Banking giant Goldman Sachs recently released the eleventh edition of its annual insurance survey. Cryptocurrency was included for the first time.
The survey of 328 chief investment and financial officers, representing nearly half of the $26 trillion global insurance industry, indicated that 6% of respondents had invested in crypto or were considering doing so. While the vast majority of insurance companies replied that they weren’t invested in cryptocurrencies and had no plans to, the six percent or roughly 20 CIOs who answered in the affirmative is surprising, especially given the recent carnage in the cryptocurrency markets. cryptocurrencies.
“We had respondents who represented over $13 trillion in assets, or about half of the global industry’s assets,” said Mike Siegel, global head of insurance asset and liquidity management. Goldman Sachs, in a podcast. hosted by the company. “So we think the survey is very representative of what the industry thinks.”
Cryptocurrency came in fifth behind private equity, commodities and emerging market stocks; while standing just above middle-market corporate lending, which traditionally consists of loans from banks, finance companies and debt funds. Notably, just last week, JP Morgan replaced real estate with crypto among its preferred alternative assets.
This was the first time Goldman Sachs had asked insurance companies about crypto, according to Siegel. A follow-up questionnaire sent out by Goldman indicated that interested companies hoped to better understand the market and infrastructure.
“If it becomes a transactional currency, they want the ability to denominate policies in crypto. And also accept the bounty in crypto, just like they do, for example, in dollars or yen or pounds sterling or euros,” Siegel said. If insurance companies started accepting crypto premiums, the new asset class would be another way to pay for insurance policies.
Although insurers may still be hesitant to invest directly in cryptocurrencies, they have long been big proponents of blockchain technology, which in many ways is perfectly suited to a business that involves extensive record keeping, for collection premiums, claims tracking and coordination of payments. In particular, in the most recent Forbes Blockchain List 50, German insurance giant Allianz and Irish giant Aon have both used blockchain for various applications but have not yet publicly disclosed the direct use of assets issued on a blockchain.
For the few insurance companies that invest in cryptocurrencies, the preferred vehicles are those that don’t require direct exposure, according to an S&P Global report.
NYDIG, an $11 billion (asset) subsidiary, New York’s Stone Ridge, is a technology and investment solutions provider for bitcoin and other cryptocurrencies. The company has helped raise funds for several insurers since 2020, including Starr, Liberty Mutual, New York Life and MassMutual have formed partnerships with NYDIG.
Turns out, it might not be a coincidence that the well-known insurance companies working with crypto are largely US-based. companies globally. “The vast majority of insurers are not considering investing in cryptocurrencies,” according to the report. “American insurers are a bit more interested.”