Amid the market panic of H1 2020 there was a short window of time to make the most of investment opportunities on offer, but that required speed of execution, which doesn't always match insurers' conservatism.
At the Insurance Asset Risk 2021 Americas conference, to be held online on 22nd September, a panel will focus on post-pandemic investment risk and strategies for insurers.
Clark Wagner, chief investment officer (CIO) at Foresters Financial, says the insurer is reviewing its strategic asset allocation by expanding the universe of asset classes it can invest in.
"That's onboarding new managers for certain asset classes, or just putting those asset classes in our investment policy and having our board comfortable with us investing in those asset classes if opportunities present themselves," he said.
Fellow panelist, Nick Martowski, CIO at MAGMUTUAL Insurance, said his firm benefitted from active management exposure in the portfolio and a modern investment policy.
"Firms with flexibility in their investment policies and active managers in place were able to capitalize on the fast-moving pandemic dislocation whereas older, more restrictive types of policies and decision processes were not optimal for that environment," he says.
Another panelist highlights how the Fed's stepping in as forcefully as it did poses some questions as to what will happen in the next crisis.
"In 2020, the Fed provided much more rapid and significant support to the system than what we saw it provide in 2008," he says. "We've gone a long time without having a real default cycle. Because of all the liquidity that the Fed provided in 2020, the defaults that we saw in 2020 didn't really feel like a normal default cycle. Many of the weaker credits that might have defaulted in a normal cycle had access to cheap financing that allowed them to avoid default in the short term; but these companies may still be weak and may present default risk in the future. Said differently, the 2020 default cycle didn't really feel like a normal cleansing of the credit system, the way you typically see in a credit cycle."
For more information about the conference and to register (free for insurers) visit our events page.