A decade of smooth sailing in equity markets has ended, as 2022 has witnessed sharp declines in equity values and higher volatility. Insurers may point to this as a reason to reduce equity exposures or avoid it altogether. That may be a mistake, however, as Conning explains in its latest Viewpoint, “Equity Investing for Insurers: Keeping Steady on the Till in Rough Seas.”
Author Matt Reilly notes that insurance companies vary widely in their asset allocations, remarkably so for companies that have more in common than not. However, insurers with larger equity exposures have benefitted significantly from the allocations over the longer term, Reilly said. Rather than backing away from equity strategies in a volatile period, he suggests a number of insurers should consider adding equity securities.
The Viewpoint is the second in the “Risk Matters” series, which focuses on current investment risks facing insurers and how modelling can help them develop holistic enterprise solutions.