Insurers are expecting their allocations in alternative asset classes to increase under Solvency II, according to a new study published by BlackRock.

The report carried out by the Economist Intelligence Unit on behalf of BlackRock surveying 223 insurers with operations in Europe, found that as a result of new regulation, there will be a move away from government bonds and equities and an increase in exposure to alternative assets. Thirty two per cent of insurers expect to increase their allocations to private equity and hedge funds despite the high capital charges that Solvency II will bring with it.

Findings also revealed that there is a considerable worry among respondents about meeting Solvency II’s data reporting requirements. Ninety five per cent are concerned about meeting the requirements for timeliness of data under Solvency II and 94 per cent said they were concerned about the completeness of their data.

BlackRock’s Financial Institutions Group global head David Lomas said: “Insurers face a market environment of unprecedented challenges including a continued sovereign debt crisis, frustrating low yield from traditional fixed income, high levels of equity market volatility, and anaemic economic growth. Against this backdrop, insurers need income to meet their liabilities and the research shows they may look to increase their allocation towards alternative asset classes such as hedge funds and private equity to achieve this.

“Anxieties about data management must be tackled if insurers are to achieve the optimum investment strategy and asset allocations to deliver superior returns, and consequently they may need to revisit the amount of time and resource they invest in this area.”

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