Esoteric ABS Offering a Clear Opportunity in Uncertain Times

August 13, 2019

New Viewpoint is Primer on ABS Subset; Asset May Help Improve Portfolio Yields, Credit Quality and Diversification in Era of Rising Market Uncertainty


HARTFORD, CT – August 13, 2019 –Leading global investment management firm Conning has issued a primer to help insurance companies better understand the asset-backed securities (ABS) subset “esoteric ABS” and how these securities may benefit insurance portfolios. In an era of rising market uncertainty, esoteric ABS securities may help insurers generate greater yields, enhance credit quality and improve diversification compared to other assets of similar quality and duration.

The Conning Viewpoint, “Esoteric ABS: A Clear Opportunity for Uncertain Times, is intended to help offer clarity about an asset class with a complex-sounding name. Many esoteric ABS are in fact backed by collateral that is relatively easy to understand, such as commercial aircraft, railcars and shipping containers. As insurers continue a decade-long effort to generate greater portfolio yields in a period of historically low interest rates, esoteric ABS may offer a valuable option.


“While the collateral backing esoteric ABS may not be as well-known as more traditional ABS collateral such as credit card receipts, esoteric collateral has a great deal of information available for analysts to study,” said author Paul Norris, a Managing Director and Head of Structured Products at Conning. “While gathering and formatting the data for esoteric collateral may take additional work, the effort can be worth the rewards.”


Investors may find esoteric ABS can help portfolios diversify away from more traditional corporate credit, a staple of many insurance investment strategies. The ongoing market uncertainty suggests that increased defensive positioning may be wise, and ABS offer a wide range of opportunities across various sectors, durations and risk profiles. Conning’s experience and expertise in analyzing collateral as well as ABS structures can help insurers navigate the opportunities in esoteric ABS, noted Norris.

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Conning (www.conning.comis a leading investment management firm with approximately $145 billion in global assets under management as of June 30, 2019.* With a long history of serving the insurance industry, Conning supports institutional investors, including pension plans, with investment solutions and asset management offerings, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America. 

*As of June 30, 2019, represents the combined global assets under management for the affiliated firms under Conning Holdings Limited, Cathay Securities Investment Trust Co., Ltd. (“SITE”) and Global Evolution Fondsmæglerselskab A/S and its group of companies (the “Global Evolution Companies”).  The Global Evolution Companies are affiliates of Conning.  SITE reports internally into Conning Asia Pacific Limited, but is a separate legal entity under Cathay Financial Holding Co., Ltd. which is the ultimate controlling parent of all Conning controlled entities.

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