Despite the challenging environment, the contribution of the investment return to the overall result of the insurance industry is still of great importance. Many insurers demonstrated this by defining third-party asset management as a strategic priority. At the same time, the low interest rate environment, the high regulatory requirements and increasing complexity demand a high degree of efficiency, which is required for value creation through investments. This comes in combination with challenges in core business activities such as pricing pressure in P&C, tight economics for group life, changes in distribution (tied agents vs. digital), tighter regulations on capital and potential disruption from insurtechs, which force insurers to critically rethink and reshape their strategy.
All of these challenges are forcing insurers to call for improved efficiency within investment management. With a limited upside on top-line growth, the cost structure can make the difference between otherwise identical portfolios. This leads to the following questions: What should we do internally; what could or should we outsource at lower cost; and, what can we provide as third-party asset managers? However, these questions target not only cost aspects, but also topics such as the strategic importance of certain investment capabilities, the maintenance of control, risk considerations and many more. This paper intends to provide some thoughts around those questions involving the investment process and to identify outsourcing potential.
Despite the fact that the investment process is independent of the asset owner’s organisation, there may be different factors to be considered depending on the insurer's strategy. We created a simplified framework to look into different aspects in a structured format and will be differentiating between the balance sheet assets of an insurance company and the off-balance sheet assets, such as unit-linked investments and investment foundations. We will highlight the differences accordingly.
The investment management process consists of several steps with associated processes and a variety of possibilities for collaboration, outsourcing as well as third-party provisions. These options are not solely restricted to investment-related tasks but also to associated processes such as risk management and operations, to only name a few. While some associated processes will also be covered, the focus of this paper will be on the individual steps of the investment management process.
In this brochure you will find answers to questions along the investment process and thus identify outsourcing potential:
Would you like more information?
We will be happy to answer your questions.