Blueprint for Insurers: Expanding the Search for Yield Amid Growing Volatility
by Michael Pagano and Jeffrey Hobbs, CFA of Voya Investment Management
A blueprint for insurance investors to navigate the current market environment.
"The prolonged period of low rates has forced insurers to counter the margin compression resulting from new money rates lagging portfolio book yields. To offset this yield erosion, insurance investors have multiple levers to pull, including credit, duration, structure, illiquidity, leverage, and alternatives. While each offers distinct advantages, insurance investors must also be mindful of the risks in the current market environment. At this stage of the business cycle, volatility has returned, forcing investors to balance the need for current growth with downside protection."