'Before the current crisis the whole world had moved to a more passive and quantitative approach to managing equity and bond portfolios, which in the current market environment doesn't work. After a crisis, such as Corona, the world is one for active management and not one for smart beta investors. Investors looking for cover have indiscriminately sold off the entire market by liquidating their ETFs. I don't think that insurers have the capacity to quickly revert to being an active investor, when they have spent the past ten years travelling the opposite road. They don't have the equity and credit research input, nor do they have the portfolio managers to implement active portfolios. Insurers’ investment departments were totally unprepared for this. This sort of scenario was on no one’s dashboard. Everybody was positioned for a further rally in an admittedly overvalued and ageing equity bull market, for narrowing credit spreads from more quantitative easing and accumulating exposure to leveraged illiquid financing and alternative fixed income. The investment grade corporate credit market for insurers had become dominated by BBB corporate. This will have a massive impact on the asset side of the industry's balance sheet. Virtually no-one was hedged against a drop in the equity market. People were also not positioned for a significant worsening of spreads, supported by the now inevitable ratings downgrades. I don't think people had an understanding of some of the embedded credit default risks in the illiquid assets on their portfolio. Solvency II is really a quantitative system which mechanically says, if you hold these assets, you could face this deterministic magnitude of loss and therefore you need X amount of capital. That is not a risk mitigation approach, since it forces us to simply invest in what we can afford in terms of capital stresses but we are not really managing emerging risks in a forward looking mode. You can't capture the complex risks of the Corona virus triggering a lock-down with disproportionate damage to specific sectors (travel, entertainment, retail, global supply chains) in turn mitigated by government support, in a mechanical formula. Fixed correlations based on macro exposure also do not perceive the risk concentrations from holding equity and miscellaneous credit instruments in sectors or corporate issuers across the entire capital structure. The quantitative macro stress test needs to be complemented with a more granular understanding of risks and opportunities, which investors at the moment simply don't have. In contrast to the standard stress tests, there is the continuous ORSA process (Own Risk and Solvency Assessment) documented in an annual formal submission to the regulators, which puts the onus on insurers to evidence the understanding of their balance sheet beyond mechanically punching the regulatory rules. Potentially there is more interesting information in the ORSA than in the publicly available data. Expect regulators to be focusing on those ORSA's at the moment, complemented with specific questions addressed to the insurer in one-to-one conversations. I expect the investment allocations now to be a bit of a reversal from what we have seen in the last few years where people went to search for yield in alternative fixed income (real estate, private assets, high yield, leveraged loans and securitisations, EM debt etc ...), but today you can harvest material spread in investment grade debt, in an asset class you understand in companies you know. If you have cash in your pocket this will be your first destination. The opportunity set has materially changed now that the market reflects the risks of the Corona pandemic. I would consider tactically stepping back into equity now that the prices have gone down so much, as it is no longer the single performance driver that we “must have” in our diversified portfolio. If countries succeed in restarting their economies in two to three months time, I think there will be good returns to be had in investment grade credit and equity of corporate entities with sound business models, good operations and cash flows. This is a contrarian view to what most professional managers feel they can advise their clients right now, but superior returns lie in the contrarian view. The point of investment management is to shy away from backward looking decision making. But again, the selection of titles needs to be research-driven instead of a passive investment in the market as a whole. Private debt funds will struggle to attract fresh investment. There is uncertainty about the intrinsic resilience of highly leveraged private companies, often having borrowed in support of ambitious acquisition projects. This market may be idle for the time being, with loans valued at historic and possibly stale prices and problems crystallising over time. Investors will be looking for evidence of the acquisitions generating good cash flows in a likely depressed economic environment and being capable of paying the debt in full. The real estate market will struggle to re-establish itself. Tenants may struggle or default on payments (and even be protected against non-payment) and available capacity will not easily fill. For leveraged real-estate owners the situation may come to a head, unless they can invoke protection against their own creditors. Here, I also expect the market to idle, with owners not wishing to concede on prices and acquirers not wishing to pay a price which they now consider stale and not in tune with a sober economic outlook.'