Insurers willing to take on more investment risks, Conning reports

Around 60% of U.S. insurers expect to take on more investment risks in 2024 as a strong majority (80%) feel optimistic about investment conditions for the year ahead, according to a survey of 300 U.S. insurance company investment professionals by Conning, Inc.

The survey found that insurers that manage assets internally, which accounted for around half of respondents, were more optimistic than those that outsource asset management.

While just 12% of investment professionals had pessimistic outlooks for the year ahead, and 8% were uncertain, all respondents agreed that the coming years would not be without challenges.

Chief among those concerns were continued pressures from inflation, according to Conning. Other issues U.S. insurance investment professionals feel could impact portfolios in the coming two to three years include the domestic political environment, monetary policy, market volatility and the impact of fiscal policy.

Private assets drawing more investment

While lower-risk securities are expected to see the biggest increase in asset allocations during the year ahead, with 63% of insurers increasing investments in this area, private equity and credit are expected to make up a bigger portion of insurers’ investments in the year ahead. Some 61% of investment professionals said they anticipate increasing private equity investments in 2024, while 56% said the same for private credit.

According to Matt Reilly, Conning’s head of insurance solutions, years of low interest rates moved insurance companies to invest in less traditional assets, such as private equity and credit.

“The increase in rates has helped make those more traditional investments appealing again,” Reilly said in a release. While many insurers appear poised to take advantage of those yields, they also remain committed to adding to less traditional assets such as real estate, private credit and private equity.”

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