WIRE)–Global Insurers are focusing on increased allocations to private markets, clean energy infrastructure and the use of new technologies by 2024, according to BlackRock (NYSE:)'s 13th annual Global Insurance Report. For the third year running, BlackRock's annual report shows the majority of insurers are planning to invest more in the private markets, with 91% of all respondents saying they will do so within the next two years. This figure rises to 96% for APAC and 96% for North American insurers. The report tracks data from 410 insurance investors surveyed across 32 markets, representing approximately $27 trillion USD in assets under management.

Mark Erickson, The Global Head of BlackRock's Financial Institutions Group, said, We have seen a rapid demand for private markets among insurance companies in recent years, given the dual benefits of these funds for diversification and increased revenue generation.

Navigating risk: finding the right investment partner

With 2024 expected to be the biggest election year in history, insurers see political uncertainty impacting major risks, citing regulatory developments (68%) and rising levels of international tension and fragmentation (61%) as their top concerns. Additionally, interest rate risk (69%) and liquidity risk (52%) were highlighted as the most critical market risks for insurers. Despite this consideration, 74% of insurers have no plans to change their risk profiles. Notably, many insurers reported benefiting from partnerships to develop their internal expertise for risk assessment and portfolio construction. According to 40% of survey respondents, an investment partner who understands both their insurance business and its operating model is critical to the success of an insurance company's core values.

Asset allocation: a balanced approach to all public and private assets

In public markets, 42% of those surveyed plan to increase their holdings in government and agency bonds. Inflation-linked bonds are also important, with 33% planning to increase exposure, as almost half of insurers (46%) identify inflation as the biggest risk. Additionally, 44% of respondents are looking to increase their cash flow and short-term financing tools.

In the private market, insurers report that they want to increase the share of private debt in several sectors, including opportunistic private debt (41%), private placements (40%), direct lending (39%), and infrastructure debt (34%). As the scope of private debt expands to include a wide range of lending opportunities, BlackRock's report shows that this asset class can support the investment objectives of insurance for those who need long-term assets to support long-term debt, as well as increasing investment income through illiquidity. There are other aspects of investing. Additionally, more than half of insurers (52%) reported that they would increase allocations to alternative investments for greater flexibility and customization.

Olivier Van Eyseren, Head of Financial Institutions Group, EMEA for BlackRock said, Insurers face unique challenges when evaluating strategic asset allocations to other investments, including regulatory issues, liquidity requirements, and high capital costs. An important part of our work with insurance clients is helping them navigate these short-term complexities while working to achieve the best long-term portfolio results.

Taking time for clean energy infrastructure

Almost all (99%) insurers surveyed have set a low-carbon transition goal within their investment portfolio, with 57% of respondents citing the management and/or mitigation of climate risks as the top motivation for doing so. Additional steps in setting goals for the low carbon transition include responding to stakeholder and beneficiary interests and fulfilling regulatory requirements. To support their low carbon transition strategy, clean energy infrastructure such as wind and solar (60%) and technologies such as batteries and energy storage (60%) have been identified as two key areas that insurers plan to target. In addition, 66% of respondents indicated that they have more confidence in investing in the low carbon transition than last year.

Using new technology

In a changing and complex macroeconomic and regulatory environment, insurers recognize the importance of investing in technology. Integrated asset allocation (63%) and asset liability management (61%) were named as strategic priorities for their technology platforms. Regulatory capital integration (51%) was also noted as an area where technology can add value. As insurers look to continue their use of private markets, 53% of respondents view private asset modeling as an additional area for technology development.

About the BlackRock Global Insurance Survey

The BlackRock Global Insurance Survey, now in its thirteenth year, provides industry-leading insight into the thinking and plans of the insurance industry through independently conducted interviews of top insurance executives worldwide. This year's survey conducted in July ” September 2024 includes the opinions of 410 senior industrial managers in 32 markets with the following regional distribution: 42% from EMEA, 29% from Asia-Pacific, 19% from North America, and 10 % from Latin America. . Together these companies represent about US$ 27 trillion in investable assets. The accompanying interactive report complements global findings with regional results, commentary from industry peers and insights from BlackRock experts.

About BlackRock

BlackRock's mission is to help more people achieve financial well-being. As a trusted investor and leading provider of financial technology, we help millions of people build savings that serve them throughout their lives by making investing easier and more accessible. For more information, please visit www.blackrock.com/corporate

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Press Contacts

EMEA

Emma Philips
emma.phillips@blackrock.com
(+44) 20 7743 2922

In the US

Thomasin Bentley
thomasin.bentley@blackrock.com
(+1) 646 231 1769

APAC

Cecilia Ho
cecilia.ho@blackrock.com
(+852) 39032595

Source: BlackRock