PineBridge Investments: Uncharted Territory
September 5 2016
While insurers around the world face a considerable challenge in a negative rate environment, there are potential solutions. Learning from industry experience in Asia markets with prolonged low interest rates will help insurers formulate appropriate investment strategies in their respective markets.
A prolonged period of low interest rates has beset insurance companies for more than a decade. Now, the adoption of negative interest rates by
a number of central banks in Europe as well as Japan is steering the industry into uncharted territory.
Traditionally, local government bonds are one of the major asset classes life insurers use for asset-liability management. But the new era of negative rates means that traditional approaches will struggle to help insurers meet their return requirements. This, plus the relatively small size of the local corporate bond markets, leaves insurance companies with limited options.
While insurers are facing a considerable challenge, they are not empty handed. The continual fall in yields has given them an incentive to take offshore credit risk for yield enhancement as well as diversification. But it’s important to realize that there is no one perfect solution; each insurer needs to determine the best asset allocation strategy to address the “negative world order.”
-
AIG’s McMurdo to join Steadfast MGA as CUO personal lines
- August 20
The move comes as the broking group's MGA division acquires AIG's HNW home and contents portfolio.
-
QBE’s Hammond on transformation and growth
- July 2
The Asia chief executive discusses Covid-19, going digital and restructuring.
-
Swiss Re: Nat cats and man-made disasters in 2018
- April 10
Climate change, increased urbanisation and a growing concentration of assets were on the risk agenda for 2018.
-
Willis Towers Watson: 2019 Asia Market Report
- March 19
Economic uncertainty, more complex risks and tighter underwriting are all influencing Asia's markets.
-
Allianz Re: Agriculture Insurance in Asia: Protection gap and embracing technology
Digital transformation is at the heart of bridging protection gap and removing bottlenecks for farm cover in China and India.
-
AXA XL: Helping ESG move from the periphery to the mainstream
Underwriter Victoria Soo and Senior Risk Analyst Daryl Soh on how credit insurance helps finance infrastructure projects and other ESG investments.
