Insurers plan to up ramp up private market investments, BlackRock says



Power-generating windmill turbines are seen at the Eneco Luchterduinen offshore wind farm near Amsterdam, Netherlands September 26, 2017. REUTERS/Yves Herman/File Photo

Insurers plan to increase their allocations to private markets to 14% from 11% over the next two years in the hunt for yield, as they add more money to environmentally focused investment funds, BlackRock Inc (BLK.N) officials said. (BLK.N)

Charles Hatami, global head of the financial institutions group at the world’s largest asset manager, described the trends in an interview with Reuters on Friday, based on a survey of 362 insurance executives running a collective $27 trillion in assets.

The results showed the insurance industry’s embrace of risk will likely continue even after the easing of interest rate disruptions from the pandemic, Hatami said. In 2019, private market assets accounted for 7% of total allocations, the survey found.

“Insurance companies are adopting more risk appetite,” Hatami said.

BlackRock manages more than $500 billion on behalf of insurers, or 5% of its total assets of $9.5 trillion.

Alternative assets such as infrastructure, private equity and hedge funds have become more attractive to investors in recent years as central bank money printing kept interest rates low and returns weak in the investment grade bond market.