Insurance companies have weathered a prolonged storm of challenges that strained both the asset and liability sides of their balance sheets, including repeated periods of macroeconomic uncertainty and volatile business performance over the past several years.
With a difficult operating backdrop, many insurers have leaned on their investment portfolios to support overall corporate objectives, making the composition of assets and their contribution to returns and volatility increasingly important. As a result, insurers have started to think more deeply about portfolio risk within the context of broader business strategy, including evaluating how best to optimize the asset portfolio to deliver the most meaningful results. We see six important themes that insurers should consider as part of an iterative optimization process.
