Three threats that pose a challenge to insurance investors in 2024: Conning

Richard Sega, Global Chief Investment Strategist at Conning emphasised that effective risk management is key.

Effective risk mitigation must be a top priority amidst the unpredictable landscape of the insurance industry, warned Richard Sega, Global Chief Investment Strategist at Conning.

Approaching 2024, Sega coined three major threats that loom, posing challenges to investors:

1. Geopolitical Uncertainty: Ongoing global tensions, initiated by events like Russia's invasion of Ukraine and the Hamas attack on Israel, impact energy markets and pose risks to trade, affecting both domestic and global GDP.
2. Persistent Inflation: Despite a gradual decline, inflation continues, exerting upward pressure on interest rates. Central banks may respond, potentially leading to the end of the U.S. market's decade-long dominance and creating opportunities for non-U.S. investors.
3. Political Dysfunction: U.S. political challenges, exemplified by delays in key decision-making processes, raise concerns. Unchecked spending may persist, contributing to economic imbalances and potentially leading to a government shutdown.

These factors suggest a shift in the late-stage credit cycle, recommending insurance portfolios align with liability targets. 

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Prudent equity positions and a cautious approach to corporate credit are advised. As we approach the next presidential election, high-grade credit emerges as a stable choice amidst potential volatility.

Looking forward, the impact of artificial intelligence (AI) offers a potential lift, with technologies like generative AI, machine learning, and natural language processing contributing to innovation across various sectors. 

However, the overall economic landscape and market stability remain crucial for overcoming challenges.