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Decisions loom on RBC factors and why you should consider middle market private high yield

The first quarter launched 2021 on a positive note. However, the U.S. Federal Reserve’s response to the crisis has many investors concerned about inflation and rising rates. In this issue of Insurance Quarterly, our strategists and portfolio managers offer their expertise in valuations, credit and interest rate risks, and offer a variety of opportunities for finding yield and value across the asset class spectrum.

Private Debt
Real Estate
Featured

A Stigmatized Sector—Our Outlook for U.S. Hotel Investments

Today, the hotel sector continues to face challenges, but we believe the most difficult period for hotel demand is behind us. In the very short-term, we believe investors who can provide liquidity to the hotel market can potentially achieve attractive returns.

Private Debt
Public Debt
Featured

Strategies for navigating an unrecognizable bond market

As the saying goes, there’s no rest for the weary, and many bond investors understand that feeling right now. After spending the last decade navigating a difficult fixed income environment, they’re now faced with new (and historic) challenges. Yet, those investors willing to expand their strategies can likely still achieve their investment goals. Download our latest market bulletin to read our take on strategies for maneuvering through the unyielding bond market.

Multi-Asset
Featured

Insurance Multi-Asset Outlook — Rising rates: Threat or opportunity?

Multi-Asset Insurance Strategist Tim Antonelli and Investment Strategy Analyst Daniel Cook argue that now may be an opportune time for insurers to adopt a more pro-risk stance, despite the potential headwind of rising rates.

Private Credit
Private Credit
Featured

A complimentary source for additional yield: Investment Grade Private Credit

Although institutional investors’ allocation to publicly traded investment grade (IG) bonds is essential for liquidity and stability, yields today are historically low. The typical corporate pension fund, for example, with a fixed income allocation of close to 50% and long-term performance goals averaging 6.5%, faces a wide return gap to be filled. A portfolio of mid-sized allocations to IG private credit could generate a substantial yield premium of 0.4% to 1.0% over core fixed income, with similar or even improved credit risk. Such a “sweet spot” portfolio delivers broad diversification while also enabling participation in the most attractive large deals.

Alternatives
Featured

Taking Stock: Assessing Opportunities in Commercial Real Estate Public and Private Markets

Tackling climate change has become the number one priority for investors. But how is the asset management industry dealing with an issue that is both a threat and an opportunity? Are we ready for the biggest challenge facing humanity?

ESG
Featured

Robeco survey reveals big investor shift on climate change and decarbonization

Alternatives
Public Debt
Technology, Regulation & Accounting
Featured

RBC, find out what it means to me

Proposed changes to RBC bond factors will increase required capital and decrease RBC ratios for U.S. life insurers. The impact of the proposed changes is uneven, as some asset classes are targeted for much greater RBC charge increases than others, while some even have RBC charge decreases. The proposed RBC changes will result in much more flexibility in what constitutes an RBC efficient portfolio and RBC focused insurers should consider changing their strategic allocation and increasing tactical flexibility.

Public Debt
Featured

What Was Lost May Now Be Found: Revisiting the Value of Tax-Exempt Municipals in Anticipation of Higher Corporate Tax Rates

Matthew Reilly, a Managing Director, and Clint Stonacek, an Assistant Vice President, of Conning’s Institutional Solutions group examine the recent history of tax-exempt municipals and how their relative value might change should corporate tax rates revert higher.

Private Debt
Featured

Avoiding the Crowds: Finding Opportunities in Private Structured Credit

In most fixed-income markets we are back to where we started in 2020 with low rates, tight spreads and warnings from some that asset prices across sectors may be overheated. What are fixed-income investors to do? For MIM’s Private Structured Credit strategy, it’s back to the basics – trying to identify higher-yield, investment grade opportunities that don’t fit neatly into the traditional asset-backed securities market or private securities market and work with borrowers to find financing solutions for these non-conforming sectors.

Technology, Regulation & Accounting
Featured

Solvency II under review: EIOPA’s Final Opinion on the 2020 Review

In its final opinion on the 2020 Review of Solvency II, EIOPA proposes changes to various parts of the Delegated Regulation.

Private Debt
Featured

Private Placements: Aiming for Greater Yields, Downside Protection and Customized Cash Flows

Matthew Daly, Head of Conning’s Corporate and Municipal Teams, and John Petchler, Director, Private Placements, discuss how private placements may offer insurers greater yield compared to public issuance of similar quality and duration. They also discuss the sector’s investor protections and how private placements may enable insurers to customize maturities to match liabilities.