NU Online News Service, Oct. 7, 2:33 p.m. EDT
Strategies of insurer's investments have not changed despite the economic recession and credit crunch, mirroring other major institutional investors according to a report from The Conference Board.
The Conference Board released its annual Institutional Investment Report yesterday. The report is a comprehensive analysis of the asset growth and portfolio composition of institutional investors operating in the United States.
It documents the presence of different types of institutional investors in single asset classes, such as equity, debt securities, alternative instruments (including hedge funds) and foreign securities. The 2009 edition includes definitive data for 2008 and discusses trends that have emerged in the most recent months.
"For decades, institutional investors had been shifting their allocation preferences from fixed-income securities into equity," said Matteo Tonello, associate director of corporate governance at The Conference Board and co-author of the publication. "Then last year came, and it had a devastating effect on institutions' expanded equity portfolios."
By the end of 2008, institutions had only 36.6 percent of their assets in equities, down from 47.2 percent at the end of 2007.
Of all the institutional investors affected by recent declines in investments, insurers were the least affected by plunging stock values, The Conference Board said. Carriers have lower exposure to stock and subsequently, their asset allocation was the least affected by the market plunge.
The property and casualty segment, in particular, reported asset distributions substantially identical to those of prior years, when investments in equities were never increased to the level that preceded the U.S. recession of 2001-2002.
The study found that by the end of 2008 institutional assets had reached their lowest level since 1980, or 15.8 percent, reporting substantial losses across virtually all asset classes.
Total institutional assets plunged more than 21 percent to $22.3 billion, a level similar to what was recorded in 2004, the report said.
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