AsianInvestor survey: Insurers are choosing quality carry over risk as EM equities edge ahead

AsianInvestor’s latest pre‑event survey of life insurance investment decision makers finds steady confidence in three‑year objectives, alongside allocation plans that emphasise income, resilience and flexibility.

Respondents signal increased exposure to high‑quality credit and private placements, with a clear preference for private debt within private markets.

Equity risk is being concentrated in North America, China and Japan, while multi‑sector and absolute/total‑return approaches are favoured to navigate shifting valuations and easing, if uneven, bond-equity correlations.

The findings come ahead of AsianInvestor’s 17th Insurance Investment Briefing in Hong Kong on September 16.

CONFIDENCE IS CONSTRUCTIVE

Half of respondents describe themselves as 75% confident of achieving their three‑year targets, with a smaller cohort fully confident and a third only 50% confident.

That tone frames the rest of the survey: insurers want dependable carry and room to adjust rather than a broad risk‑on stance.

The most cited threats for the coming year are soft global growth and lower corporate profits, followed by stretched valuations and geopolitical crises.

Interest‑rate volatility and regulatory change are noted but secondary. This hierarchy helps explain why respondents are leaning into quality credit and disciplined implementation.

WHAT INSURERS EXPECT TO WORK

On performance expectations, emerging‑market equities draw the most support, with fixed income close behind and private credit not far off. Developed‑market equities and private equity also feature but with fewer votes.

The picture is balanced: selective equity beta for upside, with core returns anchored in bond and private‑credit income.

“Asian EM debt typically sees lower volatility, supported by benign inflation and strong local demand, which creates a conducive backdrop for capital alongside equities,” said Johnny Chen, portfolio manager on the emerging markets debt team at William Blair.

WHERE EQUITY UPSIDE IS CONCENTRATED

North America and China are most often cited as likely equity outperformers, with Japan also prominent. Developed Europe attracts moderate interest, while LATAM and Southeast Asia rank lower in this sample.

The concentration suggests insurers are keeping equity risk focused in larger, more liquid markets. Reinforcing the medium‑term case for the region, Ze Yi Ang, portfolio manager at Allianz Global Investors, said Asia is “well positioned to lead the next wave of capital diversification, with resilient growth and sufficient market depth.”

CREDIT INTENTIONS

When asked where they are most likely to add in credit, respondents pick investment‑grade and private placements by a wide margin; very few plan to add high yield.

In private markets, private debt is viewed as the most attractive asset class ahead of private equity, pointing to demand for contractual income and stronger structures.

The early‑stage, bank‑centric nature of Asian corporate funding continues to create space for private lenders.

“Banks still provide around three‑quarters of corporate financing in Asia, so the displacement to private credit is earlier‑stage and less crowded,” said Neil Odom‑Haslett, global head of private credit at Aberdeen Investments. “The upside is significant, but access and structuring matter more than in mature markets.”

FIXED INCOME EXECUTION

On how best to capitalise on the current debt opportunity set, respondents favour multi‑sector credit and absolute/total‑return approaches ahead of sector‑specialist or unconstrained sleeves.

That preference points to a need to toggle between duration and spread as conditions change and to reposition quickly if growth slows or correlations shift.

“We are seeing early signs of bond–equity correlation normalisation as inflation moderates and rate cuts loom,” said Angela Lan, Senior Strategist at State Street Global Advisors. “Many investors have adopted more flexible and tactical allocation frameworks to navigate shifting correlations.”

The overall read from AsianInvestor’s survey is pragmatic. Insurers plan to lean into quality credit and private placements, use private debt as a core income sleeve with tighter structures, and keep equity risk selective and concentrated in larger markets.

Flexible fixed‑income mandates are the preferred way to navigate an outlook that is improving but still uncertain, signalling a stance designed to meet targets without abandoning caution.