Ageas’s chief investment officer Wim Vermeir described the first half of the year as being characterised by an unforeseen negative, COVID-19, and an unforeseen positive in the form of an unprecedented and very coordinated monetary and fiscal intervention.
Speaking on a panel at Insurance Asset Risk 2020 EMEA conference, held online on 19 and 20 October, Vermeir said monetary policies will be a key driver of financial markets in the coming months, and that could lead to long-term tensions.
“The recovery is relatively uneven,” he said. “The strongest company, the strongest countries, and the richest people are benefiting more than others, so that could lead to some tensions in the year to come. As usual the solution to a crisis is creating the origins of the next crisis.”
From a pure investment angle, Vermeir said Ageas hasn’t really changed its strategic asset allocation but has made some tactical moves to benefit from rising opportunities.
In particular, he highlighted “bargains” in the corporate bond space, which led the Belgium insurer to increase allocation in the asset class.
Ageas also increased allocation to equity, which Vermeir described as the asset class with the “highest long-term potential”. Infrastructure equity also caught his eye as an investment with a good mix of yield, low risk, and relatively low capital charge.
Vermeir revealed Ageas has been increasingly using the long-term equity provision introduced in the Solvency II review last year as a way to reduce the SCR charges.
He described all these move as mostly tactical and acknowledged that the longer-term theme of sustainability investing had faded away this year.
“We have forgotten about it because we are focusing on this crisis,” he said. “But it hasn’t gone away and will continue to play a very important role in the future.”