Our insurance heritage
Columbia Threadneedle has deep partnerships with RiverSource and Zurich, leading insurers in the US and the UK. These long-standing, strategic relationships are the core of our insurance asset management business and account for around 30% of the global assets we look after for our clients. Over the years we have worked with these partners and many other insurers worldwide to develop solutions that meet their diverse needs, including regulatory requirements and the investment objectives of insurers’ end-clients.
Asset solutions design
A key aspect of portfolio construction in an insurance context is the consideration of insurance liabilities. We conduct asset-liability modelling (ALM) to assess and optimise potential asset solutions, taking due consideration of regulatory obligations such as capital requirements or ensuring that portfolios are eligible for the matching adjustment under Solvency II.
We also work closely with insurers in developing or enhancing their products. We leverage our Strategic Asset Allocation (SAA) and Tactical Asset Allocation (TAA) capabilities to help determine the investment constituents of any new products and draw on a range of expertise to meet client objectives. This can take the form of:
- incorporating a dynamic allocation process such as volatility management or adaptive risk allocation
- building tailor-made diversified portfolios of asset managers to pursue an overall objective or
- constructing portfolios that fully incorporate modern approaches to responsible investing, leveraging our proprietary ratings and insights.
A solution mindset remains essential in the construction of portfolios, from initial design to implementation. This is especially true in insurance.
Ongoing portfolio management is often dynamic in nature, involving regular monitoring and review of the asset allocation to ensure that the portfolio remains aligned not just with the insurer’s investment objectives but also with regulatory requirements. This is also the case for ‘buy and hold’ fixed-income portfolios where coupon reinvestment or responses to credit events often need to take place within strict regulatory guard-rails.
The granularity and frequency of reporting also needs to align appropriately with insurers’ reporting requirements to regulators and shareholders; or to enable daily hedging of risks (usually associated with guarantees) on the insurer’s balance sheet. We have extensive experience in providing appropriately detailed and timely reporting in these cases.