Insurers in 2024 will focus on increasing investment in private markets, clean energy infrastructure and innovative technologies. According to the Reinsurance News website, this is according to the 13th annual Global Insurance Report by asset management company BlackRock.
For the third consecutive year, the report found that the majority of insurers plan to increase private market allocations, with 91% of respondents indicating they will do so in the next two years.
That figure reaches 96% for insurers in Asia Pacific and North America. The report is based on information from 410 insurance investors in 32 markets managing approximately $27 trillion in assets.
“With 2024 expected to be a landmark election year, insurers are increasingly concerned about how political uncertainty could impact macroeconomic risks, citing regulatory changes (68%) and rising geopolitical tensions and fragmentation (61%) as top concerns,” the report notes.
In addition, market risks such as interest rate volatility (69%) and liquidity problems (52%) were identified as critical.
Despite these challenges, 74% of insurers have no plans to change their current risk profiles. Many insurers cited the value of partnerships in improving their internal expertise for risk assessment and portfolio management, with 40% of respondents emphasizing that an investment partner that understands both their insurance business and operating model is critical to achieving their strategic goals.
In the public markets, 42% of insurers plan to increase investments in government and agency bonds, while 33% focus on inflation-linked bonds, as 46% view inflation as a significant macroeconomic risk. In addition, 44% of insurers are looking to increase their holdings in cash and short-term instruments to maintain liquidity.
BLACKROCK, clean energy, INNOVATION, INSURERS, INVESTMENT, private markets
BlackRock Inc. one of the world’s largest investment firms, increased its net income in the second quarter of 2023 by 27%, but its revenue fell 1%.
According to the company’s press release, its net income for the April-June period totaled $1.37 billion, up from $1.08 billion in the same period a year earlier. Earnings per share rose to $9.06 from $7.06 a year earlier.
Earnings excluding one-time factors came in at $9.28 per share, topping Wall Street analysts’ consensus forecast of $8.52 per share.
BlackRock’s quarterly revenue decreased to $4.46 billion from $4.53 billion, with experts on average forecasting the figure to be $4.47 billion.
The volume of assets under management of BlackRock Inc. increased by 11% to $9.43 trillion.
Net inflow of investors’ funds into BlackRock funds in April-June amounted to $80.162 billion against $89.573 billion a year earlier, being significantly worse than the average market forecast ($109 billion).
BlackRock shares are losing 0.7% in price in pre-market trading on Friday. Since the beginning of this year their value has grown by 4.4%.
BlackRock Investment Company has completed the first stage of the conceptual and design phase of the future Ukraine Development Fund (UDF) and presented it at the Ukraine Recovery Conference (URC2023) in London.
“We are now moving on to the second stage, which will be very important in terms of regulatory details, rules: how is it organized? how is it regulated? what kind of people will manage the fund? how to ensure good governance at the supervisory level?” – said Philipp Hildebrand, Vice Chairman of BlackRock, at the conference.
According to him, other important issues include the creation of a due diligence mechanism to process the flow of transactions and ensure that there is a sufficient flow of transactions to invest capital after it is attracted to the fund.
Speaking about the possible volume of private investments, Hildebrand mentioned the amount of $50 billion to $60 billion.
“We would like to start with concessional capital, maybe a couple of billion,” he said.
The BlackRock representative noted that these funds could be used to make the first few deals that would prove the concept, show real investment flows, and on their basis it would be possible to scale up the work.
According to him, attracting such concessional capital will reduce risks, which is necessary to mobilize large pools of investment. In addition to the flow of projects, impeccable management is also needed, Hildebrand added.
He said that the first pledge to contribute to the fund during URC2023 was made by Andrew Forrest, an Australian businessman, chairman of the investment company Tattarang and Fortescue Metals.
The BlackRock vice chairman expressed hope that in 20 years, the UDF will be as important an institution as Temasek in Singapore.
“But we need to start with realistic numbers and start with an actual proof of concept by identifying actual investments,” he reiterated.
Hildebrand emphasized that some kind of peace perspective is also needed. “If you want to mobilize private capital on this scale, there has to be a prospect,” the investment banker explained.
He clarified that BlackRock is doing this work on a pro bono basis, advising the government, and expressed a wish that European financial institutions would participate in the project in the future.
Giovanni Salvetti, Managing Director of Rothschild & Co Middle East Limited, also emphasized the importance of several pilot successful deals that could make the front page of the Financial Times, serve as an example and a better incentive for other investors than various conferences.
“Courage is contagious. Not only in defense of the homeland, but also in business,” said the investment banker.
According to him, he is currently working on three possible deals worth more than $100 million with investors who are ready to consider investing in real assets in Ukraine until the war is over, but they also want to have a long-term perspective. In this regard, the emergence of instruments to insure investments against military risks is very important, Salvetti added.
In general, he said that over the past 15 years, Rothschild & Co. has been involved in 80% of deals in Ukraine worth $53 billion, so the company has access to information about what investors want and what they are looking for.
According to the investment banker, he sees three types of investors looking at Ukraine at the moment. First, super-speculative investors who invest in Eurobonds and want to double their money in a year.
“These people don’t need anything you are preparing, they have already invested hundreds of millions of dollars five days after the war started. And they’ve doubled, tripled their money as we speak,” Salvetti said, noting that such investments bring nothing to the domestic market.
He called the second category of investors not so speculative, but brave investors who are ready to invest until the war is over and have not yet decided, while the third category is basic investors. According to a representative of Rothschild & Co, it will be quite difficult to attract the third category today, because they need security, macroeconomic prospects and very firm legal norms.
“Therefore, I think we should focus on the one (category of investors) that can already take risks,” Salvetti summarized.
Australian billionaire Andrew Forrest will invest $500 million as an anchor investor in one of the green energy-focused investment funds now being formed by Black Rock to rebuild Ukraine, Deputy Head of the Presidential Office Rostislav Shurma said at the Kyiv International Economic Forum on Thursday.
“Now there should be the first anchors who will invest the first hundreds of millions of dollars and show by their real actions that they believe in Ukraine. There is an Australian multibillionaire, the second richest man in Australia, Andrew Forrest, founder of Fortescue, one of the largest mining companies in the world, one of the largest investors in hydrogen technology, has publicly committed to invest the first $500 million in one of the funds that Black Rock is now preparing,” Shurma said.
According to him, the size of the fund is still difficult to name exactly, but it is estimated between $25 billion and $100 billion.
