Throughout 2019 we focused on the concept of “Braving the Elements — Surfing the Late Cycle.” We addressed this theme at our Global Investment Forums, held in major cities across the globe.
The tenth anniversary of the global financial crisis had come and gone in 2018, a year that saw the return of volatility in global markets due to trade tensions, tightening monetary conditions and signals of slowing global growth. These factors led to increased uncertainty, equity market corrections and lower investor confidence.
We expected 2019 to return to a more normal investment environment, with the potential for higher interest rates, rising inflation and further volatility spikes on the horizon. With these expectations in mind, we re-focused clients on ensuring a properly aligned asset allocation (both strategic and dynamic), robust risk management underpinned by operational efficiency, and embedding sustainability into their investment process.
In the 2020 edition of Mercer’s Investment Ideas for Insurers, we consider the continued impact of the “lower for longer” market regime and concerns over improperly priced asset market risks. Undoubtedly, insurers have re-allocated toward alternatives in an attempt to capture both illiquidity and alternative risk premia, and put a greater focus on extracting value across the global fixed income universe.
2020 is likely to see a continuation of the geopolitical, economic and market uncertainty we have seen in recent years.
Insurers will continue to seek the right balance between the impact of the lower-for-longer market environment, the evolving regulatory regime and the execution and operational risks that characterize increasingly complex investment strategies.
Whether you are considering your approach to assessing and managing market risk or reviewing your strategic asset allocation, our team of insurance investment experts is well placed to help you navigate the insurance investment landscape.
We help insurance clients design and implement strategies to optimize their investment portfolio, manage their credit exposures and balance their passive and active approaches to markets, including introducing a responsible investment approach.
For insurers seeking access to alternative sources of income, our Alternatives business can help you design and implement your private markets strategies. Whether you are seeking out best-in-class managers or want to execute your own decisions on a leading-edge infrastructure, we can help.
We hope you find our report useful in keeping it simple in a complicated world.
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