Ortec Finance: Insurers plan to increase their investment risk profiles
A new global study among insurance investment managers shows they expect the risk profiles of their investment portfolios to increase over the next 12 months, despite being relatively cautious over the past year.
The majority (83%) of insurers and insurance asset managers believe risk profiles will increase in the year ahead, with 20% expecting a dramatic increase. The study from Ortec Finance, the leading global provider of risk and return management solutions for insurers and other financial services companies, which polled investment managers responsible for $10.48 trillion assets under management, found just 36% said risk profiles had increased in the past 12 months.
More than half (54%) said risk profiles had stayed the same in the past year while 10% said risk profiles had decreased. The vast majority (91%) questioned said risks facing their investment portfolio were currently within agreed risk parameters.
Long-term liquidity risk is seen as the biggest risk to the portfolios they manage by 55%, while 31% believe it is short-term liquidity with a further 14% saying long-term liquidity and short-term liquidity are roughly equal as risks.
They rank the prospect of a recession as the biggest macroeconomic risk their investment portfolios face, ahead of a deterioration in liquidity conditions, and inflation ranked as the third biggest risk.
Credit market volatility is seen as the fourth biggest risk ahead of tariffs and the prospect of a trade war with monetary loosening and deflation ranked as the next biggest risks. Equity market volatility and geopolitical tensions are rated as the eighth and ninth biggest macroeconomic risks.
