Life insurers caught between rules and risk in hunt for returns
Low interest rates are making it difficult for life insurers to hit return thresholds, and capital charge costs on private assets are forcing them to head up the credit risk curve, say experts.
High yielding private assets are attracting many asset owners as they seek higher returns amid a persistently low interest rate environment. Many are piling into the assets, and intend to bring exposures up to 15% of even higher.
Life insurers are the big exception. The asset owners are traditionally some of the biggest traditional investors into fixed income, but their ability to add illiquid investments is being highly constrained by punitive capital charges and potential threa…
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