Insurance roadmap 2020: Three keys to success

Multi-Asset Insurance Strategist Tim Antonelli offers his 2020 roadmap for insurance clients, focusing on three key themes he believes insurers must navigate to be successful in the coming year and beyond.

Views expressed are those of the author and are subject to change. Other teams may hold different views and make different investment decisions. While any third-party data used is considered reliable, its accuracy is not guaranteed.

OVER THE PAST YEAR, I HAD THE PRIVILEGE OF MEETING WITH MORE THAN 100 GLOBAL INSURANCE COMPANIES, with total assets of around US$12 trillion on their balance sheets. While each insurer has its own particular risk tolerance, distribution strategy, regulatory issues, and accounting regime, they all shared many similar core concerns about what lies ahead. These challenges represent a unique intersection of industry regulation, financial positioning, and macroeconomic conditions.

So, as a new decade begins, there are three key themes that we believe insurers must navigate in order to be successful in 2020 and beyond:

  1. Downside risk mitigation
  2. Climate change
  3. BBB credit exposure

Theme 1: Downside risk mitigation

A dominant theme across continents in 2019 was the renewed focus on downside risk mitigation. A number of factors make this an even more critical issue for insurers in 2020:

  • A desire to protect gains accrued from the strong run in capital markets over the past decade;
  • Migration of accounting standards to reflect more ”mark-to-market” investment results (e.g., the negative earnings impacts from the fourth quarter of 2018 are still fresh in many insurers’ minds); and
  • Select regulatory risk-capital calculations allowing for a reduction in capital charges if certain criteria are met.

We have been in a “late-cycle” environment for years, but eventually it will have to turn. However, the danger of derisking too early should be a very…

To read more, please click the download link below.

RECOMMENDED FOR YOU

Credit research looms large in the era of COVID-19
In the wake of severe credit-market dislocations earlier this year, Fixed Income Portfolio Manager Mahmoud El-Shaer shares his thoughts on the growing importance of credit research in a still-uncertain environment.
August 2020
Credit research looms large in the era of COVID-19
,
Where can insurers find compelling returns?
In our mid-year insurance webcast recap, we shed light on the early signs of recovery that we are observing and where they intersect favorably for insurers from an investment standpoint.
July 2020
Where can insurers find compelling returns?
,
Insurance summer reading list
Our culture values continuous learning, personal growth, and humility. Therefore, it has become a tradition that, each year, we poll our colleagues to ask for their latest reads to kick-start summer, a season when many of us seek time to reflect and recharge. Learn how our 2020 reading list is inspiring us.
July 2020
Insurance summer reading list
,
Insurers in the hot seat: Illiquidity, impairments, and <br>enterprise risk
Whether it's a financial meltdown, a natural catastrophe, or the COVID-19 pandemic, insurance companies often find themselves in the cross-hairs when a global crisis hits. Multi-Asset Insurance Strategist Tim Antonelli shares his thoughts on how insurers can navigate today's troubled landscape.
May 2020
Insurers in the hot seat: Illiquidity, impairments, and
enterprise risk
,
Insurance Multi-Asset Outlook — A game plan for insurers to navigate volatility
Multi-Asset Insurance Strategist Tim Antonelli and Investment Strategy Analyst Daniel Cook consider the economic impact of the ongoing COVID-19 virus and the implications for various asset classes.
April 2020
Insurance Multi-Asset Outlook — A game plan for insurers to navigate volatility
,
Five reasons to rethink your BOLI allocation
We explore several new opportunities offered by a more modern approach to BOLI portfolios.
March 2020
Five reasons to rethink your BOLI allocation
,
Value investing’s existential crisis
In this video series, Multi-Asset Strategist Adam Berger sits down with researchers and portfolio managers from across our equity and alternatives platforms to discuss the long stretch of underperformance by value stocks.
March 2020
Value investing's existential crisis
,
Debunking four common myths about CLOs
Fixed Income Portfolio Manager Alyssa Irving sets the record straight regarding the risks and potential benefits of investing in collateralized loan obligations (CLOs).
January 2020
Debunking four common myths about CLOs
,

We use cookies to improve your experience on our website. To accept cookies click Accept & Close, or continue browsing as normal. For more information, visit Cookies & Tracking NoticE.