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Building modern insurance portfolios in Asia Pacific: How to adapt to dynamic markets

1 day ago

A survey in Q1 2025 of more than 70 investors from 50 leading insurers across the region by AsianInvestor, in collaboration with Aberdeen Investments, reveals different routes to tackling new regimes and planning portfolios in a new investment era.

Building modern insurance portfolios in Asia Pacific: How to adapt to dynamic markets

SUMMARY - Adapting to changing times in insurance investing

A growing number of insurance companies in APAC are working on modernising their investment portfolios – through incorporating best practices in asset-liability management (ALM) and more closely integrating these with allocation decisions and how they measure overall performance.

This trend is reflected in how various insurers are responding to evolving capital regimes and integrating capital efficiency requirements into the investment process.

There is little choice for insurance companies but to adapt. Amid intensifying market stress through heightened volatility and continuing uncertainty, they need to reassess exposures to both public and private markets, and also how they select third-party managers to outsource to. Put simply, investors need to navigate and balance the risks of escalated market volatilities via geopolitical tensions and Trump's policies through greater diversification, including broader alternative asset allocation.

At the same time, a shifting regulatory landscape demands a rethink for most insurers in APAC about how they approach ALM.

In markets such as Hong Kong, Singapore and Korea, for example, the majority of insurance investors have established matching adjustment portfolios which comply with local regulations, and some of the more forward-thinking institutions are, in parallel, optimising the matching adjustment spreads.

These were among the views of asset allocators in response to a survey of more than 70 individuals from over 50 insurance companies across APAC.

The findings outlined in this report cover sentiment at leading insurers on a range of commonly discussed topics – from key performance indicators (KPIs) to new drivers of investment decisions, to the impact of ALM and regulatory trends, to asset allocation strategy in today’s markets, to net zero and sustainability considerations.

Key survey takeaways: How insurers are responding to evolving markets and regulations

Risk vs return is by far the most important factor shaping investment decisions this year amid escalated volatility.
Nearly 80% of respondents believe the most appropriate investment KPI is to evaluate performance with both liability-matching and risk capital requirements in mind.
The two biggest hurdles to incorporating capital efficiency in the investment process are: (i) the need for management to review the investment process; and (ii) establishing a new working framework with other departments, such as actuarial, finance and risk.
Under today’s insurance capital regimes, the area most respondents want adjusted to achieve more favourable capital treatment is infrastructure investment, across both equity and debt.
Within public markets, global investment grade (IG) credit is the preferred asset class for 2025, followed by global equities.
For private markets exposure, private debt is by far the most appealing asset this year – in the form of corporate debt.
When outsourcing private debt investments, the most important characteristic that insurers look for in a third-party manager is track record.
The most effective way to implement a net zero investment strategy is at the strategic asset allocation (SAA) level, with insurers looking for clarity and consistency of the ESG / sustainability process when selecting a third-party manager.

Click here for deeper insights and analysis - including the following coverage:

- Trend 1: New drivers for investment decisions
- Trend 2: Putting ALM best-practice at the core
- Trend 3: Raising the bar in response to new regulatory regimes
- Trend 4: Allocating to diversify risk and income
- Aberdeen Investments’ three-step approach to a best-practice insurance portfolio

For further information