Insurers diversify their investments in less liquid assets

Insurers invest in riskier assets in order to maintain their return on equity above 3%. The new Solvency II framework paves the way for less liquid investments such as infrastructure projects, corporate credit or real estate whose returns are higher.
This diversification is significant for many insurers: Axa intends to allocate 10% to 20% of the 40 billion EUR (52.8 billion USD) of annual investments in corporate debt and in infrastructure.
In Great Britain, the insurer Legal & General has concluded a credit agreement with the group Unite for the construction of a students’ dormitory. The reinsurer Swiss Re is about to invest 500 million USD in infrastructure programs.