New research by State Street Corporation shows that 78% of insurers are confident their asset managers can navigate the financial crisis caused by COVID-19.
State Street surveyed insurers around the world on the impact of the COVID-19 pandemic and their views on how asset managers have handled the crisis.
The survey also found that insurers valued the transparency on market conditions and strategic counsel provided during the crisis.
79% rated the communication, support and information provided by them during the crisis as good.
When asked what the most important element of support provided by them has been, 76% said the provision of market commentary and strategic reviews, followed by 47% who say their assessment of investment opportunities.
Paul Fleming, global head of Alternative Investment Solutions at State Street, said, “With traditional fixed income strategies generating lower returns, we are observing insurance companies increase allocations into this asset class at an accelerated pace.
“We’re seeing an uptick in insurance firms coming to us for our alternative asset servicing capabilities and differentiated skill sets, as well as our broader technology offering. We believe the current COVID-19 crisis will further intensify the move towards alternatives.”
When it comes to their asset allocation, the survey reveals more than a third (36 percent) of insurers expect to increase their allocation to actively managed investments in the short-term, compared to one in ten who anticipate it will fall, as is common during market downturns.
Insurers have faced a variety of investment challenges during the crisis. The survey found respondents have faced difficulties around security valuations (39 percent); liquidity challenges (36 percent); and cash forecasting (25 percent).
John Lehner, global head of the asset manager segment State Street said: “The COVID-19 crisis has created a number of challenges for asset owners and managers, but our research shows insurers appear to be coping well when it comes to their investment operations. They have confidence in their asset managers and plan to make changes to their asset allocation to address the new world that we now live in.”
