AIA: Liquidity requirements influence investment decisions

Azerbaijani insurance companies are not willing to take significantly higher risks for the prospect of gaining only an additional four percentage points in investment returns, Abas Miskarli, Executive Director of the Azerbaijan Insurers Association (AIA), said at the 12th Conference on Microfinance Investments and Sustainable Development, organized by the Azerbaijan Microfinance Association, Report informs.

The director noted that investment decisions are influenced by the characteristics of Azerbaijan's investment market as well as liquidity requirements imposed on financial institutions.

"First of all, our market offers a limited selection of investment instruments. Secondly, there are the specific features of non-bank credit organizations, including the structure of their loan portfolios and their liquidity needs. Insurance companies also have their own obligations. When insured events occur, they must be ready to make payments to clients," Miskarli said.

According to him, under such conditions, insurance companies prefer investment instruments that allow them to quickly recover invested funds, making liquidity a key consideration.

Miskarli also emphasized the importance of loan portfolio diversification among non-bank credit organizations.

"The more diversified a loan portfolio is, the lower the associated risks. This factor is also important for insurance companies," he added.