Abas Miskarli: Azerbaijani insurers may allocate just 2–3% of portfolios to risky assets

Azerbaijani insurers may allocate only 2–3% of their investment portfolios to risky instruments, Azerbaijan Insurers Association (ASA) Executive Director Abas Miskarli said.

Report informs that he was speaking at the 12th Investment and Sustainable Development in Microfinance Conference, organized by the Azerbaijan Microfinance Association (AMFA).

Miskarli referred to bonds backed by mortgage loan portfolios, noting that the underlying loans are secured by collateral.

"Income generated by the loan portfolio serves as the source of funding for both coupon payments and repayment of the principal. I believe investment instruments in the insurance sector are generally highly conservative worldwide.

"Insurance companies analyze each risk in greater detail than other investors. I do not believe insurers will actively invest in portfolios of this kind. Even if they do, they would allocate only a very small share of their portfolios, around 2–3%, to such instruments. They would not want to take on greater risk.

"Although there is collateral behind them, these are essentially loan portfolios. The financial crisis in the United States was also triggered by risks associated with this type of security. Therefore, frankly, I do not believe insurance companies will show interest in such instruments," Miskarli said.