As 2015 draws to a close, the challenge facing insurers in 2016 and beyond is how to generate reasonable returns given the low yields on high-quality fixed income assets. Insurers that have strong governance frameworks, and that are able to improve returns by utilizing the breadth of opportunities at their disposal, will be able to distinguish themselves from their peers. The following considerations are areas that we believe insurance companies should focus on in 2016.
"Optimize your risk budget by balancing conservatism with the need for income and growth, adjusting your approach as needed to the changing economic environment."
Should you tilt from beta to alpha?
Are you capturing the illiquidity premium?
Have you reviewed investment governance recently?
When was your last investment health checkup?
Do you have clear performance standards and management information?
What is your optimal blend of internal and external resources?
Have you considered incorporating ESG factors in your investment process?