Nearly three-quarters (73 per cent) of insurers at present spend money on non-public markets or plan to take action in 2024, in accordance with the Mercer-Oliver Wyman World Insurance coverage Survey.

The skilled companies companies’ newest survey additionally discovered that almost 4 in 10 (39 per cent) intend to extend their non-public markets allocations, whereas a 3rd (32 per cent) of insurers intend to extend asset allocations to personal debt this 12 months, up from 27 per cent in 2023.

Nevertheless, the fee and complexity of each funding devices and supervisor choice stay probably the most prevalent headwinds to growing allocations amongst these already invested.

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Market volatility was probably the most cited problem (61 per cent) to insurers’ funding frameworks over the subsequent 12 months, prompting many to re-evaluate their fastened earnings methods.

Optimisation of core fastened earnings portfolios was cited as the highest funding alternative for the 12 months forward by 60 per cent of insurers, adopted by diversifying portfolios away from conventional asset lessons (51 per cent) and utilising illiquidity as a driver of returns (37 per cent).

Steps taken to extend money allocations in 2023 are set to tug again this 12 months. Simply 7 per cent of insurers plan to extend money in 2024, whereas 27 per cent plan to scale back publicity. Practically half (49 per cent) of insurers report extra liquidity of their portfolios.

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“With elevated rates of interest and glued earnings volatility, in addition to appreciable uncertainty round inflation, many insurers are re-evaluating their funding frameworks and assessing methods to place extra money to work,” mentioned Mercer’s world head of economic establishments Amit Popat.

“Allocations to personal debt methods are in focus for a big proportion of insurers as they search entry to the improved earnings, diversification, and structural safety advantages afforded by the asset class”,

For insurers with no present non-public market allocations, probably the most cited hurdles embody liquidity constraints, a scarcity of sources to evaluate funding alternatives, and the complexity of funding devices.

Mercer and Oliver Wyman are companies of Marsh McLennan group of corporations.

Learn extra: Banks struggle again towards non-public credit score increase as debtors hunt down financial savings