Around half of the insurers said they would stick to their current allocation levels for real estate, multiasset, fixed income, and money market and cash investments.
Nearly three-quarters of the insurers said they would allocate more to international markets, although representatives from South Korea, Mainland China, Thailand, and Malaysia preferred domestic markets.
The results were in line with global findings. Goldman Sachs Asset Management released its annual global insurance investment survey on Apr. 4, which found that 51% of insurers planned to increase allocation to private assets over the next 12 months. This was more pronounced in Asia, where 61% of respondents planned to increase allocations to private assets.
A March 29 commentary by DWS Group also reported similar findings. During the low-interest rate environment of the past few years, insurers raised their investment risk in search of yield, the commentary said.
However, as interest rates rose over the past year, insurers reverted to higher-quality fixed-income instruments, but maintained their interest in alternative assets.
"The reason for this might be that alternative assets can still provide other advantages than just an illiquidity or complexity premium over comparable liquid assets. To name a few, alternative assets can typically also provide diversification benefits, better structural protection, some degree of inflation hedging as well as high capital efficiency," the commentary said.
The abrdn survey also found that 91% of Asia insurers considered the adoption of International Financial Reporting Standards 9 and 17 as a top priority, while 71% viewed risk-based capital regulations as a high priority.
In addition, 70% of APAC insurers have either already integrated ESG into their investment strategies or are in the progress of doing so, the survey found. However, 50% of respondents have not yet started to integrate net-zero targets into their investment strategies.
"We see regulatory adoption and ESG integration as high-priority focus areas for regional insurers amid the current market conditions. The key to gaining a competitive advantage for regional insurers would be to move away from a reactive, compliance-driven mindset to a proactive one, leveraging RBC, IFRS 9/17, and ESG as strategic differentiation points," Xiong Jian, senior insurance solutions director at abrdn, said in a statement.
