Insurance Asset Risk Awards 2023 - North Americas

Equity manager of the Year - DWS

DWS had a novel approach to equity investing—applying a fixed income methodology to create an equity solution.

The global asset management firm, teamed up with Solactive, a leading index provider in Germany, to create a new custom-made US equity index for one of the world's largest global life/multiline insurance companies.

Taking almost two years to develop, the Solactive GBS United States 500 Enhanced Investment Grade Index went live in September 2022, with the aim of providing a consistent benchmark for insurers who need to measure performance for investments that comply with Regulation 114 in the US, which details standards for the use of trust funds for reinsurance.

The GBS United States 500 Enhanced Investment Grade Index provides exposure to securities from the top 500 companies in the US stock market that are not insurance related and have high credit quality. Despite being a pure equity portfolio, the index innovates by screening stocks using the issuer's credit-rating concept, which is generally employed on fixed income products.

The companies that constitute the index must also have a long-term issuer credit rating higher than or equal to A3, according to Moody's rating scale, or A-, according to Standard & Poor's or Fitch's Ratings' scale, or not being rated by all the agencies and without any debt outstanding.

DWS is managing the equity portfolio for the insurer against the parameters set forth in the investment guidelines, benchmarking the managed portfolio against the new index. And while this was developed specifically for the insurer, in future the index could potentially be leveraged with other insurance companies that incorporate equity as part of their overall strategic asset allocation and have to satisfy insurance-specific regulations such as Reg 114.

It is an innovation that insurers will have some attraction for.