Welcome to our review of the latest investment trends across the UK non-life insurance market. We conducted in-depth interviews with key decision-makers at 22 non-life insurers.
Our research shows significant and growing appetite for non-traditional investments. We found that the large majority of non‑life insurers now hold investments outside of the traditional areas of short‑dated developed government bonds, investment-grade corporate bonds and cash.
Inside this report:
- The average allocation to less traditional areas is 25%;
- Many insurers have a much higher allocation than that, of up to 60%;
- 50% of insurers are holding an absolute return or multi-asset allocation;
- 50% are holding an allocation to illiquid assets, with direct lending to companies and commercial mortgage loans the most frequently held illiquid assets; and
- 55% are holding an allocation to equities. Most insurers who invest in equities also use some downside protection, such as put options.
For many insurers, improving investment efficiency is a key priority. Insurers are reducing the number of ‘traditional’ investment managers, typically looking to bring down fees and simplify governance. Where new managers are being introduced, typically this is in non-traditional areas where existing managers are not best-of-breed.
Environmental, Social and Governance (ESG) issues are a hot topic, with 41% of insurers currently reviewing their ESG policies. Our research revealed that a wide range of different ESG approaches are being taken, with many insurers finding it difficult to determine what best practice currently looks like.
How we can help
We work with insurers to help them better understand and manage the risks they face and their capital requirements.
We help organisations to unlock business value from their Solvency II processes.
We can help you harness your data for competitive advantage, through powerful analytics and deep industry knowledge.
We provide an alternative, external view on the best estimate level of reserves for insurers and also help them understand the key drivers of variability around that best estimate.
We help you get your investment strategy right to ensure good member outcomes in your DB and DC schemes.
We help our insurance clients to develop strong links between their strategy, capital management and risk management processes, improving their chances of business success.
We help our clients understand and implement responsible investment principles.
Our business-focused approach to validation can help you be confident that your insurance models are robust, and that you are meeting regulatory requirements.