State Street Corporation announced new research[1] which reveals that 78 percent of insurers are confident their asset managers can navigate the current financial crisis caused by COVID-19. State Street surveyed insurance companies around the world on the impact of the COVID-19 pandemic and their views on how asset managers have handled the crisis.
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The survey also found that insurers valued the transparency on market conditions and strategic counsel provided during the crisis. 79 percent 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 percent say the provision of market commentary and strategic reviews, followed by 47 percent who say their assessment of investment opportunities.
The COVID-19 crisis has fueled the appetite of insurers for alternative asset classes, particularly in private credit and private equity. In the short term, 33 percent plan to increase their allocation to private credit and 28 percent in private equity. Alternatively, 10 percent expect to decrease their allocation to private credit and 13 percent within private equity.
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.”
