Insurance Insights Q1 2024 : SAA review using updated capital market assumptions
Jaijit Kumar, Invesco’s Head of Asia Insurance Solutions shares his Q1 2024 SAA review using updated capital market assumptions.
Invesco Insurance Insights
This newsletter brings the latest topics impacting insurers, aimed to help those managing investment portfolios while considering an insurer’s business, regulatory and solvency needs.
Welcome
2024 has generally been marked by expectations around easing in monetary conditions – although the narrative has gone back and forth a few times. For insurers, while the yield environment has been quite favorable (and may remain so, at least for a short period), there still is the potential to monetize certain risks, and in this second edition of our Insurance Insights, we re-assess the utility of considering alternative/private asset classes and extend this beyond the typical piecemeal strategy approach.
2024 has generally been marked by expectations around easing in monetary conditions – although the narrative has gone back and forth a few times. For insurers, while the yield environment has been quite favorable (and may remain so, at least for a short period), there still is the potential to monetize certain risks, and in this second edition of our Insurance Insights, we re-assess the utility of considering alternative/private asset classes and extend this beyond the typical piecemeal strategy approach.
We hope that this topic and observations will help you in your discussions on the assessment, construction, and management of portfolios in this constantly evolving and challenging macroeconomic landscape.
As always, please do not hesitate to reach out to us – your thoughts on such topics are always much appreciated.
Jaijit Kumar, Head of Asia Insurance Solutions
Insurance Insights Newsletter 2024 first edition
Invesco Insurance Insights 2nd edition 2024
In this edition, we extend the analysis around asset allocation and look a bit more closely into asset classes that we feel can enhance the efficiency of insurance portfolios and improve resilience. Watch this video to learn more.
Quick take: Insurance Insights 2nd edition 2024
Transcript
Hello everyone, welcome back to this 2nd edition of our Insurance Insights newsletter of the year. The topic for discussion this time around - to extend the analysis around asset allocation and look a bit more closely into asset classes that we feel can enhance the efficiency of insurance portfolios and improve resilience. We feel that certain asset classes, such as alternatives, still offer value over the longer term and lend themselves well to an insurance portfolio construct. What we outline in this edition is an example of how to extend the investment frontier by incorporating multiple alternative strategies as part of a systematic investment program. As before, we hope you find this of use and we will be very happy to get your thoughts, insights, and suggestions around this topic, or indeed any other issues you are dealing with, and we look forward to receiving your feedback. Thank you.
Insurance investment insights
Insurance Insights
Strategic Asset Allocations using multi-alternatives
In this analysis, Jaijit Kumar, Head of Asia Insurance Solutions uses a case study to illustrate how efficiencies can be generated from careful asset class/strategy selection. He showcases the potential impact of diversified exposure to “multi-alternatives” to enhance the efficiency of a hypothetical portfolio and make it more resilient.
Previous editions
Insurance Insights Q4 2023: Enhancing insurance portfolio allocations
Jaijit Kumar, Invesco’s Head of Asia Insurance Solutions shares his Q4 analysis on enhancing insurance portfolio allocations.
Insurance Insights Q3 2023: Enhancing fixed income buy-and-maintain portfolios
Jaijit Kumar, Invesco’s Head of Asia Insurance Solutions shares his Q3 analysis of optimizing fixed income buy-and-maintain portfolios.
The macro outlook and implications for asset allocation
Insurance Insights
Opportunities amidst divergence
David Chao, Global Market Strategist, Asia Pacific (ex-Japan) shares his macro outlook for Q2 2024. He believes global growth is improving but not evenly. He shares his thoughts on how alternative investments, previously overlooked, now appear more attractive in a macro environment characterized by higher interest rates and diverging macroeconomic narratives.
Municipal Bonds: the case for inclusion in Asian insurers' portfolios
US municipal bonds are worth considering for Asian insurers portfolios as they may provide a source of diversification and for their relative value compared to US corporate bonds.
2024 Mid-Year Investment Outlook: Opportunities amidst divergence
At the mid-way point of 2024, divergence between individual economies has re-emerged as a theme. How will key economic factors play out and what will the impact on markets be?
2024 Long-Term Capital Market Assumptions
Invesco Solutions is proud to present our 2024 Capital Market Assumptions (CMAs). We hope the insights and data presented in this publication assist in your asset allocation process as you begin to rebalance portfolios in the coming months.
Footnotes
-
Investment risks
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. Diversification and asset allocation do not guarantee a profit or eliminate the risk of loss.
Invesco Solutions (IS) develops Capital Market Assumptions (CMAs) that provide long-term estimates for the behavior of major asset classes globally. The team is dedicated to designing outcome-oriented, multi-asset portfolios that meet the specific goals of investors. The assumptions, which are based on 5- and 10-year investment time horizon, are intended to guide these strategic asset class allocations. For each selected asset class, IS develop assumptions for estimated return, estimated standard deviation of return (volatility), and estimated correlation with other asset classes. Estimated returns are subject to uncertainty and error and can be conditional on economic scenarios. In the event a particular scenario comes to pass, actual returns could be significantly higher or lower than these estimates.
Vision
Invesco Vision is a decision support system that combines analytical and diagnostic capabilities to foster better portfolio management decision-making. Invesco Vision incorporates CMAs, proprietary risk forecasts, and robust optimization techniques to help guide our portfolio construction and rebalancing processes. By helping investors and researchers better understand portfolio risks and trade-offs, it helps to identify potential solutions best aligned with their specific preferences and objectives.
The Invesco Vision tool can be used in practice to develop solutions across a range of challenges encountered in the marketplace. The analysis output and insights shown in the document does not take into account any individual investor’s investment objectives, financial situation or particular needs. The insights are not intended as a recommendation to invest in a specific asset class or strategy, or as a promise of future performance. For additional information on our methodology, please refer to our CMA and Invesco Vision papers.
Meet our team
Portfolio analytics service
COMPLIMENTARY PORTFOLIO MANAGEMENT RESEARCH AND ANALYTICS SERVICE
Vision
The Vision platform is a state-of-the art, portfolio diagnostics tool to “pre-experience” how different variables affect investment outcomes. By identifying risk and return drivers, including under certain risk-based capital regimes, as well as exposures to an array of factors, Vision effectively characterizes the inherent risks in a defined liability or cash flow profile to identify optimal investment strategies.
Request Vision Demo
Request a demonstration of the complimentary portfolio management research and analytics service.