Continued low interest rates
In many economies, the monetary policy response to the pandemic has been a further cut to interest rates, meaning that insurers will face a continued low-yield environment for longer.
This low-yield environment will continue to be a key driver for insurers to look for alternative investment strategies since returns from traditional fixed-income investments are no longer matching the long-term obligations needed to safeguard the interests of clients across life, annuities, and retirement planning business lines. Furthermore, the pressure on yields and solvency ratios is intensifying the shift away from guaranteed rate products towards unit-linked products.
As alternative investment allocations keep increasing, so will the cost and complexity of supporting these illiquid assets. These operational challenges can be grouped in three primary challenges: lack of system consolidation, reporting time lags and associated transparency issues, and processing unstructured data.
It’s more important than ever to have a single integrated view on all assets, regardless whether they are managed internally or externally.
Why a consolidated strategy matters
SimCorp enables insurance firms and other asset owners to diversify asset allocation through the provision of a single, integrated platform to handle all asset classes including alternatives. The single platform is underpinned by SimCorp’s market leading Investment Book of Record (IBOR) which provides accurate and real-time data on positions and exposures to the different stakeholders across the entire investment value chain. This strongly reduces operational risks (less reconciliation and less manual interventions), increases efficiency through automated flows and ensures data transparency, thereby freeing up expensive resources that can be dedicated to more value-added tasks..
Learn more about consolidating all asset classes on one system
Explore the benefits of consolidating and supporting all asset classes, including alternatives, on a single platform in this on-demand webinar featuring ATP and Cutter Associates.