INSURANCE SOLUTIONS

A life insurer looking for yield enhancement

An insurer had a book of asset backing liabilities that offered policyholders a guaranteed rate of accumulation. The insurer had historically invested in domestic government bonds, but the prevailing yields available on such bonds were not high enough and they were looking to carefully enhance the yield of the portfolio.

Yield enhancement necessarily means increasing exposure to credit risk and under the regulatory capital framework, results in a higher capital ratio. Janus Henderson worked with the insurer to develop a corporate bond portfolio which served to provide this yield enhancement in a fully diversified, capital efficient way, helping to manage the exposure to credit risk.

A life insurer seeking efficient use of additional capital

An insurer accumulated additional capital following a number of years of good business performance and wanted to deploy it to enhance returns. Janus Henderson worked with the client to understand their risk, profit volatility, capital and liquidity tolerances and presented a range of potential investment solutions. The insurer consequently allocated existing and new capital to a selection of capital-efficient credit opportunities and were able to add additional yield.

Given the insurer was operating beyond their existing ALM investment restrictions, Janus Henderson set up an investment and governance structure for these solutions to be monitored and accounted separately from their Asset Liability Management (ALM) portfolio.