In this video, we outline how our investment solutions, tailored for insurance clients and focusing on regulatory capital, can benefit insurers' balance sheets.

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.

Key takeaways:

• 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.

Introduction to short dated high yield (3m:55s)

Cathy Braganza, Senior Portfolio Manager, explains why short-dated high yield can be attractive for insurers.

Key takeaways:

• 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.

An introduction to ABS (3m:45s)  

Andy Burgess, Fixed Income Investment Specialist, explains how asset backed securities are structured and their attributes.

Key takeaways:

• 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

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.

Key takeaways:

• 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

Digging deeper into secured finance (3m:22s)

We give a brief explanation of secured finance securities and their attributes.

Key takeaways:

• Secured finance consists of private and publicly traded securities
• Returns on secured finance are much higher than for similarly rated credit
• Secured finance securities are more complex to analyse than corporate bonds