Conning Viewpoint Identifies Four Municipal Bond Strategies to Help Insurers Improve Portfolio Diversification, Quality and Yield
December 01, 2021
Options to Address Growing Yield, Quality Challenges in IG Corporate Bond Universe
HARTFORD, CT – December 1, 2021 — Leading global investment management firm Conning has posted a Viewpoint highlighting four municipal bond strategies that may offer insurers opportunities to improve portfolio diversification, yield and quality.
In “Municipal Bonds: Four Opportunities for Insurers,” authors Michael Gibbons, a managing director and a trader, and Kevin Antaya, a director and a portfolio manager, outline the evolving market conditions that are creating opportunities within the municipal asset class.
The Tax Cuts and Jobs Act of 2017 changed the buying behavior of both P&C and life companies and altered their allocations to municipal bonds. “However, in the past four plus years, relative value has diminished across investment-grade fixed-income sectors,” Gibbons said. “The municipal market has a larger percentage of securities rated A- or better than the corporate market, and they often offer higher yields than corporate debt of similar quality and duration.”
Antaya said Conning suggests insurers consider four areas of opportunity - taxable municipals, not-for-profit institutions, lower coupon tax-exempts, and tax-exempt mortgage securities – as potential allocations. “Conning’s deep experience in the municipal bond sector can be invaluable in helping insurers evaluate these ideas relative to their business needs and in helping them execute to fully leverage the opportunities,” he said.
Conning (www.conning.com) ) is a leading investment management firm with more than $209 billion in global assets under management as of September 30, 2021.* With a long history of serving the insurance industry, Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.
*As of September 30, 2021, represents the combined global assets under management for the affiliated firms under Conning Holdings Limited and Cathay Securities Investment Trust Co., Ltd. (“SITE”). 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 Holdings Limited controlled entities.
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