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Insurers’ long-term investment strategies are largely holding steady, though the pandemic may motivate certain changes, according to recent research and comments from New York–based Goldman Sachs Asset Management (GSAM).

GSAM’s annual insurance survey, which polled industry CIOs and CFOs worldwide in February 2020, found that most insurers had reduced their portfolio risks as a result of expensive valuations. It also said respondents anticipated credit-cycle concerns ahead of March’s sell-off.

The survey found a continuation of recent investment trends among insurers, such as increases in private equity, private credit and securitized assets — funded with reductions in cash, government bonds and hedge funds.

These trends are expected to continue or accelerate based on recent conversations, the report said.

What may not continue is investment in certain commercial real estate.

Specifically, insurers’ stakes in office space are becoming risky because of employees working remotely, GSAM executives said on Thursday, as reported by Reuters. As a result, insurers may shift some of these real estate investments, which include retail properties and storefronts, for investments in warehouses.

ETFs and ESG

The survey revealed trends in ETF as well as environmental, social and governance (ESG)  investing among insurers.

Globally, 58% of respondents used ETFs in their investment portfolios, the Friday report said.

In the Americas, that figure was 56%, down slightly from 59% in 2019. Europe, the Middle East and Africa (EMEA) had a year-over-year increase in ETF use, with 52% of respondents in the region using ETFs compared to 39% in 2019 — that increase was attributed to continued adoption from European insurers, the report said.

Consistent with previous years, ESG was a stronger investment consideration in Europe and Asia Pacific than in the Americas, the survey found.

For example, only 2% of respondents from the Americas said ESG or impact investing was “a primary” investing consideration. That figure was nearly one-fifth for respondents from EMEA, and 12% for respondents from Asia.

Further, the report said, the vast majority of insurers (95%) say there are hurdles to face as ESG implementation becomes more commonplace.

The survey also found a year-over-year increase in insurers’ investment in insurtech. In the Americas, 57% of respondents had invested in the space, versus 36% in 2019. In the EMEA and in Asia, the percentages were 61% and 66%, up from 49% and down from 66% when compared with 2019, respectively.

For full details, read the Goldman Sachs Asset Management insurance report.

About the survey: The ninth annual survey released by GSAM Insurance Asset Management incorporates the views, as of Feb. 28, 2020, of 273 CIOs and CFOs representing over US$13 trillion in global balance sheet assets, accounting for about half the global insurance industry.