Case Studies

    Corporate Pension Liability
    Global/International Equity Manager
    Risk Exposure Management
    Insurance Asset Management
    Merge Intermediary Business Units
    Launch Asset Management Unit
    Institutional Equity Asset Management
    Institutional Fixed-Income Management


  Proprietary Papers



Risk Exposure Management

Improved portfolio management at Insurance company’s
in-house investment management area

Project goal:
To increase return potential while better managing risk exposure for in-house investment management at an insurance company.

Business context:
The organization faced a highly competitive and volatile market environment and had recently begun supporting multi-line insurance products. There was some concern that a new investment strategy might not suit all affiliated products. Functional areas were independent and unaccustomed to working cooperatively.

A working team was formed including, investment, actuarial and executive management, to evaluate adjustments to the firm’s investment strategy. The workgroup was co-led by Jeff Margolis and was charged with initiating a sustained dialogue around resources, limitations and potential solutions, evaluating best options, socializing the selected approach with internal and external partners and implementing a new investment strategy.

The workgroup defined economic total return on surplus – an innovative benchmark for managing insurance assets at that time. The solution included the creation of a new asset-liability model that better optimized the trade off between risk and return; an approach embraced by the organization and later followed by other industry firms.

The organization saw a material improvement in the way it managed its investment portfolio against its insurance lines of business, because it could now better quantify the risk/return trade off. This distinctive approach created opportunities for the organization to manage assets for external clients.

Lessons learned:
By tackling an organic problem, inventing a variety of possible solutions and evaluating those solutions against market-based criteria, an organization can address operational challenges and uncover meaningful new ways of doing business. In our view, any organic problem facing your organization is also likely to contain a number of hidden opportunities.

The solution was not the brainchild of a single individual or department. It was made possible by facilitating discussion of needs, concerns and ideas from a number of areas within the organization, by a technical understanding of internal operations and the investment environment, and by encouraging new ways of thinking about the problem.