Goldman Sachs survey identifies top threats to insurer investments

Fears of how inflation will impact their portfolios once again topped the list of concerns among insurers, according to a major new survey that was taken even before the Trump administration tariffs were imposed.

More than half of the 405 respondents to Goldman Sachs Asset Management’s 14th annual global insurance survey cited inflation as a top concern, up from 42% in 2024.

According to the survey, the top five macroeconomic issues that pose the greatest risk to
insurers’ investment portfolios are:

• Inflation (52%)
• Economic slowdown/recession in the U.S (48%)
• Credit and equity market volatility (47%)
• Geopolitical tensions (43%)
• Tariffs/trade disputes (32%)

“We closed the survey six weeks ago,” said Michael Siegel, global head of the Insurance Asset Management and Liquidity Solutions for Goldman Sachs. “I think if we surveyed right now, you would see tariffs and trade disputes would be significantly higher.”

Nevertheless, the survey showed an overwhelming belief that inflation will decelerate in all markets: Americas, Europe, and Asia.

“The view that inflation will decelerate is off the table,” Siegel said. “So, it's either inflation is going to remain stable, or inflation may accelerate. And this is a bit of a shift here. Last year it was more a view that inflation was coming down.”

Private asset demand is strong

Despite the implications rising inflation and slowing economic growth could have on markets,
demand for private assets remains strong, as 58% of insurers report planning to increase
allocations to private credit during the next 12 months.

Moreover, fears of recession have abated. Last year’s survey found 44% respondents expecting a recession in the current year, with fewer than 1% thought so this year.

“That has fallen off a cliff,” Siegel said. “Can we see a recession in years one through three or three through five, the answer is yes. But, a surprising number of respondents, around 20%, don't think we're going to see a recession at all in the U.S. markets”

Top asset classes

When asked which asset classes will provide the highest total return during the next 12 months,
insurers were bullish on private assets – private credit (61%) topped the list for the second
consecutive year.

The top five was rounded out by:

• U.S. equities (57%)
• Private equity (55%)
• Private equity secondaries (30%)
• High-yield debt (28%)

“The private credit market has experienced a significant transformation during the past decade,”
said Matt Armas, Global Head of Insurance for Goldman Sachs Asset Management. “We
expect it will continue to expand in 2025. Through this growth, insurance companies will have
ample opportunities to diversify their direct lending portfolios while pursuing attractive risk-
adjusted returns.”

Insurers' S&P expectations tempered

Most insurers expect positive returns for the S&P 500 Index in 2025 (83%). However, after posting gains of 25% in 2024 and 26% in 2023, this year’s forecasts are tempered: 50% expect the S&P 500 to return between 5-10% and just 15% forecast returns between 10-20%.

A bullish private asset outlook has many insurance companies planning to raise allocations, according to the survey:

• 58% to private credit
• 40% to investment-grade private debt
• 36% to asset-based finance
• 32% to infrastructure debt
• 29% to private equity

Meanwhile, only 17% of insurers plan to increase allocations to U.S. equities, and even fewer
(10%) to European equities.

Operational synergies and economies of scale were identified by 68% as the primary drivers of
increased merger and acquisition (M&A) activity across the insurance industry.

The increasing adoption of Artificial Intelligence (AI) to improve efficiencies could prove to be a catalyst for further consolidation: 90% report currently using, or are considering utilizing, AI; this is up from 80% in 2024. Of those planning to adopt AI, 81% cited reducing operational costs as its primary benefit.

“These are very, operationally intensive businesses:  issuing bills, receiving premiums, investing premiums, receive claims, make claims payments,” Siegel said. “Therefore, the use of AI is seen as a way to reduce operating costs. Secondly, evaluating a risk. With tremendous amounts of data, AI is able to sift through that data and improve underwriting standards.”

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