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Insurers remain upbeat despite late cycle woes -BlackRock survey

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By Reuters

By Saqib Iqbal Ahmed

NEWYORK (Reuters) – While less sanguine about the macro risk than in 2018, global insurance companies remain optimistic about the investment outlook despite the late stage of the economic cycle and abundance of geopolitical risks, according to a survey released on Monday by BlackRock Inc <BLK.N>.

BlackRock’s latest global insurance report found that 78% of insurers polled were upbeat about the current investment outlook. The survey polled 360 senior insurance executives, accounting for $16 trillion (12.9 trillion pounds) of industry assets, BlackRock said.

“Although we see some caution exemplified by a more selective risk appetite relative to 2018, particularly in Europe, we are still far removed from the risk aversion we saw in 2017,” Charles Hatami, Global Head of BlackRock’s Financial Institutions Group Global said in the report.

“The shift towards monetary policy easing appears an important factor in explaining insurers’ constructive mood this late in the cycle,” he said.

With economic growth slowing around the world a number of central banks, including the U.S. Federal Reserve, have tweaked policy to a somewhat more accommodative stance over the last year.

The survey showed insurers intend to allocate more to private markets such as private equity and real estate equity.

On average, insurers expect to increase their private market allocations as a proportion of their total portfolio from 6.6% to 8.5% over the next three years, the survey found.

Allocations to government bonds is one area where insurers have turned more cautious, as negative interest rates begin to pressure insurers looking to generate returns, the survey found.

(Reporting by Saqib Iqbal Ahmed; Editing by David Gregorio)