Insurer Allstate to increase infra investments

The US insurance company, which manages a $100bn investment portfolio, has cut its municipal bond holdings by over $10bn. In a recent conference call to investors, Allstate’s CIO said she believes growth in emerging economies will create more demand for infrastructure and commodities.

Allstate is planning to increase infrastructure investments over the next three to five years, Judy Greffin, chief investment officer for the US insurer’s $100 billion portfolio, said in a conference call to investors last week.

Greffin said Allstate is going to shift away from some of its fixed-income investments and toward “inflation-protection”, which includes infrastructure assets and real estate.

Greffin did not provide any details on what kind of infrastructure investments Allstate would consider, but said that she believed “the emergence of developing economies will create demand for real assets, infrastructure and commodities over the next three to five years”.

A spokesperson for Allstate declined to comment, saying that the specifics for the increased infrastructure investments had not yet been announced.

Greffin also said Allstate had decreased its municipal bond portfolio by $10.4 billion in recent years.

“That reduction was part of our view that the deteriorating financial situation for municipalities was basically going to lead to, if not already led to, a revaluation of the municipal market,” Greffin said.

Allstate’s portfolio was about three-quarters invested in fixed-income as of March 2010, according to the company’s website. But Greffin said newer risk allocation models and potential “headwinds” for domestic recovery suggested that in the future Allstate should “favour alternatives and inflation-protection over expensive fixed-income”.

Commitments to private equity and debt funds totaled $870 million. Allstate had commitments to 121 individual funds with 78 sponsors, and the largest exposure to any single fund was $25 million, according to the annual report. In real estate, Allstate had limited partnership interests of $279 million, with exposure to 55 funds. The largest exposure to any single real estate fund was $17 million.

Allstate is the largest publicly-held personal lines insurer in the US, according to the company’s website. In addition to auto, homeowners and life insurance, the New York Stock Exchange-listed company provides investment products including mutual funds.