Top 7 investment considerations for insurance companies in 2021

"Last year, we opened our 2020 outlook with a recommendation for clients to prepare their investment portfolios for a wide range of possible outcomes. We posited that stellar financial market returns, low rates, and tight spreads led to thinning margins of safety. As we said then, “think ‘doomsday preppers,’1 but not quite as dramatic.” 
 

Those words seem prescient now as the year has come to a close, but no one could have predicted that a global pandemic was about to trigger one of the deepest recessions in modern history. The saving grace for financial markets was massive monetary and fiscal emergency measures. Although this provided a boost to risk assets, it also increased downward pressure on interest rates. This pressure has considerably worsened the outlook for the tried-and-true sources of income typically embraced by insurers and has served as a catalyst for significant changes in investment positioning across the industry.

 

Insurance companies must develop an investment approach that not only recognizes emerging risks but also supports the overarching goal of improving enterprise value — an objective made more difficult by persistently low-interest rates and narrowing spread premium. We believe the themes outlined in the following pages can help insurance companies navigate this challenging environment.

 

This paper focuses on these investment themes for 2021:

  1. Holistic capital management
  2. Liquidity: Who needs it?
  3. Private investment-grade debt
  4. Alternatives
  5. Multisector high income
  6. Responsible investing for insurers
  7. Capital-efficient strategies 

 

 Download the whitepaper to learn more.

 

Please see Important notices for further information.

Services to be provided by Mercer Investments LLC, which is one of several, associated legal entities that provides investments services to clients as part of a global investment advisory and investment management business (collectively referred to as “Mercer”).

1 Doomsday Preppers was an American reality television series that aired on the National Geographic Channel from 2011 to 2014.

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