Alternative investments have become firmly established in the portfolios of insurance companies. Currently, the average allocation of insurance companies to alternative investments is already 17.9%. This shows that German insurance companies differ less from other investors than is the case in the global context. In a global comparison, German insurance companies started earlier with corporate private equity, but show a clear need to catch up in all private debt asset classes. Compared to other investor types, which have an average allocation of 22.7%, insurance companies still have catch-up potential when it comes to investments in alternative assets.
Regulation as an obstacle to alternative investments
One of the most important obstacles for insurance companies to invest in alternative investments is regulation, especially the Solvency II regulations. Currently, Solvency II regulation is under review. In the process, special attention is also being paid to the discussion on long-term equities. In order to encourage insurance companies to use their equity more strongly for goals such as the creation of a Capital Markets Union, new growth impulses after the Corona pandemic and the achievement of climate neutrality within the framework of the European Green Deal, the Commission wants to create incentives in the form of capital relief.
The EU Commission’s planned reforms for Solvency II include a stronger weighting of sustainability. In its analysis of the insurance market, the BAI therefore also looked at which ESG aspects already play a role and which ESG strategies are used.
The detailed results of the study can be found here.
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