Reduced fears over China recession boosts Asian insurers’ risk appetite

Insurers in Asia are more optimistic about growth prospects, going for riskier investments for higher returns

Reduced fears over China recession boosts Asian insurers’ risk appetite

Insurance News

By Gabriel Olano

Asian insurers’ risk appetites have more than doubled compared to global peers as fears of a recession in China subside, according to a survey by a leading investment manager.

Almost six in 10 (59%) insurers said that they plan to increase risk in their investments over the next 12 months, compared to just 26% of insurers from the rest of the world, according to the Goldman Sachs Asset Management (GSAM) annual insurance survey.

The survey studied over 300 chief investment or finance officers from insurance firms around the world, representing over US$10 trillion in combined assets and 40% of the global insurance industry’s assets.

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“There was rising optimism among insurers worldwide about investment opportunities, with Asian insurers being more positive than their counterparts in the US and Europe,” Tuan Lam, head of institutional business for Asia Pacific at GSAM, told Asia Asset Management.

“This was partly due to a decline in growth concerns about China, with fewer respondents citing these concerns as a top three risk this year.”

Compared to a high of 78% last year, 48% of insurers from the Asia-Pacific region listed China’s economy undergoing a recession as one of the top risks their businesses face.

However, attention to political risks seems to have taken centre stage, with more than half of global insurers listing it as among the top three risks, compared to just 3% in 2016, and zero in 2015.

Asian insurers have expressed concern about low yields, increasing interest in US investment grade corporate debt. Around 57% of Asian firms said they would increase investment in this asset class in the coming year, compared to 45% in 2016.

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