Since our last update, the macroeconomic environment has largely been a continuation of the first quarter, with inflation expectations increasing even further which has led to heightened concerns that tightening monetary policy will lead to a recession.
In addition, reviews of the regulatory frameworks within both the UK and wider Europe have continued to progress – with the PRA (Prudential Regulation Authority) in the UK issuing its response to the HMT Consultation for the Solvency II review, and the European Commission publishing its position on amendments to the Solvency II directive. There have also been further developments around climate risk management and sustainability.
Within this quarterly update, we cover developments to the two main areas most prevalent to the asset side of insurers’ balance sheets – investment markets and regulations. In addition, we highlight two investment themes we believe should be considered by many insurers at the present time.
The views expressed are those of the authors at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.