29 May 2024

Insurance Solutions: Four Themes Emerging in Life Insurers' Asset Allocations

Life insurers are continuing to move toward less liquid securities—which provide the potential for yield enhancement—while simultaneously de-risking from a credit perspective.

Insurance companies have recently released their statutory filings for year-end 2023, presenting an opportunity for a deep dive into what's driving asset allocations within life insurers' portfolios. While some new trends have emerged, there are also old trends that have continued and some that have been broken from this year's data. Below we highlight four key themes that are shaping asset allocations for life insurers.

1. Up in Credit Quality

Allocations to the highest rated NAIC 1 class (A- and higher) have continued higher since 2022 when the industry broke a string of five years of declining allocations. In particular, allocations increased by 1.7% from the year prior, to 59.1% of total bonds.1 Within NAIC 1, AAA-rated growth has been flat with increases seen mainly in the AA and A-rated categories. This credit improving increase in NAIC 1 has largely come from the NAIC 2 (BBB+/-) class, which saw a stark reduction of 1.3% of total bonds from 2022. High yield allocations have also been declining since hitting a peak in 2020.

Read the full article

Sponsored by

Ilena Coyle, Managing Director

Phone: +1 980-417-5651

Email: ilena.coyle@barings.com

Latest Stories
  • Manulife IM launches new multi-asset credit fund

    21 June 2024

    Vehicle will be co-managed by Manulife's John Hancock Investment Management

  • MEAG strengthens institutional clients team

    21 June 2024

    Lydia Malakis and Alexander George join Munich Re's asset manager

  • Legal & General appoint new private markets CIO

    21 June 2024

    Gareth Mee to become CIO following merger of AM affiliates

  • Zurich takes 70% stake in Kotak General Insurance as part of India expansion

    21 June 2024

    In deal with parent company worth INR 5,560 crores

  • Sumitomo Life issues sustainability-linked loan under new financing framework

    21 June 2024

    Five-year loan links to GHG cuts by Nippon Thomson