The world’s leading insurance companies are prepared to increase their risk to combat low yields.

The third annual Goldman Sachs Asset Management (GSAM) survey covers 233 insurance company CIOs and CFOs who manage $US6 trillion ($6.4 trillion) in global assets. 

GSAM’s Global Head of Insurance Asset Management, Michael Siegel, says insurers are considering non-traditional asset classes with the potential for higher total returns and compensation for illiquidity.

“Against a backdrop of low yields and growing concern about monetary tightening, CIOs are planning to increase allocations to less liquid assets, alternatives and equities rather than increase credit risk or lengthen duration,” he said.

The survey finds CFOs are more comfortable with investment risk than when surveyed last year.

Only 6% of the CFOs surveyed believe their peer group is taking on too much investment risk, compared to around 30% in 2013. One-third of CFOs surveyed believe investment opportunities are improving. 

Accordingly, the major insurers’ CFOs are giving the green light to make the greatest allocation increases to less liquid assets, including infrastructure debt, private equity, commercial mortgage loans and real estate equity. 

More than one-quarter of the CIOs surveyed believe private equity will be the best performing asset class in 2014.

Globally, both CIOs and CFOs consider credit and equity market volatility the greatest near-term risk.