Insurance Risk Data to publish third annual Bermuda insurance outsourcing report

Insurance Risk Data, the insurance research and data arm of Insurance Asset Risk, will host a launch webinar for its third annual research into outsourcing by Bermudian insurers on 22 November, providing key insights into the report's findings.

The comprehensive 200-page report examines how, why, to which managers and on exactly what terms, Bermuda's chief investment officers outsource investment duties for their general accounts, to more than 170 different, named asset managers.

The report comes with an Excel chartbook containing accompanying data for all of the report's 110 exhibits.

The backbone of the report is a list that runs to more than 30 pages, detailing the investment size and recent performance of Bermuda's insurance groups and undertakings, the asset managers they use, and further details of the engagements.

This list has hirings/firings, names of specific funds being used, investment performance, and more.

A second list, that runs across 16 pages, is in a dedicated chapter of detailed analysis of the investment management agreements (IMAs) made between over 100 different named insurers and 80 named asset managers. This IMA list enumerates the fee rates and amounts that asset managers earned from their IMAs with Bermuda's re/insurers in 2022 and 2021; the tasks the re/insurers expected them to perform; return- and capital charge targets they were set to hit; redemption terms and when re/insurers could vary these terms; which asset classes the IMAs referred to, and more. The 25-page chapter on insurers' IMAs with managers is, to Insurance Risk Data's best knowledge, the most comprehensive and commercially valuable analysis and setting-out, of how insurers' outsourcing IMAs are structured and negotiated.

For instance, one CIO demands their chosen alternatives manager hit a solvency capital charge target-band. Another pays up to 30% performance fee but has hurdles, high water mark and multi-year escrow accounts to discourage short-termism by the manager. Another links redemption terms to the reinsurer's solvency levels and creditworthiness.

Managers can demand fees payable on short terms; others can extend lives of lock-ups; others have tenure lasting nearly 30 years.

Details for IMAs with both affiliated and independent managers are presented.

In another chapter, the names of individuals holding 115 different investment-related positions at Bermudian insurers - from CIO and CFO to investment committee members and heads - are provided, along with their biographies, and their insurer's name. From former Bank of England governors, top Bermudian regulators, employees of George Soros, even a US swimming who trialled for the Olympics – the list offers unprecedented insight into the key investment individuals, and their backgrounds.

To augment readers' understanding of the latest developments in ESG and net-zero investing in Bermuda, a separate chapter is dedicated to explaining the BMA's comprehensive plans for enhanced climate-reporting, and what this means for outsourcing in Bermuda. A page, and a data-led exhibit, to each Bermudian insurance group, looks at where each stands vis a vis climate change-investing.

Another chapter looks at the regulatory change being proposed – and coming soon – to Bermuda's insurance rules, including on liquidity, the 'scenario-based approach' and other GA-related facets. A comprehensive list of capital charge factors for various key asset classes is also in this chapter, to help managers wanting to model portfolios for capital consumption.

Overall, the research report seeks to examine the emerging trends in investment outsourcing; reveal which managers have work on the island already; what it takes to win fresh mandates; what the potential financial rewards will be; who to speak to at insurers to win such work; and explain the key changes coming to Bermuda's insurance landscape.

Channels: 

Companies: