KEYNOTE ADDRESS: THE CHIEF EUROPEAN ECONOMIST’S VIEW: MACRO OUTLOOK FOR THE MONTHS AHEAD
Charlotte Müller, Chief Economist Europe, Swiss Re
PANEL DISCUSSION: INFLATION: SIMPLY TRANSITORY OR A PERMANENT HEADACHE ON THE HORIZON? HOW WILL GOVERNMENTS AND CENTRAL BANKS RESPOND AND WHAT ARE THE IMPLICATIONS FOR ASSET PRICES?
- Inflation Outlook:
- How did we get where we are today?
- What is the medium-term outlook for inflation? Are we on the precipice of a structural shift to a higher inflation environment or is this transitory?
- Policy responses
- What response is expected from the central banks in terms of interest rate policy? Will 'low for longer' continue?
- What should the focus and role of governments and the central banks be going forward?
- Will governments and central banks act in a coordinated manner to help the recovery, or is there disagreement as to how to proceed that could lead to conflicting policies?
- How can we expect the different central banks to approach the winding down of stimulus packages? Divergence between US, UK and European approaches and what this means.
- What will the likely policy responses mean for the pricing of government and corporate bonds and wider risk assets?
- Implications for insurers
- What does higher and more uncertain inflation mean for insurers from both a balance sheet and wider business model perspective?
- What challenges does this present for the entire insurance industry?
- What are the main risks for the asset side of insurers' balance sheets?
- Mitigation of inflation risks
- How should insurers manage inflation risk holistically across their balance sheets?
- Will reallocations of investments be needed? What strategies can asset owners use to avoid inflation risk and take advantage of opportunities?
Craig Inches, Head of Rates and Cash, Royal London Asset Management
Theresa Patricios, Head of Investments, Convex Insurance
Christian Wegener, Global Head of Investment Solutions, HSBC Life Insurance
Thomas Fiedler, Team Head, Group Investment Management, Strategic Asset Allocation,
ERGO International Entities
Corrado Pistarino, Chief Investment Officer, Foresters Friendly
DIVERSIFYING CORE FIXED INCOME ALLOCATIONS: CONSIDERATIONS FOR 2022 AND BEYOND
As investors continue to rotate assets into private markets, insurers expect their private markets allocations to increase to 14% in 2023, double the level from 2019. What is particularly notable however is the way in which private assets are being integrated into investment portfolios. Insurers globally are now considering private assets as a key tenet of their core fixed income portfolios, a part of the investment book historically reserved for government bonds and investment grade credit.
M&G will discuss this trend, the risks associated with this 'new normal' and explore some asset classes which may be suitable and beneficial for diversifying core fixed income portfolios.
Russell Lee, Global Head of Insurance Solutions, M&G
MORNING COFFEE BREAK
CIO PANEL: WHERE TO INVEST? WHICH SECTORS AND GEOGRAPHIES ARE GOING TO BE IN DEMAND IN 2022 AND 2023?
- Overview of Investor flows – where has the hot money gone in recent years and where can we expect it to go in near future?
- What will be the key driving factors that will influence asset selection in 2022 and 2023?
- Can we expect rate moves, inflation and monetary policy to have a big influence on the search for yield?
- Which sectors are going to be most affected by inflation and which are going to be benign? Why?
- How are we looking at geopolitical risks when we are considering asset selection? (oil prices, Ukraine, China)
- The role of private market assets
- With the threat of inflation looming, how should we alter our management of illiquid asset classes. Is illiquids still the place to be?
- Where should we be looking to for new opportunities? What is exciting right now in the illiquids space?
- Trends and opportunities in infrastructure investments.
