The changing asset allocation of insurers

Oct 18, 2021

Many insurance companies have been adding to their sub-investment grade allocations over recent years, seeking higher yields and greater diversification. This has often been targeted at a particular asset class, whether it be high yield or CLOs.

Increasingly, we are now seeing insurers consider the case for a flexible portfolio of credit sub-asset classes from across the spectrum via multi-asset credit (MAC) strategies.

Whilst such an investment approach has been the stalwart for many defined benefit pension schemes for more than a decade, with external pressures such as the advent of regulation like Solvency II over the past few years, insurance companies are considering their options within this space.

What problems can MAC help solve?

  1. Returns: enhanced returns via accessing higher yielding credit
  2. Flexibility: overcome the inefficiency of static allocations
  3. Liquidity: often daily or monthly liquidity

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