Global Insurers Want to Increase Private Equity Investments, as Inflation Hits Portfolios

April 5, 2022

Insurers want to put more money into private equity this year as they contend with rising inflation and its effects on monetary policy, a survey by Goldman Sachs Asset Management showed on Monday.

More than 40% of insurers plan to increase their investments in private equity in the next 12 months to boost returns, according to the survey of 328 executives overseeing more than $13 trillion in insurance assets.

Goldman Poll Finds Insurers Expect a U.S. Recession Inflation a ‘Major and Growing Concern’ for Reinsurers

“Against a complex macroeconomic and geo-political environment, demand for yield remains high, and we expect to see insurers continue to build positions in private asset classes as well as inflation hedges,” said Michael Siegel, global head of insurance asset management.

Middle market corporate loans, infrastructure debt, real estate equity, infrastructure equity and United States investment grade private placements were other favored asset class for insurers seeking to increase investment returns, the survey said.

The survey found that insurers now see rising inflation and tighter monetary policy as the largest threats to their portfolios.

Russia’s invasion of Ukraine has darkened the outlook for the global economy by causing a surge in energy and food prices that spells more pain for consumers and businesses and major central banks have raised rates to tame inflation, even in the face of growth risks.

Globally, 92% of investors said they now consider environmental, social and governance factors throughout the investment process, nearly a three-fold increase from 2017.

European insurers represent the only group that plans to increase their green or impact bonds allocation as their top priority this year, the report said.

The report also showed that 11% of American insurers said they are invested in or are considering investing in cryptocurrencies.

(Reporting by Noor Zainab Hussain in Bengaluru; editing by Amy Caren Daniel)

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