Opportunities for insurers – Improved cash management | Insight Investment

As interest rates have normalised and the legacy of the low-yield era fades, European insurers are increasingly reassessing the efficiency of traditional cash management approaches. Bank deposits, while familiar, can carry concentrated counterparty risk and attract relatively high Solvency II capital charges, particularly where exposures are not well diversified.

We look at how reallocating cash into money market funds (MMFs) and enhanced MMFs may offer a more balanced approach, combining improved diversification, strong liquidity characteristics and more efficient capital treatment. It also explores how evolving securitisation rules and the growing role of high-quality asset-backed securities are enhancing the appeal of these strategies within insurers’ broader treasury and capital management frameworks.