Amidst a challenging economic backdrop, institutional investors are navigating a prolonged low interest rate environment in their search for yield. A growing subset of insurance companies are turning to listed infrastructure as an attractive asset class for two key reasons:
• Availability of assets. A shortage in high-quality alternative assets with an attractive yield, which match the liability profile and risk appetite of insurers, has resulted in firms experiencing difficulties in sourcing appropriate direct investments in the private market.
• Capital efficiency. Return on capital is a crucial metric by which insurers assess their investments. As a result of the European Insurance and Occupational Pensions Authority’s recent activity in encouraging investment in the listed infrastructure market, the return on capital of such investments may materially improve.
This article explores the benefit of insurers accessing t