Insurers in Asia Pacific will respond to last year’s turmoil in public markets by seeking out investments in private markets and increasing their allocation to international markets.
That is at least according to a new report from abrdn and Hong Kong-based strategy consultancy firm Quinlan & Associates.
The survey found that 41% of insurers plan to increase their allocation to private debt over the next three years, while 39% plan to do so for private equity.
Meanwhile, around one third plan to decrease their allocation to equities, reflecting the negative market outlook.
For real estate, multi-asset and fixed income, 50%, 47% and 50% respectively plan to keep it unchanged.
Overall, around 73% of insurers plan to allocate more capital to international markets, while the remaining 27% that plan to allocate more capital to domestic markets are mostly motivated by regulatory requirements, according to the report.
Regarding ESG, regulators in Apac have set out rapidly evolving expectations on ESG integration requirements. In response, leading insurers in Apac have started to align their ESG integration and disclosure initiatives with global standards, with a growing number signing the UN Principles for Sustainable Insurance
Unsurprisingly, the majority of insurers in Australia (77%), Malaysia (72%) and Hong Kong (69%) expect regulators to more strictly enforce ESG/net zero regulations, although only about 50% of insurers in Taiwan and Korea see stricter enforcement as likely.
As a result, over 70% of respondents said that one of their key motivations to integrating ESG was stricter regulatory expectations, although this lost out to branding and reputation, which was seen as a more important factor.
The survey covered 56 senior executives across 43 insurance companies covering eight markets: Hong Kong, Singapore, Australia, Korea, Taiwan, Malaysia, Thailand and Mainland China
Respondents consisted of both regional and local CEOs, CIOs, CROs, heads of investment, heads of risk and various other departments.
