With traditional gilts giving the lowest rate of return for decades, insurers have been forced to start looking for alternative sources of investment income. Intelligent Insurer investigates.
There was a time when insurance companies thought that all they had to do to guarantee stable investment income was to buy long-term government bonds (gilts) and then sit on them.
But with interest rates at historical lows in the US, UK and Europe, gilt returns have also hit rock bottom, forcing investment teams within insurance companies to start looking about for something else. Many ‘something elses’ in fact.
First, some history.
Lloyd's, Gareth Haslip, JP Morgan Asset Management, Patrick Liedtke, BlackRock, Bermuda, Europe