Twelve Capital CIO comments on the current market situation and the expected impact on the insurance industry

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Twelve Capital AG
Twelve Capital AG

ZÜRICH, Switzerland, March 23, 2023 (GLOBE NEWSWIRE) -- Urs Ramseier, CIO & Founding Partner at Twelve Capital, comments on the current market situation and the expected impact on the insurance industry.

Persistent core inflation, uncertain economic growth, and rapidly raising interest rates have led some company-specific issues to surface. In turn, these have caused widespread market volatility in both equity and fixed income markets.

We witness concerns around the liquidity positions of banks and insurers. We believe banks and life-savings insurers to be more exposed to liquidity risk, albeit in most cases liquidity buffers are adequate.

The Swiss regulator’s decision to impose losses on Credit Suisse AT1 bonds requires a re-assessment of regulatory risks. Spill-over risk could affect the insurance RT1 space.

In the current environment, insurers are better positioned than banks. Still, we believe that in both sub-sectors there are defensive names and structures that are well positioned to show resilience in the current markets. Albeit cautious, buying opportunities could also arise.

In the fixed income space, we currently favour dated Tier 2 instruments with limited going concern loss absorption features issued by large and well diversified multi-line insurance companies with solid investment grade ratings. In equities we underweight banks in relation to insurance and diversified fee-based financials.

Twelve Capital’s strong fundamental analytical capabilities and a selective investment approach are key in the current environment.

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