The road less traveled: An insurer’s path to investing in alternatives

Tim Antonelli, CFA, FRM, SCR, Insurance Strategist and Portfolio Manager, Wellington Management

The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional or institutional investors only.

The investable asset universe for global insurers has evolved and proliferated rapidly and continues to do so. From new asset classes and security types to numerous implementation vehicles, keeping track of it all could easily be a full-time job. Within this vast universe resides a “galaxy” that is pretty large and eclectic in its own right: alternative investments. It’s an area that many investors (including some insurance companies) have historically taken a cautious stance on, but that has begun to change in recent years — an encouraging development, in our view.

One reason for the past skepticism was widespread confusion around the alternatives space. While traditional asset classes like equities and fixed income are familiar to and well understood by most investors, the alternatives bucket has chronically lacked a clear consensus, both in terms of the scope of the universe and what purpose it should serve in an investor’s strategic asset allocation. With that in mind, this paper aims to provide global insurers with a robust framework for how they might approach and navigate the alternative investments landscape. As prerequisites to using this framework, insurers should of course identify their own overall portfolio risk/return objectives and at least be open to the possibility that alternative investments can aid in the pursuit of those goals.

So how might insurers go about creating, implementing, and managing an effective alternative investments allocation? Please click the link below to read the white paper.

Wellington Management
Wellington Management

Insurers have been building investment partnerships with Wellington since 1975. With $140 billion AUM as of June 30, 2022, our goals since then have remained evergreen – to exceed the investment objectives and service expectations of our clients. As an integral part of Wellington’s global investment platform, our dedicated Financial Reserves team offers a breadth and depth of resources and experience to serve our insurance clients as a go-to thought partner, risk manager, and trusted advisor for complex investment challenges. The new decade we have just entered looks more treacherous from a risk perspective than anyone could have imagined. Our collaborative strategic and proactive risk management approach helps our clients to be well-prepared.

Rich Coffman
Americas
rmcoffman@wellington.com
+1 617 951 5311

Max Davies, CFA
APAC
mdavies@wellington.com
+852 2846 6011

Sarah Marschok
Americas
smmarschok@wellington.com
+1 617 790 7170

Bob Sharma, CFA
EMEA
bssharma@wellington.com
+44 20 7126 6068

www.wellington.com/en

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