- Private markets will be among the main beneficiaries with private debt, private equity and real estate the key sectors
- Spending on risk management will increase, research shows, with AI playing a bigger role
Insurers are ready to take on more risk in the year ahead with a rise in capital to invest expected, a new report from Ortec Finance, a leading global provider of risk and return management solutions for insurers and other financial services companies, says.
The report, based on a global study* with insurers and insurance asset managers, , found 83% believe risk profiles will increase in the year ahead, with 20% expecting a dramatic increase.
The study from Ortec Finance found more than three quarters (77%) of insurers and insurance asset managers say an increase in capital to invest in their organization is definite or likely in the year ahead. Only 2% think it will definitely not happen.
They are optimistic about investment opportunities with private markets, fixed income and equities seen as among the most attractive sectors. Around 80% believe investment opportunities will be more attractive in private markets this year compared with last year with private debt, private equity and real estate the key areas for investment.
The research in detail
The full research findings can be read in the report RISK MANAGEMENT IS THE KEY CHALLENGE AS INSURER RISK PROFILES INCREASE. It shows spending on risk management by insurers will rise over the next two years - insurers and investment managers look set to invest more in stress testing, scenario modelling and asset liability management (ALM). Nearly four out of five (79%) plan to increase both spending and effort in these areas, with 24% planning dramatic increases.
Spending on risk management is part of wider investment by insurers who are increasingly using AI to guide and improve their investment strategy. All firms surveyed expected their investment in AI to rise, with nearly half (49%) of respondents saying their organization’s budget for AI applications will rise by 75% or more over the next 12 months.
Ortec Finance on the research
Hamish Bailey, Managing Director UK, and Head of Insurance & Investment, Ortec Finance said: “The study indicates that insurers are preparing to take on greater investment risk, even as recession and liquidity concerns remain front of mind.
“We also observe a continuing optimism regarding opportunities in both private and public markets this year.
“In such an environment, the value of advanced analytical tools becomes even more important for those seeking to make well-informed, forward-looking decisions.
”Ortec Finance supports insurers and asset managers with advanced scenario analysis, balance sheet simulation, and portfolio optimization tools. These take account of dynamic asset/liability interactions, liquidity and solvency constraints to help navigate market uncertainty and help make resilient investment decisions.”
More information
For further information visit https://www.ortecfinance.com/en/industries/insurance-companies.
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Notes to editors:
*Ortec Finance commissioned independent research company Pureprofile to interview 100 investment management professionals at life insurance companies, Lloyds of London insurer and reinsures and at fund managers who support insurers in November 2023. Survey respondents are located in the UK, the USA, France, Germany, Hong Kong, Italy, Netherlands, Singapore and South Korea. Collectively the organisations they work for manage around $5 trillion.
For more information, contact:
Phil Anderson, Perception A.
phil@perceptiona.com / +44 7767 491 519