The majority of global insurance companies are planning to either maintain or increase their exposure to investment risk over the next 12 months, according to a new report.
The In the eye of the storm report, commissioned by BlackRock and conducted by the Economist Intelligence Unit, surveyed 315 senior executives in the insurance and reinsurance sectors between May and June 2016.
While the respondents were wary of the "extremely challenging" investment landscape, they were nonetheless willing to increase their exposure to risky assets, said the report.
Only 8 per cent of the executives, who manage an estimated US$12 trillion in assets under management, said they planned to reduce their exposure to investment risk.
Against this, 47 per cent of insurers expect to increase investment risk in 2017 (down from 57 per cent in the previous year's survey).
The report found that insurance companies are willing to embrace riskier credit in the search for additional sources of yield and return.
However, this contrasts with the large percentage of insurers that expect to increase their allocation to cash over the next 12 to 24 months, said the report.
"Our interviews suggest that cash may be building up in part because of a lack of adequate investment opportunities, and government bonds have remained in demand because of their low risk weighting," the report said.
When it comes to private assets, more than half of insurers plan on investing more in direct mortgages, and 49 per cent said they expect to increase their private equity exposure.
Anyone expecting an RBA rate cut to trigger a repeat of the six-year property boom we experienced from 2011 needs to think again, according ...
The Reserve Bank has warned of negative equity risks among off-the-plan property buyers and the broader economic consequences of a supply gl...
Australian asset managers will be aggressively buying yield assets as the US Federal Reserve has delayed further interest rate increases for...