How insurers are navigating volatile markets

As one of the largest investors in the world, insurers can have an outsized impact on markets and investment flows. So how are they approaching today's volatile markets? I'm Alison Nathan, and this is Goldman Sachs Exchanges. For today's episode, I'm sitting down with Goldman Sachs' Mike Siegel, global head of the insurance asset management and liquidity solutions business, and Matt Armas, global head of insurance asset management, to discuss how insurers are managing their portfolios and why it matters for markets and economies. Mike, Matt, welcome back to the program. Thank

you. Thank you for having us.

This has been an annual event the last few years, so looking forward to the conversation. So, Mike, this is clearly a very tricky market environment for all kinds of investors. But does this environment pose any particular challenges for insurers?

Allison, this is a tricky environment. We've seen tricky environments before. It does pose challenges for the insurers, but it also poses quite significant opportunities. When you look at the typical insurance company balance sheet, they are underweight relative to others' equities. So the equity market volatility is concerning but not damaging to their capitalization. That's number one. Number two, the life companies in particular do offer out equity sensitive products. So that creates more of a hedging need for them. They're very adept at that. But I'm sure with the markets whipsawing around

And, Mike, you've just published your annual insurance survey. So remind us what that entails.

Thanks, Allison. This is the fourteenth year that we've published the survey. It's a survey of insurers globally. This year, we had a record turnout. We had over 400 companies respond to our survey, managing over $13,000,000,000,000 of balance sheet assets, which represents about half of the industry's asset base. We called the survey the great pivot, which represents the pivot from public markets, public assets to private markets, private assets, which I'm sure we're gonna discuss further.

Right. So, Matt, let's talk about this a bit more. When we talked last year at this time, insurers were generally feeling much better about the economy. I think we all were feeling pretty good about the economy. And as Mike said, insurers are just this rare asset class that actually likes high interest rates. They were worried about interest rates falling. I imagine the conversation is just very different right now. It

is very different right now than it was last year. And we can start with when we took the survey and we're talking to insurers, that was after the inauguration, but inauguration, but before the first tariff shock in February. And even then, insurers tell us that they were already preparing the portfolios for higher inflation. So they were worried about inflation accelerating. They were worried about a slowdown, particularly in The United States, and they were worried about volatility. So even before the event really kicked off in February and then accelerated here in March and April, insurers

So how are insurers adjusting their asset allocation strategies amid this uncertainty and this volatility in the markets? And