Goldman Sachs: the popularity of cryptocurrencies in the insurance market is growing

One of the world’s leading investment banks, Goldman Sachs Group, made this conclusion in its report.

The key theme for 2022 for GS is “Re-emergence: Inflation, Yields, and Uncertainty”. It is dedicated to the features of a dynamically changing environment in which any investment decisions are made. Over 300 CIOs and CFOs with over $13 trillion in assets of the global balance took part in the GS annual survey. This corresponds to about half of the global industry.

Key conclusions

The results show that insurers consider inflation and monetary tightening the main threats to investment portfolios. 

We expect to reduce inflation from its peak in the first quarter of this year, but strong demand growth, rising energy prices, and a restricted labor market suggest the upward shift of risks,

said Sharmin Mossavar-Rahmani, CIO of Consumer and Wealth management.

At the same time, they give optimistic assessments of investment opportunities for the first time in the past few years. Thus, 63% of respondents noted the preservation of the previous investment landscape and its improvement, while in 2021, this figure was only 40%.

Unexpected was the distribution of places in the rating of assets, which, according to the respondents, should bring the highest total profit over 12 months. For the third year in a row, private investment and stocks of emerging markets are in the top three. In 2022, primary commodities joined them, resulting from the geopolitical situation and increasing inflationary expectations.

Cryptocurrencies took fifth place, surpassing the corporate lending market, infrastructure capital, and US stocks. About 6% of respondents already invest in digital currencies or are considering this possibility. The most active in this regard were American insurers. 11% of respondents have a positive attitude towards cryptocurrencies. Among Asian and European insurers, only 6% and 1%, respectively, expressed their desire to work with digital assets.

Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, noted that this result is mainly due to the development of the cryptocurrency market and the growing certainty in its regulation. As a result, many institutions are starting to explore investment opportunities related to digital assets and are aware of the potential of the crypto industry.