Investment solutions and OCIO for insurance firms
Effective portfolio management for insurance companies
Fluctuating interest rates, volatile risk premiums and rising inflation are some of the issues driving increased complexity for insurance investment portfolios. That’s why many insurers are looking for better ways to optimise their investments, increase income, grow surplus and properly align risk.
We believe that with the right expertise and structure, efficient operations, effective execution and lower costs1, an insurance company’s investment programme can grow enterprise value and provide a competitive advantage.
Five common investment challenges facing insurers
Incorporating sustainability into insurer portfolios
The insurance industry is taking action on environmental, social and governance (ESG) considerations through ventures such as the UN Environment Programme’s work on Principles for Sustainable Insurance. Internal and external stakeholders are increasing their scrutiny of ESG issues.
Whether you’re focused on risk management, regulatory compliance, or identifying potential investment opportunities, you will need to consider sustainability issues. For example, climate change poses significant risk on asset owners of all sizes around the world. We provide a number of tools that can help you understanding the potential impacts, benchmark against peers and implement changes.
Sourcing new ideas and innovation through alternative asset classes
When you’re seeking greater diversification and higher returns, private market asset classes, such as infrastructure, real-estate and private debt, could play a greater role in your portfolio. Private debt is increasingly becoming a core allocation for insurers, supported by asset classes such as middle market lending, structured credit and speciality finance.
Understanding these asset classes and how they can meet your needs requires specialised knowledge, manager selection capabilities, access and scale to be effective. For smaller insurers, being able to pool assets with other institutional investors through our investment solutions could open new investment markets at an affordable cost. Our specialists around the globe source and implement alternative investment solutions for our clients.
Common questions about portfolio management for insurance companies
Every investment programme has its own unique set of objectives and often requires internal and external resources to manage it. We flex our services to suit your requirements, creating a customised approach that works for you, no matter the size of your team. Depending on your needs, you may choose one or a combination of the following:
- Digital: Do it yourself by accessing our digital manager research platform, MercerInsight®.
- Advisory: Get help, with our comprehensive investment consulting services.
- Delegated: Have us implement and manage your investment strategy.
When you engage us, we operate as an extension of your team. We can guide you on your strategy and allocation, help you source new ideas and innovation through alternative markets and help you integrate ESG, diversity, equity, and inclusion (DEI), and impact investing considerations to target sustainably. We can also manage the implementation for you, based on your desired direction. You will always maintain control of key decisions.
We use an open-architecture platform, not affiliated with any one asset manager, giving us a true independent perspective. This allows you to customise solutions to match your specific requirements regarding returns, liabilities or liquidity. The platform also helps you execute your strategy, through your in-house team, external managers, or a combination of both.
Alternative asset classes, including private markets, can offer insurers many benefits — returns that are less correlated to public markets, important sources of diversification, and ways to invest in and support the real economy. However, accessing and maintaining these strategies is not straightforward. There are layers of complexity and cost through origination, due diligence, legal work and relationship building — all before any investment has been made.
We can help you navigate these challenges in a way that suits your strategy and requirements.
- Advice: You keep control of your investment strategy and implementation, while we provide research, operational, legal and due diligence support.
- Directed implementation: This approach lets you keep control of investment decisions and manager selection, deploying and implementing strategies through our platform.
- Delegated implementation: Our specialists work with you to create a bespoke investment strategy and approach, implemented through our platform using segregated mandates or pooled funds.
Our investment specialists around the world place importance on integrating sustainable investment considerations when defining strategies, monitoring and selecting managers, and implementing selected strategies.
We have been at the forefront of sustainable investment strategies for more than a decade. Our large team of specialists across the globe can advise you on all aspects of ESG investing, DEI investing and impact investing. Our aim is to help you construct a complete strategy and portfolio designed to protect your company against risks and capture long-term opportunities. We also aim to help protect your company’s reputation.
We are committed to embedding a focus on sustainability across our advice and implementation work. To that end, we are a signatory to the United Nations’ Principles for Responsible Investment and our ESG beliefs and Sustainable Investment Policy, both of which are freely available to help you understand how we operate in this field.
We have also published detailed research modelling the path to a net-zero economy and its implications for investors’ portfolios.
How we helped a large insurer adjust its portfolio operating model
The issue:
A global marine insurer needed to adjust to a new operating model. The process highlighted the company’s limited internal resources and inability to execute and nimbly adapt its investment strategy.
The in-house team wanted to retain control of manager selection but also explore new investment opportunities that capture yield, including moving into private markets.
The solution:
We began working with the insurer in an advisory capacity before progressing to an implemented consulting and discretionary delegated asset allocation relationship. The insurer was able to retain its existing fund managers while expanding and diversifying with managers we helped find.
We introduced detailed data and risk analytics, which enabled the insurer to enhance its governance structure. This also helped simplify and streamline the company’s operating model across multiple group entities and reduce costs.
Investment solutions to suit your needs
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Implementation and OCIO
We can help you define, develop and implement your investment strategy by addressing areas such as governance, risk, sustainability and diversification. We flex our services to suit your needs and help you achieve your investment goals. -
Sustainable investments
We help you build a sustainable investment strategy that integrates environmental, social and governance (ESG) considerations; diversity, equity and inclusion (DEI) factors and seeks an optimal mix between positive change and favourable returns. -
Alternative investments
Leveraging our existing relationships with hundreds of asset managers around the world, we can help you identify and source new investment strategies, opportunities, ideas and innovations across private markets and hedge funds. -
Strategic research
Become a member of the MercerInsight® Community today to get access to strategic research from hundreds of thought leaders around the world, including Mercer and third-party publishers. It’s complimentary and easy to join. -
Asset manager research
By subscribing to MercerInsight®, an alliance with eVestment, you can gain access to data, analytics and our forward-looking research on asset managers and thousands of investment strategies across both public and private markets. -
Managing investment risk
Our Mercer Sentinel team can help you conduct due diligence and mitigate operational risks across your portfolios and strategies. We assess asset managers, custodians and other service providers to help you deliver on your governance objectives.
Leverage our breadth and depth
US $16.2 trillion in global assets under advisement1
US $548 billion in global assets under management2
More than 11,900 investment strategies rated3
More than 3,000 asset managers rated4
It's all here: MercerInsight® Community
Introducing some of our team
Related insights
Contact our insurance investment team
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