Menu

Recent macro-economic and geo-political events haven't gone easy on insurance companies. Shoring up business practices around regulatory events, such as Solvency II, adjusting to consumer habits that seem to be in a permanently fluid state, plus interest rates that remain stubbornly low, hampering insurers attempts to drive growth from traditional, business line activity.

Citi Analyst, Farooq Hanif, summed the situation up succinctly in an article released in April 2017, when he said: “It is surprising that the third-party asset management businesses of the large listed insurers still account for a relatively small part of their overall earnings. There is significant room to grow asset management profits in the insurance sector.”

The fore mentioned factors have seen UK and European insurers share prices slump, resulting in market participants turning to the one consistently profitable segment of their activities with a view to starting to generate better performance for their firms as a whole: Asset Management.

European insurers have been regulatorily required to hold more capital due to the rules of Solvency II. However, the asset management divisions of these insurers are not held to the same level of accountability. There is a clear incentive for insurers to focus on a clear strategy where asset management products are sold to third party clients. Citibank in the US have forecasted that profits from Standard Life’s asset management operations will rise by around 7.2% annually over the next three years, profits at Aegon will rise 9.1%, and Aviva’s will jump 24.7% over the same period.

All of these firms have made significant hires, increased resources and made strategic moves to ensure that asset management is given the platform to become more profitable now and going forward.

Adapting approaches to asset management will be explored in greater depth at the upcoming Insurance Asset Management Summit to be held on the 16th November in central London. Open to representatives of insurers and regulatory bodies, this event will gather together leading heads of investment to debate the pertinent issues facing insurers today. To learn more, then get in touch at iamregistrations@clearpathanalysis.com or visit the website here.

Share with others: