More evidence for the increase in private-markets investment comes from the insurance sector, where appetite for private debt is recorded.
A BlackRock survey found 91% of respondents from insurers internationally intend to increase investments in private assets over the next two years, particularly across multiple private debt categories, including opportunistic private debt (41%), private placements (40%), direct lending (39%).
Some 60% of insurers are targeting clean energy infrastructure investments for low-carbon transition objectives, with wind and solar and technologies, including batteries and energy storage, identified as the top two thematic areas that insurers plan to target.
The survey also found that respondents see value in technology for key challenges of private asset modeling (53%) and regulatory capital integration (51%)
BlackRock’s 13th annual Global Insurance Report showed for the third year running that a majority of insurers are planning increased investments in private markets.
The report tracks insights from 410 insurance investors surveyed across 32 markets, representing nearly US$27 trillion in assets under management.
Mark Erickson, global head of BlackRock’s financial institutions group, said: “We’ve seen rapidly accelerated demand for private markets among insurers in recent years, given these investments’ dual benefits of diversification and increased income generation.”
The research also found demand for public market securities. Within public markets, 42% of those surveyed planned to increase allocations to government and agency bonds. Inflation-linked bonds are also a priority, with 33% planning to increase exposure, given nearly half of insurers (46%) identify inflation as a major macro risk. Additionally, 44% of respondents are looking to increase their allocations to cash and short-term instruments for liquidity.
Nearly all (99%) of insurers surveyed have set a low-carbon transition objective within their investment portfolio, with 57% of respondents citing management and/or mitigation of climate risks as a top motivation for doing so.
Additional drivers for setting low-carbon transition objectives include responding to stakeholder and beneficiary interest and fulfilling regulatory requirements.
To support their low-carbon transition strategy, BlackRock said clean energy infrastructure such as wind and solar (60%) and technologies such as batteries and energy storage (60%) were identified as the top two thematic areas that insurers plan to target. In addition, 66% of respondents stated that they have more conviction now towards investing in the low-carbon transition than they did one year ago.
