Industry shows need for greater yielding investments
Demand for various investments has been rising within the US life insurance coverage business over the past yr and a half, in accordance with a report lately printed by ALIRT Insurance Research.
Life insurers have been rising their investments in options, which account for six.3% of whole invested belongings by the tip of June 2023.
This enhance in demand, ALIRT identified, reveals the business’s need for greater yielding investments and its elevated consolation coping with the extra complicated investments, corresponding to non-public fairness and hedge funds, that underly the broad asset class.
ALIRT, nonetheless, famous that whereas monetary markets remained unstable within the first half of this yr, insurers have continued so as to add to their holdings of other investments. It additionally predicted that demand for this asset class would stay even amid market volatility and better charges.
The insurance coverage analysis specialist additionally revealed that various investments have grown to 55% of the overall business surplus by the tip of this yr’s first half.
“As this asset class can exhibit greater volatility compared to more ‘traditional’ investments, the life industry must remain cognizant of the risk-return balance of this asset class as aggregate holdings continue to rise,” ALIRT mentioned.
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