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    Opportunities for insurers

    Investment solutions for Local Government Pension Schemes

    At Insight, we have worked for decades to manage insurers’ assets, helping them to meet their objectives in a way that reflects their unique challenges and priorities. We believe fixed income markets today present insurers with significant opportunities to build portfolios that help them target enhanced yields, reduce risk, or both.

    This video series outlines some key areas of focus that we believe insurers should consider. To learn more about how we can help you, email insurance@insightinvestment.com

    Enhancing buy and maintain for insurers (3m:51s)

    Claire Bews, Integrated Solutions Credit Portfolio Manager, explains how an enhanced approach to buy-and-maintain corporate bond investing can be positive for insurers.

    Key takeaways:

    • Higher yields mean contractual assets offer higher returns, but there is limited supply of longer-dated bonds suitable for a traditional buy-and-maintain approach.
    • Investing beyond core investment grade corporate bonds can improve return potential without increasing risk, or improve risk exposure without decreasing return potential.
    • Adding asset-backed securities, US municipal bonds, secured finance, private credit, and/or short-dated high yield can offer meaningful benefits over a traditional strategy.

    Introduction to short dated high yield (3m:55s)

    Cathy Braganza, Senior Portfolio Manager, explains why short-dated high yield can be attractive for insurers.

    Key takeaways:

    • Along with offering a higher yield, shorter-maturity high yield bonds are less sensitive to spread widening and rising rates than longer-dated bonds.
    • The short-dated nature of such bonds offsets the higher risk charges on lower-rated bonds under most risk-based capital frameworks.
    • Average credit ratings in the high yield market have significantly improved over time.

    An introduction to ABS (3m:45s)  

    Andy Burgess, Fixed Income Investment Specialist, explains how asset backed securities are structured and their attributes.

    Key takeaways:

    • ABS can be backed by pools of hundreds or even thousands of individual loans
    • ABS finance car loans, credit card loans, mortgages and commercial loans
    • ABS have a return linked to short-term cash rates

    Why now for fixed income for insurers (3m:16s) 

    Damien Hill, Senior Portfolio Manager, explains why now could be a good time for insurers to allocate to fixed income.

    Key takeaways:

    • Bonds are a core allocation for insurers, which use them to match policyholder liabilities
    • Yields on fixed income assets are comparable to the expected returns for equities
    • Fixed income can act as a natural diversifier of returns and is more capital-efficient for insurers

    Digging deeper into secured finance (3m:22s)

    We give a brief explanation of secured finance securities and their attributes.

    Key takeaways:

    • Secured finance consists of private and publicly traded securities
    • Returns on secured finance are much higher than for similarly rated credit
    • Secured finance securities are more complex to analyse than corporate bonds

    Latest insights

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    The importance of prioritising responsible investment in fixed income

    The importance of prioritising responsible investment in fixed income

    Debt markets are larger and reach further than equity markets, offering extensive opportunities to engage with this much wider issuer base.

    Debt markets are larger and reach further than equity markets, offering extensive opportunities to engage with this much wider issuer base.

    Responsible Investment at Insight

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