Cash and corporate bonds continue to account for an overwhelming percentage of U.S. life insurers’ investable assets, according to new research.
Conning, a provider of asset management, risk management, capital management and industry research services for insurance companies, discloses this finding in a new report on investing trends at U.S. life insurers. Conducted with the American Council of Life Insurers (ACLI), the study highlights the concerns of 50 U.S. life insurance CEOs, noting declining investment income and the need for capital appreciation as primary concerns.
The report reveals that cash and bonds accounted for 84 percent of U.S. life insurers’ investable assets at the close of third quarter of 2014. This is the same percentage as Conning recorded in 2013, as well in 2011 and 2010.
The report indicates that U.S. life insurers are addressing continuing income needs by adding Triple-B corporate credit exposure and extending out the yield curve, despite declining risk premiums. The study cautions, however, that an exclusive focus on Triple-B credit may be to the detriment of other investment concerns, including the need for diversification and proactive risk management.