Fitch Ratings has published a new Dashboard Report examining U.S. property/casualty (P/C) insurers' asset risk exposures.
The U.S. P/C Insurers Asset Risk Dashboard discusses the composition of Fitch's U.S. P/C insurer's investment portfolio, which has remained relatively consistent over time. Earnings from investments face further pressure as portfolio yields have declined by over 100 basis points (bps) since 2007, to 3.4% in 2013.
Risk asset holdings have increased to 29% of net invested assets in 2013, from 21% in 2009, but more than half of this change is tied to the appreciation of equity values, rather than new risk asset purchases or a meaningful shift in asset allocation.
The report provides a breakdown by type of investment for the industry from 2009 to 2013, as well as for the 10 companies with the highest allocation to risk assets. Common equities remain the most prominent risk asset held.
The report also looks at the insurers with the largest allocation to Schedule BA assets (including hedge funds and private equities as well as certain affiliated investments) and identifies the five largest holders of hedge funds and private equities (alternative investments).
Factors that may lead to future marginally adjusted asset allocations include wider usage of more sophisticated asset modeling, outsourcing to professional asset managers, and competitive pressures to generate higher returns.
The 'Property/Casualty Asset Risk Dashboard' is available on Fitch's website at 'www.fitchratings.com' or by clicking on the link.
Additional information is available at 'www.fitchratings.com'.
James B. Auden, CFA, +1-312-368-3146
Source: Fitch Ratings
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