Asia-Pacific insurers grow more cautious about economic environment, risk appetite as US-China trade war rages on, BlackRock says

Insurers in the Asia-Pacific region are growing more cautious about the investment outlook as concerns increase about macroeconomic risk in the next few years, as the US-China trade war continues to rage and stricter regulatory requirements on capital come into place, according to a new report by BlackRock, the world’s biggest asset manager.

Of the Asian insurers surveyed, 54 per cent said they were most concerned by financial market risk over the next two years as the biggest driver of change in the industry. That compared with 39 per cent of respondents globally.

Kimberly Kim, head of BlackRock’s financial institutions group for Asia-Pacific, said insurers in the region were “disproportionately concerned with weak economic growth and asset volatility” compared with their peers in the United States and Europe.

“Sentiment in [Asia-Pacific] took a rather dramatic turn. APAC went from having the highest appetite to add risk last year, to having the lowest appetite to add risk this year,” Kim said. “Of those reducing risk in APAC, concerns about regulatory capital requirements and macroeconomic growth were the leading considerations.”

Only 23 per cent of Asian insurers were willing to increase their exposures, according to the report.

The Global Insurance Report, in its eighth year, interviewed 360 senior executives in 22 countries in the insurance and reinsurance industry, with a combined estimated assets under management of US$16 trillion. Asia-Pacific insurers represented 28 per cent of this year’s responses.