Understanding the forward-looking risks and assessing the robustness of their business plans provide insurers with a rare opportunity to extract value from their Solvency II investment

The investment thesis that a balanced portfolio delivers strong and stable results through the market cycle very much held true in 2014

A "buy and maintain" strategy provides an effective way for liability-driven investors such as insurers to match income from a portfolio of investment-grade bonds to their balance sheet liabilities – but there are a few important rules

The reinsurance marketplace has been evolving rapidly in recent years, driven by the inflows of additional capital from insurance-linked securities fund managers and hedge fund reinsurers, alongside a relatively benign period of catastrophe losses. In combination, these factors have led to a continued softening of the reinsurance market, with renewal rates across the majority of classes in decline. Reinsurance margins in some programs today stand at levels not seen for a generation (1). Furthermore, investment yields are at historical lows, caused by the ongoing low yield environment that has persisted since the Global Financial Crisis in 2007-08.

The results of a study to gauge the historical level of investment risk assumed by UK non-life insurance companies raise a number of questions about the industry’s investment strategy over the past 13 years and how they must prepare themselves for the future

A key challenge for insurers today is developing investment strategies that are effective in the context of the group’s wider enterprise risk and capital management policies