Insurers glum about investment outlook as low yields bite — Reuters

(Reuters) – Low or negative yields and surging equity markets are making insurers gloomy about the outlook for their investments, according to a Goldman Sachs Asset Management survey of nearly 300 senior insurance executives across the globe.

The insurers, who collectively invest more than $6 trillion, were the most pessimistic since the annual survey began four years ago, GSAM said on Wednesday.

Bond yields have turned negative in several European countries this year, following the introduction of quantitative easing by the European Central Bank, while low interest rates around the world have helped swell stock prices.

This has led insurers to move further into alternative asset classes in the hunt for rising returns to match their liabilities.

“Insurers … are looking to increase allocations to less liquid, private asset classes,” Michael Siegel, GSAM’s global head of insurance asset management, said in a statement.

The executives see private equity markets as likely to offer the best returns in the next 12 months, while cash and large corporate loans are least favored.

Insurers based in Europe, the Middle East and Africa were particularly downbeat, with 74 percent believing investment opportunities are getting worse.

The International Monetary Fund last week highlighted issues in Europe’s life insurance sector, where companies may have difficulty making guaranteed payments to their policyholders when interest rates are low.