Redington research finds consolidator investment portfolios more resilient than those of insurers

The consultant studied the performance of a typical insurer portfolio versusĀ one consolidator investment portfolio under a range of market scenarios and stress tests.

The study showed, following a 2008 shock scenario, the funding ratio of assets to liabilities would have reduced by 12.8% in the consolidator’s investment portfolio, against 25.3% in the model insurer portfolio. Additionally, the funding ratio at risk sat at 7.5% in the consolidator’s portfolio while in the model insurer portfolio it was 8.5%. In a 99.5% market shock situation, the funding position of the consolidator’s investment portfolio would be expected to worsen by 16.3%, while the model portfolio worsened by a larger 17.6%. Reasons for this outcome were largely due to the fact consolidator portfolios are not constrained by Solvency II regulation, enabling them to invest in higher-yielding credit and real assets.

 

This article is taken from professionalpensions.com. Read the full article :https://bit.ly/2M7uKj1