2018 Asian Actuarial Conference - Diversification in investments is key

The one positive he said, that insurers could take from some of the market developments this year, is the return of volatility. “Volatility is supposed to be our friend – and indeed it is as it creates opportunity,” he said.

He also brought up three possible risks that a company could take in today’s market environment to generate income – currency risk, credit risk and duration risk. “I am very wary of people who claim they can take currency risk because the amount of people who can do that very successfully over a long term is very low,” he said, while pointing out that the risks involved in duration risk is currently incredibly high.

And while there have been some interesting developments in certain markets this year, credit risk must still be approached carefully. “As investors, credit risk is something we feel we can control. If you do your bottom-up research, and if you have a strict quality approach, then I can be comfortable dealing in credit markets,” he said.

“The good news is that in emerging markets and to a certain extent, Asian credit markets, we’ve seen a great widening in credit rates this year, especially over the last couple of months, and for the diligent investor there is going to be a lot of opportunity there.”

The Asian Actuarial Conference was held in Hong Kong for the first time in 17 years and is host to almost 700 actuaries and other insurance professionals. The four-day conference ends today.