IIE Digital Roundtable - Cash dethroned: reallocation opportunities for insurers under Solvency II

IIE Digital Roundtable

Rethinking the Insurance Opportunity Set

Cash Dethroned: Reallocation Opportunities for Insurers under Solvency II

11-12.15pm UKT / 1200-1315 CET

15th July 2021

The last decade has been painful for insurers, with rates reaching the zero bound and for some jurisdictions, even falling through. Alongside, inflation - even if low all this while - has consistently been above these levels, leading to a sustained environment of negative real rates and a slow bleed for insurance portfolios.

Now, as inflation rises post the lifting of pandemic restrictions, the pain is set to get worse as policymakers insist on an accommodative approach on the grounds of transience and sheltering a fragile economy. The crush for yield is set to become more prevalent than ever, as insurers seek new ways of making their balance sheets work harder and deliver shareholder returns.

The implications for the insurance portfolio going forward are profound.

Join us for our latest roundtable, in partnership with M&G Investments, as we begin our exploration over the coming months of key emerging themes now coming through across life and non-life: the sweating of cash, the refashioning of core fixed income away from IG bonds, the trend towards diversification of non-core holdings and the continued evolution of private assets within the insurance portfolio.

With c.€190bn of cash and cash equivalents sitting on European and UK insurance balance sheets earning -0.5% in Euros and effectively 0% in GBP, the 'cash is king' mantra finds itself under severe scrutiny. Join us as we explore and debate the ways in which insurers operating under Solvency II are reframing how they consider cash allocations and liquidity buffers, the role they play in insurance portfolios, and balancing the holy trinity of yield, risk and capital efficiency.

Discussion topics

Key discussion topics include:

• Strategic cash and other liquidity pools on the insurance balance sheet
• Differing needs of life and non-life insurers
• Sweating cash: What are the investment options available which still exhibit cash-like liquidity and safety but crucially help to improve portfolio yields, profitability metrics and return on capital?
• What about insurers who are capital constrained?
• More capital, more return, more risk: Deploying capital efficiently and finding a balance
• Active strategies around government securities, short-dated credit and ABS
• The changing face of core fixed income: The return of securitisation, mortgages, real estate debt and infra

Agenda

11.00-11.10 Welcome and opening remarks

Bob Swarup, Insurance Investment Exchange

11.10-11.40 Presentation: Sweating the Balance Sheet

David Parsons & Christian Thompson, M&G Investments

11.40-12.10 Roundtable discussion and debate

12.10-12.15 Closing remarks

Please note that numbers are strictly limited for this and that your participation is vital given the intimate format. Please make every effort to attend or to send a colleague in your place if you cannot attend for any reason.

Our events are always complimentary for insurers, regulators and select independents. They are also eligible for CPD points and quarterly certificates will be issued to attendees to confirm their attendance.

We look forward to what should be an engaging interactive debate and to seeing you (virtually) on 15th July.

In partnership with