Laurence Fink, CEO of the world's biggest asset manager, BlackRock, has warned again of the dangers that the low interest-rate policies of central banks pose to insurance companies and pension funds.
"As we live in a world of persistent low rates and, in the case of Europe, negative rates today, when you put a macro-prudential framework on it, we are destroying the value of pension funds," Bloomberg reported Fink as saying at a conference in Singapore yesterday. "We are destroying the viability of insurance companies."
BlackRock, which oversees $4trn of investments, is the biggest investor in insurance companies, including American International Group and Prudential Financial, as well as managing assets for them.
Fink said that policy makers need to think broadly about the impact of their decisions: "Society has given our central bankers worldwide the responsibility for macro-prudential risk, all the risk in the system, not just the risk in the banking system," Fink said at the Credit Suisse global megatrends conference.
"I don't think there is enough talk about what are the costs of the low-rate environment to the other components of our global society -- pension funds, retirees, savers and insurance companies."
Last week Fink told CNBC that central banks do not understand "the huge pain" low interest rates are causing to the long-term interests of insurance companies, pension funds and retirement plans.
Speaking after BlackRock reported first-quarter earnings that beat Wall Street estimates, he said the performance of his firm was due in part to the fact that low interest rates are creating problems for its clients, and they are consequently seeking guidance from BlackRock.
Those low interest rates are preventing insurance companies in Europe from reinvesting in Germany and Switzerland, he said. They must now look for other ways of making returns.
"If you think rates are going to stay that low longer, you're going to see more and more people moving into equities, into more alternatives," Fink said. We're seeing huge inflows into our European equities [funds]."
"I like European equities more today than I like US equities. I like Asian equities more today than US equities," he said. "US equities as we all know outperformed for three straight years Europe and Asia, and it's catch-up time."