Insurance Multi-Asset Outlook —The rising tide of inflation: Risks and opportunities for insurers

Multi Asset Outlook featured image - includes a top-view photo of a shoreline of a beach

Tim Antonelli, CFA, FRM, SCR, Multi-Asset Strategist; Daniel Cook, CFA, Investment Strategy Analyst

The views expressed are those of the authors 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.

THERE IS A GROWING SENSE THAT THE WORLD IS “GETTING BACK TO NORMAL,” AND WHAT A RELIEF IT IS! WE SEE MORE PEOPLE VENTURING OUT, DINING AT RESTAURANTS, STAYING AT HOTELS, RETURNING TO THEIR NON-HOME OFFICES, AND MORE. Unfortunately, many countries are still dealing with more contagious and virulent mutations of COVID19 and lower vaccination rates. But in aggregate, the global economy is recovering with the aid of accommodative fiscal and monetary policy, supporting the strong performance of risk assets and the continued rotation from growth to value.

Inflation is the bogeyman now. US inflation leapt 5% in May from a year earlier, well above the Federal Reserve (Fed) forecast for 2021. “Transitory versus persistent” was the central debate at the June Federal Open Market Committee meeting, with recognition of the upside risks to inflation accelerating the Fed’s tightening path from zero rate hikes in 2023 to two anticipated hikes in 2023. Even though the market has priced in earlier hikes, the Fed’s base case is that temporary factors and base effects are still distorting inflation prints. We see an elevated risk that supply/demand imbalances in labor and commodity prices may become more persistent. In housing, for example, structural drivers are contributing to higher prices and could feed into…

Wellington Management
Wellington Management

Insurers have been building investment partnerships with Wellington since 1975. With $150 bn assets under management as of Sept 30, 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
Americas
rmcoffman@wellington.com
+1 617 951 5311

Max Davies, CFA
APAC
mdavies@wellington.com
+852 2846 6011

Sarah Marschok
Americas
smmarschok@wellington.com
+1 617 790 7170

Bob Sharma, CFA
EMEA
bssharma@wellington.com
+44 20 7126 6068

www.wellington.com/en

View the contributor page

Related Articles

About Us

Insurance AUM Journal is the #1 rated industry investment resource. We are committed to our mission of education through the distribution of thought leadership and research.

For institutional investors only.

Contact us: journal@insuranceaum.com

Insurance AUM Journal is not a Registered Investment Advisor, Broker/Dealer, Financial Analyst, Financial Bank, Securities Broker, or Financial Planner. While Insurance AUM Journal seeks to present accurate and reliable information, Insurance AUM Journal does not endorse, approve, or certify such information, nor does it warrant or guarantee the accuracy, completeness, efficacy, timeliness, or fitness of such information for any particular purpose. Information presented may or may not be current as of the date of the presentation, and Insurance AUM Journal has no duty to update and maintain the information, reports, or statements made during events.

The information presented is provided for information purposes only, and is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice, is general in nature, and is not specific to you. None of the information presented is intended as an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any security, company, or fund.

Copyright © 2021 Insurance AUM Journal | The Industry's Resource HUB

Register for Insurance AUM Journal

Register today to confirm your status as an institutional investor and gain access to the latest thought leadership in the industry.

  • Thought leadership delivered to your inbox
  • Confirm your status as an Institutional Investor
  • Complete CFA Continuous Professional Development requirements

By clicking submit you confirm that you qualify as an institutional investor and you consent to allow Insurance AUM to store and process the personal information submitted above.

Lost password