2022 Insurance Outlook: Three transition year themes — inflation, capital, ESG

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Tim Antonelli, CFA, FRM, SCR, Multi-Asset Strategist, Wellington Management

The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional or institutional investors only.

Is that light at the proverbial end of the long tunnel that was 2020 – 2021? At least from an investment standpoint, it’s starting to feel that way for many of our insurance clients — not that 2021 has been without major challenges and volatility, or that 2022 doesn’t pose continued risks (including the fast-spreading Omicron variant of COVID-19), but there seems to be a sense of cautious optimism heading into the new year that’s been missing since early 2020.

The COVID-19 crisis has galvanized the global insurance industry in many ways and has forced insurers to reassess all aspects of their business. We have observed a noticeable uptick in insurer requests for strategic asset allocation studies, a spike in demand for actionable ideas to advance ESG integration broadly, and a growing desire to address climate-related risks and opportunities specifically. We have also seen insurers focus on all flavors of risk capital, both regulatory and rating agency-driven, with the goal of optimizing their portfolios accordingly. Finally, the industry is dusting off its inflation protection blueprints to prepare for the mounting threat of higher inflation in the period ahead.

Thus, our 2022 outlook for global insurers is framed around the three key themes of: 1) inflation; 2) capital; and 3) ESG, taking into account that these topics do not neatly lend themselves to cookie cutter, “one-size-fits-all” solutions because no two insurers are exactly alike.

Wellington Management
Wellington Management

Insurers have been building investment partnerships with Wellington since 1975. With $156 billion AUM as of December 31, 2021, our goals since then have remained evergreen – to exceed the investment objectives and service expectations of our clients. As an integral part of Wellington’s global investment platform, our dedicated Financial Reserves team offers a breadth and depth of resources and experience to serve our insurance clients as a go-to thought partner, risk manager, and trusted advisor for complex investment challenges. The new decade we have just entered looks more treacherous from a risk perspective than anyone could have imagined. Our collaborative strategic and proactive risk management approach helps our clients to be well-prepared.

Rich Coffman
+1 617 951 5311

Max Davies, CFA
+852 2846 6011

Sarah Marschok
+1 617 790 7170

Bob Sharma, CFA
+44 20 7126 6068


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