June 8, 2018 |
After years of stuffing their portfolios with government bonds, Brazil’s insurance companies are entering a new phase. As their investment strategies embrace diversification, they are creating new demand for corporate stocks and bonds and alternative classes, such as hedge funds.
They may even look at international markets in their quest for investment performance that has become much harder to achieve since the country’s interest rates started a dramatic downward trend in September 2016.
"Our main focus is to keep delivering underwriting results, but we should gradually start looking at investments outside of government bonds," says Petrônio Duarte Cançado, CFO at the local reinsurance comp
Brazilian insurers have found the recipe for investing simple: Buy high-yield, low-risk government bonds. But as interest rates drop, they are venturing into new territories in a search for yield.