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According to a recent survey sponsored by Insurance Asset Management, 62% of U.S. insurers said that despite heightened concerns about election year politics, fiscal and monetary policy, and continued inflation and volatility, They said they intend to take on more investment risks in 2024. Solid conning.
The survey found that risk expectations generally rose depending on an insurer’s asset base, but companies with assets between $5 billion and $10 billion were most likely to agree with this statement.
At the same time, companies that outsource asset management had lower expectations for increased risk in their portfolios compared to companies that managed assets in-house (57% vs. 68%).
Although there is no strong relationship between insurance company size and outsourcing activity, Conning found that insurance companies that choose to outsource are more likely to be affected by inflation, the domestic political environment, and the domestic political environment than those that manage assets internally. It noted that investors reported low levels of concern about monetary policy and other portfolio concerns.
Matt Riley, head of insurance solutions at Conning and co-author of the study, commented: Rising interest rates have made these traditional investments attractive again. While many insurance companies appear poised to take advantage of these yields, they also continue to add non-traditional assets such as real estate, private credit, and private equity. ”
said Scott Hawkins, director of Conning Insurance Research and co-author of the study. This will be a challenge for any insurance company. Outside expertise may be the solution for many. ”
Conning’s survey was completed in November 2023 among 300 investment decision makers at U.S. insurance companies.
Meanwhile, inflation remains a top concern for insurers over the next two to three years (as measured by a weighted average of responses), and is the top concern in Conning’s annual survey for the third year in a row.
Other top concerns highlighted, in order of importance, are the domestic political environment in an election year, the impact of monetary policy, market volatility, the impact of fiscal policy, and the impact of artificial intelligence (AI).
When it comes to AI, some of the biggest concerns surrounding the use of this technology include ethical considerations, lack of human oversight, unexpected market changes, cybersecurity and data privacy, and data quality and bias. You can
However, it is important to highlight that an overwhelming 89% of insurance investment professionals believe that the benefits of implementing AI into the investment process outweigh the risks.
Three out of four respondents said they are already using or piloting AI and ML (machine learning) in investment-related activities such as investment research, portfolio management, investment accounting, and trading.
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