28 January 2015
The Institute and Faculty of Actuaries' (IFoA’s) Non-Traditional Investments Working Party held a sessional research event on 19 January where the group presented its new research. The paper, entitled Non-traditional investments: Key considerations for insurers, is an encyclopaedia of key alternative investments insurers are currently looking at.
Life insurers have historically relied upon investment markets as a key source of profit and crucially have been able to do this through traditional investment strategies. However, in the current low yield environment, insurers must look at other alternatives if they are to maintain profitability. The paper summarises some of the potential benefits and pitfalls for insurers seeking to invest in non-traditional assets.
While this paper has primarily been written from the perspective of a life insurer, many of the asset classes considered here are relevant to general insurers, pension funds and the wider capital markets as well.
Gareth Mee, Chair of the IFoA’s Non-Traditional Investments Working Party, commented on the report:
“We are very proud to publish this paper, which we believe is the most comprehensive paper to date on non-traditional assets. The lack of data in this area is well known, and so we hope this paper will be a welcome resource for the industry. The working party has pulled together its collective proprietary knowledge of the assets as well as their appropriateness for insurers, and we hope that it will help insurers to continue to explore the opportunities available and to navigate some of the challenges presented in investing in non-traditional assets.”