Insurers increase equity exposure despite risk management challenges

This year is being mooted as the year of the 'great rotation' by investors out of bonds and into equities. For their part, insurers are modestly increasing their equity exposure in pursuit of more attractive yields. Blake Evans-Pritchard reports on the risk management challenges that they face

The past five years have seen widespread de-risking throughout the insurance industry, as firms have dumped equities in favour of safer assets such as cash and bonds. While this has made many funds more resilient to shocks in the market, it has also badly undercut returns, since yields on these assets remain disappointing.

There is palpable frustration within the insurance industry of having to operate in a persistently low-yield environment. This has led to a strong desire to increase exposure