Insurers in the region are less upbeat about investment outlook

Asian insurers are more muted in their optimism about the current investment outlook. This is probably a reflection of the region's greater vulnerability to the risk of an escalating US-China trade tensions, says global investment management corporation BlackRock.

In its “Global Insurance Report 2019 – Re-engineering for resilience”, BlackRock notes that 78% of its global sample say they are positive about the current investment outlook, with 10% of those being very positive. In comparison, insurers based in Asia-Pacific appear more cautious with only 66% positive about the current investment outlook.

BlackRock says the shift towards monetary policy easing appears an important factor in explaining insurers’ constructive mood this late in the cycle. The report also says that only 23% of APAC insurers are ready to increase exposures. This more selective risk appetite probably reflects the pressures on the mainly export-led economies of the region from continuing trade tensions. In the case of APAC, insurers may also be concerned about impending regulatory change.

Furthermore, APAC-based insurers seem more worried about weak economic growth than their global counterparts (46% versus 37% respectively), which matches the somewhat higher readings in relation to recession fears.

Risk

From a market risk perspective, North American insurers appear the most focused on liquidity risk (44% relative to 36% globally). Interest rate risk scores highest among European and Latin American insurers, 48% and 47% respectively, while Asian and Latin American insurers worry most about asset price volatility (47% and 57% respectively), which may reflect their higher emerging market exposures.

Of the Asian insurers surveyed, 54% said they were most concerned by financial market risk over the next two years as the biggest driver of change in the industry. That compared with 39% of respondents globally.

The BlackRock Global Insurance Report summarises the results from a telephone survey the Economist Intelligence Unit conducted on the global asset manager's behalf during July-August 2019. It reflects responses from 360 senior executives across more than 22 countries in the insurance and reinsurance sectors, representing estimated assets under management of $16trn, with strong representation from Asia-Pacific, EMEA and Latin and North America. These responses are complemented by insights gained through detailed telephone interviews with 10 senior executives from the sector.

Source: Asia Insurance Review