Conning provides Strategic Asset Allocation (SAA) services to property-casualty and life-health insurers. We develop customized investment portfolio strategies that:
- Support the needs of a company’s insurance operations
- Maintain a reasonable risk profile
- Seek to maximize enterprise value over the long term
SAA is the starting point for an effective investment management process. The process begins with an integrated analysis of enterprise risks and rewards using a stochastic testing process which measures the volatility of assets and liabilities under selected assumptions. Key factors considered include:
- Business objectives and risk tolerance
- Regulatory and competitive environment
- Investment risk
- Underwriting risk
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- Operating risk
- Accounting implications and tax issues
- Liquidity needs and capital requirements
- Rating agency considerations
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Developing an Optimal Investment Strategy
We use our time-tested proprietary financial system FIRM® and industry asset liability management (ALM) software to create a financial model of enterprise assets and liabilities. This process provides a platform for SAA and other ”total balance sheet” integrated Enterprise Risk Management analyses.
A series of efficient-frontier model runs are produced using scenarios generated by our Economic & Capital Markets Scenario Generator. These results provide:
- A risk/reward comparison of alternative investment portfolios
- Pro forma financial statements based on U.S. STAT, U.S. GAAP, IFRS, tax and economic value financial statements, as appropriate, for each alternative portfolio
- Volatility analyses of underwriting and other business risks underlying the risk/reward comparison
We test investment strategy alternatives and identify an optimal asset allocation strategy that meets our client’s objectives and produces the most attractive risk/reward trade-offs.
To learn more about Conning’s SAA process or other strategic advisory services, please contact us.