Tighter spreads prompt insurers to rethink liquidity premium

Firms struggling to know whether returns justify buying illiquid assets

Extracting value from illiquid assets is getting harder

The ability to invest over the long term should be a clear source of value for insurers. Their annuity books and other long-term liabilities allow them to consider assets that are less attractive to most other investors because of their illiquidity, and for which insurers would naturally expect a premium. Furthermore, in the UK in particular, firms can benefit directly from a buy-and-maintain strategy through the Solvency II matching adjustment. At the same time, banks, which previously dominate