OLDWICK, N.J.--(BUSINESS WIRE)--Aug 29, 2018--In this A.M. BestTV episode, Jason Hopper, associate director, industry research and analytics, A.M. Best, said insurers have become more selective in their use of hedge funds. Click on http://www.ambest.com/v.asp?v=hedgefunds918 to view the entire program.

For a second straight year, the insurance industry has pulled back on its hedge fund investments. Hopper believes hedge fund performance is a dominant factor.

“Volatility is not an insurer's best friend. Especially when the two preferred strategies of hedge funds—equity long/short and multi-strategy— ave been a little volatile this year,” said Hopper. “Fee structures, I think, is the other factor, potentially pushing some insurers out of the hedge fund space or at the least reducing their over-allocations to hedge funds.”

Hopper also highlighted how A.M. Best is looking at changes in hedge fund investment strategies.

“Property/casualty and life/annuity insurers’ have about 9% of their hedge fund holdings allocated to distressed security hedge funds. Those types of funds typically back non-investment grade organizations or companies that are in bankruptcy or close to default. If the credit markets make a wider turn toward the negative that would definitely be something A.M. Best would more closely monitor and analyze,” he said.

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KEYWORD: UNITED STATES EUROPE NORTH AMERICA NEW JERSEY

INDUSTRY KEYWORD: PROFESSIONAL SERVICES INSURANCE

SOURCE: A.M. Best

Copyright Business Wire 2018.

PUB: 08/29/2018 08:42 AM/DISC: 08/29/2018 08:42 AM

http://www.businesswire.com/news/home/20180829005394/en