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Investment challenges for insurers

Whatever the market conditions, an investment strategy that aligns with, and supports, the needs of an insurer’s business is critical.  Equally important is to be able to retain control of key investment decisions, manage costs and implement strategy in a complex regulatory and operational landscape. Mercer works with insurers to design and deliver investment strategies that reflect their risk, return and capital requirements and align to the regulatory, operational and commercial agenda.


Common investment challenges

 

  • Complex regulatory environment
  • Sustained low-yield environment
  • Access to private markets programs
  • Sustainable investing
  • Limited resources and capacity
  • Portfolio oversight and governance



Addressing these challenges


Do your research

Do your research

 

Identifying risks and opportunities in increasingly complex public and private markets can be easier with access to the latest insights. Here are some resources that can help clarify and inform:
 

Get some advice

Get some advice

 

An investment insurance consultant understands the complex needs of its clients and can help define a strategy that is relevant to your business.

 

explore solutions

Explore solutions

 

Implementing a bespoke investment solution on Mercer’s platform can allow clients to execute their strategy in a low cost, efficient and effective way.

 




How we can help you


Tools and resources

Tools and resources

We have created a range of tools and resources to help insurers with their investments. Through our platform, MercerInsight®, our insurer clients can access a suite of analytical tools to help select managers, implement mandates and make informed investment decisions. Learn more today.

Strategic advice

Get some advice

Drawing on 20 years of insurance consulting heritage, we design bespoke investment strategies aligned to client’s needs. We cover asset liability management, investment policy and strategy design, strategic asset allocation, portfolio optimisation and construction. In addition we undertake manager searches and selection, capital markets research, dynamic asset allocation, ESG integration and transition management.

Strategy implementation

Strategy implementation

Our open architecture model allows our insurance clients to implement their investment strategy across public and private markets through passive and active approaches. It enables them to ensure ESG is embedded across the entire investment process. Our platform is underpinned by regulatory, capital and financial reporting, with our staff and resources providing support on often pressurised internal teams.



Client case study



Access to more managers

Data and risk program

Improved governance

Streamlined operating model


The issue

 

A global marine insurer, with more than $1bn in assets, was having to adjust to a new operating model. This was highlighting its lack of internal resources and insufficient ability to execute and nimbly adapt its investment strategies. The in-house team wanted to retain control of manager selection, but also explore new opportunities to capture yield, including through private markets.

The solution

 

We began working with the insurer on an advisory basis with responsibility for dynamic portfolio management, before progressing to a full OCIO relationship. The insurer was able to retain its existing fund managers, but expand its horizons to work with other high-quality providers identified by Mercer. We introduced a detailed data and risk analytics program, which enabled the insurer to improve its overall governance. This simplified and streamlined operating model, along with fee reductions we achieved, also led to lower costs for the insurer.





Meet our specialists


 

Colin Tipping

Head of Insurance Solutions

 

Ciara O Leary

Senior Consultant, Insurance Solutions

 

William Gibbons

Senior Consultant, Insurance Solutions

 

Chris Bewley

Consultant, Insurance Solutions

 

Niall Clifford

Senior Consultant, Insurance Solutions

 

Gerard-Jan Van Berckel

Insurance Solutions Relations



Mythbusters / Q&A

Q

Why Mercer for insurers?

A

The growing complexity of insurers’ investment programs requires experience and expert technical knowledge, supported by dedicated resources and infrastructure.
 

Mercer is the world’s largest insurance investment advisor,1 operating across multiple geographies and lines of business, covering P&C, health, P&I, life, reinsurance, captives and speciality. Our services are delivered by a team of insurance specialists made up of actuaries, technical analysts and CFAs. They sit alongside industry practitioners who have practical experience of working with and for insurance companies. We work closely with our affiliates across Marsh McLennan – Guy Carpenter, Oliver Wyman and Marsh - bringing together a unique understanding of all aspects of the insurance balance sheet.
 

 1 The Insurance-Focused Investment Consultant Compendium, October 2020. $423 billion under advisement across 118 clients globally.

Q

I have an in house team – how does Mercer support me?

A

We work as an extension of your team, not a replacement. Mercer’s open architecture platform ensures we are not affiliated to any one asset manager and that we bring an independent perspective. Our ability to customise solutions to your specific requirements means you can execute your strategy on our platform through your in-house team, external managers or a combination of both. We provide the necessary infrastructure, resources and people to allow you to focus on investment decisions and overall objectives. We provide the regulatory, investment and capital reporting to support your internal governance and decision making.

Q

I want to allocate to alternatives but don’t have the resources – how can Mercer help?

A

Insurers are increasingly keen to allocate to alternatives and private markets, but many do not find them straight-forward strategies to implement or maintain. Additional costs from origination, investment, legal activities and operational due diligence, alongside commitment planning, capital calls and distributions, add to the complexity of private market investing. We work with our insurance clients to help them access private markets in a variety of ways:
 

  • Advisory - Clients retain investment strategy and implementation in-house while accessing Mercer’s research, operational, legal and due diligence capabilities. 
  • Directed implementation - Clients retain control over investment decisions and manager selection, then deploy and implement strategies through our operational platform. 
  • Delegated – Clients work with Mercer specialists to create a bespoke investment strategy and approach, which is implemented through our platform using segregated mandates or pooled funds. 

Q

Responsible investing is high on my agenda – how does Mercer help me?

A

We have a dedicated team of 24 responsible investment specialists globally, advising investors on all aspects of environmental, social and governance (ESG) factors. This team has been in place since 2004, when Mercer was the first global investment consultant firm to create one – by more than a decade. We provide responsible investment support to insurers to help protect your reputation, enhance governance, help meet regulatory obligations and improve long-term returns. 


This support could involve integration of ESG issues into the investment process, identifying sustainability themes that drive long-term investment risk considerations, as well as promoting active ownership, through voting and engagement and recognising the value of the UK Stewardship Code. Given our depth of resource and expertise, we provide market-leading advice. We have helped clients implement exclusionary approaches and develop policies for public engagement. We also help devise more discrete processes that involve collaboration on important issues with other investors or industry bodies to ensure engagement without direct public attention. However you choose to implement your aims, we will be able to assist you. 

Mercer’s ESG beliefs and Sustainable Investment Policy support Mercer’s own commitment to the United Nations Principles for Responsible Investment (UNPRI).

Q

What is Mercer’s approach to diversity and inclusion in investing?

A

We consider a commitment to diversity and inclusion to be part of our social responsibility. Diversity is one of our core values, and our diversity efforts centre on our commitment to our employees, clients and the communities in which we work. Our Environmental, Social & Governance Committee is ultimately responsible for diversity and inclusion, including monitoring and reporting on it.


Key facts - Mercer Insurance Solutions

World’s largest insurance advisor
$423 billion under advisement across 118 insurance clients globally
Mercer’s Investment Solutions Business, $305Bn assets under management
Mercer - $15Trn assets under advice

Speak to a Mercer consultant