- Overcoming regulatory hurdles to increase portfolio allocations to real assets
- Opportunities linked to sustainable finance
Chris Howells, Head of Insurance Solutions, Schroders
Aileen Mathieson, Group Chief Investment Officer, Aspen
Wim Vermeir, CIO, Ageas
Emily Penn, Capital and Investment Director, LV=
Johnny Chow, Chief Investment Officer, Legal and General Retirement
3 KEY ESG CONSIDERATIONS IN FIXED INCOME PORTFOLIOS
Integrating ESG and active engagement with issuers is just as critical in the bond world as it is in equities. The multidimensional nature of fixed-income portfolios requires investors to apply a comprehensive approach. As the world navigates the path to net zero, we think it's helpful for insurers to focus on three key aspects when integrating ESG in bond portfolios.
- Main considerations when structuring a carbon transition portfolio
- Current footprint and future commitments: a closer look at metrics and portfolio reporting
- A framework for evaluating the current wave of ESG-labeled bonds
Erin Bigley, CFA, Head—Fixed Income Responsible Investing, AllianceBernstein
PANEL DISCUSSION: MANAGING CREDIT AS AN ASSET CLASS
- What are the considerations in an environment of rising rates? Are there concerns that rising rate could negatively impact the alternative credit space?
- Which credit strategy is most appropriate right now given the unique market dynamics?
- High yield vs investment grade?
- Private vs listed?
- Do we need to rethink and adjust our overall exposure to credit, or keep it stable?
Antonello Aquino, Associate Managing Director - EMEA Insurance & Africa Banking, Moody's Investors Service Ltd.
Nohman Iqbal, Senior Product Specialist-Private Debt, DWS
Massimo di Tria, Chief Investment Officer, Cattolica Assicurazioni
Michela Bariletti, Chief Credit Officer, Phoenix Group
Mark Wood, Head of Credit Risk, Aviva UK
PANEL DISCUSSION: WITH THE FIRST MILESTONE OF 2025 LOOMING FAST ON THE HORIZON, HOW REALISTIC ARE THE NET ZERO TARGETS? HOW DO WE MANAGE THE RISK OF THE TRANSITION AND AVOID A SYSTEMIC RISK FAILURE?
- Can and should financial institutions be expected to solve the climate crisis alone?
- Should financial institutions behave differently of their own accord, which is challenging from a fiduciary duty perspective, or should the government and regulators be tilting the playing field in a way so as to naturally allow financial institutions to move in the right direction.
- What role can the right carbon tax play and what would good look like?
- What role can the real economy play and how as insurers do we encourage that?
- How can regulators/policy makers, financial institutions and the real economy combine to make a real difference?
- Can it be done? As investors, what can we (and can't we) meaningfully and realistically do to support net zero?
- Are the tools and instruments at our disposal up to the task?Where do the key challenges lie?
- Who is funding net zero?
- How do we manage the risk of the transition process and avoid a systemic risk failure?
- What does a well thought out net zero transition plan look like?
- What constitutes real impact and how do we achieve it?
- How do we set about fulfilling those targets?
- How do you set the strategies for meeting targets on each asset class?
- Incorporating net zero target setting into the ALM and SAA process
- How are firms currently approaching the task of adding net zero target considerations into their ALM, SAA and capital management frameworks?
- Where are the challenges/limitations?
- How does the process need to change to achieve a truly holistic approach?
- What does best practice look like?
Abbie Wood, Insurance Asset Risk
Hetal Patel, Head of Climate Investment Risk, Phoenix Group
Ying Ye, Chief Investment Officer, Allianz UK
Michele Lacroix, Group Head of Sustainability, Scor
Penny Apostolaki, Head of Net Zero Solutions, Aviva Investors
SOLVING ILLIQUID ASSETS
Insurers worldwide are increasing their allocations to illiquid assets. As they do so, the challenges that come with illiquid allocations are looming larger on their agenda: the cash drag of uninvested commitments; the "J-curve" of the initial invested; the debates over how to measure performance and compare it with that of liquid assets; the potentially lengthy wait for investment payback; the difficulty of modelling cash flows a decade into the future. With an unusual set of capabilities stretching across public markets, private equity, private credit and multi-asset investing, Neuberger Berman has had a front row seat to these trends and a strong incentive to develop solutions. From accounting optimization, vehicle design and currency hedging to combining public and private markets and utilizing secondaries, co-investments and private debt to enhance cash flow, we will discuss some of what we've learned in this session.
