Insurers looking to investment portfolios to boost profitability: BlackRock poll

INSURERS are facing a profitability squeeze and are increasingly looking to their investment portfolios as a larger component of profitability, according to a study commissioned by BlackRock released on Wednesday.

The sixth annual global survey of 300 senior insurance executives found that two-thirds of insurers agree that rethinking the investment portfolio will be vital to maintaining or improving the future profitability of their business.

Over two-fifths, or 41 per cent, said they were under growing pressure to generate a greater contribution from investments to their overall profitability.

An overwhelming majority of respondents (84 per cent) state that embracing private market or alternative assets will be a key component in improving the returns of investment portfolios.

David Lomas, head of BlackRock's global insurance asset management business, said: "Insurers are under increasing pressure to improve their profit margins against a backdrop of continued geopolitical uncertainty, the low yield environment, regulatory constraints and intense underwriting competition."

"We're seeing attention turn to investment portfolios and performance as a greater source of total profitability."

"As appetite for increased investment risk exposure has ebbed over the last year, insurers are looking instead to optimise for risk and are turning away from traditional asset classes in order to generate returns."