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The survey revealed trends that could be associated with a search-for-yield behaviour in the insurance industry such as increased exposures towards lower credit rating quality fixed income securities and more illiquid investments such as non-listed equities and loans.
Additionally, the average maturity of the bond portfolios increased while equity allocation remained largely unchanged. Large insurance groups appear to invest more into non-traditional asset classes such as infrastructure, mortgages, loans and real estate.
The survey was conducted during the first quarter of 2017, and is focused on the asset side of the balance sheet of large insurance groups. The results are based on submissions from 87 large insurance groups and 4 solo undertakings across 16 European Union Member States.
Gabriel Bernardino, Chairman of EIOPA, said: “The survey points to a search-for-yield investment behaviour of insurers which is a natural reaction to the low interest rate environment. The increased exposure to more illiquid investments and to non-traditional asset classes, such as infrastructure, improves asset diversification but also demands new risk management capabilities from insurers and closer supervisory attention. At the same time, in line with our expectations, the first observations from the impact of Solvency II point to an increase in long-term investment and a stable allocation to equity. EIOPA will continue to closely monitor the investment behaviour of insurers to ensure that it continues to remain in line with their risk bearing capacity.”