Ewan McAlpine, Senior Client Portfolio Manager, and Andrew Epsom, Insurance Client Solutions Director, look at the performance of sterling investment grade credit over recent weeks and consider the ongoing case for investment Insurance investing – is now the right time to invest in credit?
For most insurers, investment grade credit forms a core component of the overall asset allocation, whether through matching liabilities and/or generating returns as part of a diversified portfolio in a conservative manner. Recent events have therefore led many to reassess their allocations to investment grade credit.
For some insurers with long-term buy and hold bond portfolios, the possibility of increased defaults and downgrades for many areas of the market has been the main risk. For others, higher mark-to-market volatility through elevated spreads has been a greater concern. In addition, certain insurers have been viewing the situation as a (balanced) buying opportunity rather than just a risk.