Inflation May Push Insurers To Private Equity Investments

Insurers are expecting the reappearance over the next few years of two infamous villains, inflation and recession, according to Goldman Sachs’ annual global insurance survey.

Inflation was a clear leader in the top concerns race with 28% of insurance companies globally citing it as the greatest macroeconomic risk to their portfolio for the first time in the 11 years that Goldman has conducted the survey. In fact, 91% of companies in the Americas (79% globally) expect inflation to be a risk this year.

After inflation, it was a tight race for the next three, with 20% citing U.S. monetary tightening, which goes hand in hand with an inflation response. The majority of respondents (87%) said they think the Federal Reserve will raise rates at least three times this year, with 36% in the Americas expecting more than four increases.

Credit and equity volatility are next on the roster of risks at 18%, with the fourth horseman, U.S. recession, closing in at 16%. Sixty-three percent of respondents said they believe an economic recession will hit the United States in the next two to three years, with Asian companies leading the pack with that prediction. On the plus side, the respondents did not expect recession to begin this year, said Michael Siegel, Global Head of Insurance Asset Management for Goldman Sachs Asset Management.