Insurance Multi-Asset Outlook — Higher inflation, rising rates: Front and center for insurers

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

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In our 2022 Insurance Outlook, we highlighted persistent inflation and rising interest rates as critical factors for insurers investing in the new year. It’s safe to say these themes are now front and center in a major way. Market complications are piling up early in 2022 and weighing on equity and bond returns. The year began with higher-than-expected inflation (the US CPI hit 7.9% in February) and the US Federal Reserve’s (Fed’s) firm response to it (signaling a first rate hike in March, which the Fed delivered). Then it took another sharp turn with Russia’s invasion of Ukraine — creating a massive and distressing humanitarian crisis, while adding another layer of market complexity given Russia’s role as a global supplier of commodities (notably oil).

So where to from here?

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