Ziling Jiang, Senior VP, Head of Insurance Analytics EMEA, Neuberger Berman
PANEL DISCUSSION: AS THE INSURANCE AND RISK LANDSCAPE SHIFTS, IS REGULATION STILL FIT FOR PURPOSE?
- In general, do you think regulation is cautious and overly restrictive? Are there still investment opportunities to be had by the most innovative among us?
- Are there particular asset classes or opportunities you would like to invest in, but you think regulation prevents you from doing so?
- Has regulation got the right balance between protecting the policyholder and providing the policyholder with opportunities?
- Should we expect regulation to have some positive role to play in society, for example around climate change? Or should it be purely aim to reflect risks?
- The divergence in approaches between UK & Europe – what challenges will this pose?
- How can we expect regulation to drive and influence investment strategies in the coming months? Which regulatory changes might trigger an impact on investment strategies?
- How will the proposed SII amendments force changes to investment approaches both for the better and for the worse?
- IFRS 17 and 9 - How will this new accounting regime influence the steering of insurance portfolios and what does it mean for the investment teams?
- How are strengthened expectations to incorporate climate related risks and opportunities within investment decisions influencing the insurer's approach to asset strategy and selection?
• If you could change one piece of regulation - what would it be?
Mark Saunders, Director, Risk Solutions, Conning
Lauri Saraste, Director ALM, LähiTapiola
David Otudeko, Head of Prudential Regulation, ABI
Benoit Hugonin, Director of Prudential and Regulatory Affairs, Scor
AFTERNOON COFFEE BREAK
PANEL DISCUSSION: MANAGING THE INCREASING COMPLEXITY AND RISK SURROUNDING ILLIQUIDS – IS OUR INVESTMENT TOOL KIT FIT FOR PURPOSE?
- What should the role of illiquids be on an insurer's balance sheet?
- As the exposure to illiquids continues to rise, how well placed are we to tackle the challenge of increasing complexity in illiquids?
- Has our risk monitoring capability advanced and evolved sufficiently?
- Is our investment tool kit fit for purpose when looking at illiquids and, if not, what should we do about it?
- How do we get a greater insight in order to better manage the risk and capitalise on opportunities?
- Regulation challenges with respect to illiquids – what is the best approach?
- Reporting and accounting considerations for illiquid investments
Erik Vynckier, Board Member, Foresters Friendly Society
Angela Jung, Senior Director, Investment ALM Risk, Athora
Andrew Bailey, Director of Financial Risk, Just Group
Neil Blundell, Head of Global Client Solutions and Alternative Solutions, Invesco
Ashish Dafria, Chief Investment Officer, Aviva
PANEL DISCUSSION: NOT FORGETTING THE ‘S’. ARE WE DOING ENOUGH? WHAT STEPS CAN INSURERS TAKE TO PROACTIVELY EMBRACE SOCIAL RISKS AND OPPORTUNITIES AND INCORPORATE THESE WITHIN AN INVESTMENT STRATEGY?
- How has the social crisis created by the covid-19 pandemic influenced and driven awareness and commitment to social considerations -what has this meant for insurers?
- What needs to change to drive and encourage a greater commitment and focus on the 'S'?
- How should firms be considering the whole picture of sustainability in their investment strategy?
- Where does this impetus need to come from?
- With little regulation and guidance around social considerations, what guidelines should insurers give themselves to decide what the right thing to do is?
- Are insurers and other financial institutions best placed to decide what is ethical and what isn't?
- How do you set clear objectives on what you are trying to achieve?
- What should the metric be for measuring the impact of social investment?
Vincent Huck, Editor, Insurance Asset Risk
José Luis Jiménez, Chief Investment Officer, Mapfre
Sumit Mehta, Head of Investment Solutions, Legal and General
Lucia Silva, Group Head of Sustainability and Social Responsibility, Generali