(Reuters) – Insurance companies want to spend more money on private equity this year as they grapple with rising inflation and its effects on monetary policy, a survey by Goldman Sachs Asset Management showed on Monday.
More than 40% of insurance companies plan to increase their investment in private equity over the next 12 months to increase returns, according to a survey of 328 executives overseeing more than $ 13 trillion in insurance assets.
“Against a complex macroeconomic and geopolitical environment, the demand for returns remains high, and we expect to see insurance companies continue to build positions in both private asset classes and inflation hedging,”; said Michael Siegel, global head of insurance asset management.
Corporate loans in the mid-market, infrastructure liabilities, real estate investments, infrastructure equity and US investment-classified private investments are other favored asset classes for insurance companies that want to increase the return on investment, the report states.
The survey showed that insurance companies now see rising inflation and tighter monetary policy as the biggest threats to their portfolios.
Russia’s invasion of Ukraine has weakened the outlook for the global economy by causing energy and food prices to rise, causing more pain for consumers, and companies and major central banks have raised interest rates to curb inflation, including in the face of growth risks.
Globally, 92% of investors said they are now considering environmental, social and governing factors throughout the investment process, almost a threefold increase from 2017.
European insurance companies represent the only group that plans to increase its allocation of green or impact bonds as its top priority this year, the report said.
The report also showed that 11% of US insurance companies said they invested in or were considering investing in cryptocurrencies.