By Hamlin Lovell, NordicInvestor

We are proud to present our first Annual Nordic Insurance Industry Report, which compiles answers from investors across the Nordics. The responses we have received provide valuable insight into the Nordic investor sentiment and we would like to thank all the investors that have participated. We would also like to thank the team at Aegon Asset Management who have provided us with support for this project

The report aims to highlight the questions that key asset allocation decision-makers among Nordic insurance companies are facing in a world still affected by the global pandemic.

NordicInvestor has in 2021 interviewed chief investment officers and other senior investment professionals at over 25 life and non-life insurance companies in Sweden, Denmark, Finland and Norway, which together manage over EUR 500 billion.

Key highlights include:

  • Strategic Asset Allocation continues to see assets moving into higher yielding paper, alternatives, and illiquids to pick up yield in a low yield environment
  • Whilst seeking yield pickup, some insurers are aware of rising default risks and are emphasizing higher quality paper
  • Active management is used for all alternatives and most fixed income, whilst equities see a growing trend in passive management
  • We see a pick-up in the number of insurers preparing portfolios for scenarios of higher interest rates or inflation or both
  • Preparing for EU rules on SFDR and Taxonomy is an ESG priority. Climate change is another key theme
  • ESG policies are seen as being most advanced for equities and corporate bonds albeit Solvency II regulation may not leave enough freedom for some insurers’ ESG ambitions
  • Many insurers perceive Solvency II as short term in focus and encouraging credit and interest rate risk. They would welcome a longer-term approach giving more flexibility