Mid-year Insurance Multi-Asset Outlook — Insurers: Strengthen your core in the second half

Tim Antonelli, CFA, FRM, SCR, Insurance 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.

As we march into the second half of 2022, the “bread and butter” of most insurers’ asset allocation is beginning to look more promising, as we have improved our outlook for reserve-backing fixed income assets. Market wor­ries seem to be shifting from stagflation to weaker growth, yet fed funds futures are signaling more interest-rate hikes ahead than the US Federal Reserve’s (Fed’s) already-hawkish forecast. For our part, we think slower growth and the market’s expectations will limit future spikes in rates. In the meantime, higher yields of around 4.5% in US high-quality bonds mark a departure from the return-free rate environment and offer a welcome reinvestment rate for insurers. However, we still have a moderately under­weight view on surplus fixed income.

Wellington Management
Wellington Management

Insurers have been building investment partnerships with Wellington since 1975. With $140 billion AUM as of June 30, 2022, 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

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