At Insight, we have worked for decades to manage insurers’ assets, helping them to meet their objectives in a way that reflects their unique challenges and priorities.
We believe fixed income markets today present insurers with significant opportunities to build portfolios that help them target enhanced yields, reduce risk, or both. This video series outlines some key areas of focus that we believe insurers should consider.
To learn more about how we can help you, email insurance@insightinvestment.com
Why now for fixed income for insurers (3m:16s)
Damien Hill, Senior Portfolio Manager, explains why now could be a good time for insurers to allocate to fixed income.
- Bonds are a core allocation for insurers, which use them to match policyholder liabilities
- Yields on fixed income assets are comparable to the expected returns for equities
- Fixed income can act as a natural diversifier of returns and is more capital-efficient for insurers
An introduction to ABS (3m:22s)
Andy Burgess, Fixed Income Investment Specialist, explains how asset backed securities are structured and their attributes.
- ABS can be backed by pools of hundreds or even thousands of individual loans
- ABS finance car loans, credit card loans, mortgages and commercial loans
- ABS have a return linked to short-term cash rates
Introduction to short dated high yield (3m:55s)
Cathy Braganza, Senior Portfolio Manager, explains why short-dated high yield can be attractive for insurers.
- Along with offering a higher yield, shorter-maturity high yield bonds are less sensitive to spread widening and rising rates than longer-dated bonds.
- The short-dated nature of such bonds offsets the higher risk charges on lower-rated bonds under most risk-based capital frameworks.
- Average credit ratings in the high yield market have significantly improved over time.
Enhancing buy and maintain for insurers (3m:51s)
Claire Bews, Integrated Solutions Credit Portfolio Manager, explains how an enhanced approach to buy-and-maintain corporate bond investing can be positive for insurers.
- Higher yields mean contractual assets offer higher returns, but there is limited supply of longer-dated bonds suitable for a traditional buy-and-maintain approach.
- Investing beyond core investment grade corporate bonds can improve return potential without increasing risk, or improve risk exposure without decreasing return potential.
- Adding asset-backed securities, US municipal bonds, secured finance, private credit, and/or short-dated high yield can offer meaningful benefits over a traditional strategy.