Investment solutions and OCIO for insurance firms

We offer investment solutions for insurance companies of all sizes across the globe. Our research, advice, tools and implementation capabilities are designed to help you transform your investment program into a strategic differentiator. Use our research to inform your decisions or work with us to develop and execute your investment strategy, including integration of alternatives and sustainable investments.

Effective portfolio management for insurance companies

Fluctuating interest rates, volatile risk premiums and rising inflation are some of the issues driving increased complexity for insurance investment portfolios. That’s why many insurers are looking for better ways to optimize their investments, increase income, grow surplus and properly align risk.

We believe that with the right expertise and structure, efficient operations, effective execution and lower costs1, an insurance company’s investment program can grow enterprise value and provide a competitive advantage.

Our role goes beyond seeking to simply beat a benchmark, but working with our clients to customize investment solutions to derive greater value from the investment portfolio through insurance-specific investment ideas, improved implementation, operational support, and the alignment of your portfolio with your specific geographic, regulatory, rating agency, liability, and liquidity requirements.

Five common investment challenges facing insurers

Every insurance company and investment strategy is unique, however in our experience there are five common challenges. We can help you address these challenges by leveraging our deep expertise across all asset classes, our global scale, extensive manager research and dedicated team of insurance experts.

National and international regulations are complex and make it difficult to construct compliant investment portfolios while properly optimizing risk and return. If you operate in multiple jurisdictions, it’s even more challenging to balance the different requirements within a central investment strategy. We work across all major domiciles and have extensive experience working with multi-national insurance companies.

Economic cycles are becoming shorter and more extreme, with inflation being a primary concern for insurers today. Insurers must position their investment portfolios for a range of outcomes in a volatile market environment. We believe diversification of asset classes is important and requires broad coverage of managers and asset classes that can generate risk-adjusted returns across the market cycle.

Sustainable investment and ESG are a set of issues increasingly driven by regulators and rating agencies across the globe. The appropriate integration of these measures and the need to develop robust reporting for internal and external stakeholders is critical in today’s environment. Our dedicated sustainable investment team can help you stay ahead of these challenges. 

Low yields on traditional fixed income securities mean it is expensive to hold these less-risky assets to meet liabilities. The recent return of inflation will only exacerbate this issue and may lead to policy errors, heightening the need for diversified sources of yield.

Alternative investments provide a potential opportunity to guard against the volatility of equities, hedge against inflation, and seek better returns through illiquidity. Investing in alternatives and private markets requires deep expertise, research, strong relationships with managers and access to opportunities. Our private market specialists can help you build exposure to these asset classes.

As insurance investment portfolios become more complex, pressure on internal resources increases. Finding the right partners and solutions to leverage your internal capabilities while maintaining strategic control of key decisions requires a customized approach for each client. Leveraging our breadth of resources and scale can help focus your team on the most impactful things.

As insurers come under greater regulatory scrutiny, maintaining effective oversight of your investment portfolio is vital. You will need significant data management and processing capabilities, reporting facilities, manager research and oversight functions at your disposal.

Incorporating sustainability into insurer portfolios

The insurance industry is taking action on environmental, social and governance (ESG) considerations through ventures such as the UN Environment Program’s work on Principles for Sustainable Insurance. Internal and external stakeholders are increasing their scrutiny of ESG issues.

Whether you’re focused on risk management, regulatory compliance, or identifying potential investment opportunities, you will need to consider sustainability issues. For example, climate change poses significant risk on asset owners of all sizes around the world. We provide a number of tools that can help you understanding the potential impacts, benchmark against peers and implement changes.

Although this issue is complex and challenging, there are substantial growth and income opportunities in sustainable investments. We have worked with large insurers to build a complete, balanced solution, which fuses the objectives of seeking financial returns with acknowledging risks in a transitioning economy. Some of the investment strategies range from facilitating renewable power infrastructure and energy-efficient buildings to financing innovative green technologies and addressing crucial social issues such as inequality. We offer a variety of sustainable investing solutions for insurers.

Sourcing new ideas and innovation through alternative asset classes 

When you’re seeking greater diversification and higher returns, private market asset classes, such as infrastructure, real-estate and private debt, could play a greater role in your portfolio. Private debt is increasingly becoming a core allocation for insurers, supported by asset classes such as middle market lending, structured credit and specialty finance.

Understanding these asset classes and how they can meet your needs requires specialized knowledge, manager selection capabilities, access and scale to be effective. For smaller insurers, being able to pool assets with other institutional investors through our investment solutions could open new investment markets at an affordable cost. Our specialists around the globe source and implement alternative investment solutions for our clients. 

Common questions about portfolio management for insurance companies 

Every investment program has its own unique set of objectives and often requires internal and external resources to manage it. We flex our services to suit your requirements, creating a customized approach that works for you, no matter the size of your team. Depending on your needs, you may choose one or a combination of the following:

  • Digital: Do it yourself by accessing our digital manager research platform, MercerInsight®.
  • Advisory: Get help, with our comprehensive investment consulting services.
  • Delegated: Have us implement and manage your investment strategy.

When you engage us, we operate as an extension of your team. We can guide you on your strategy and allocation, help you source new ideas and innovation through alternative markets and help you integrate ESG, diversity, equity, and inclusion (DEI), and impact investing considerations to target sustainably. We can also manage the implementation for you, based on your desired direction. You will always maintain control of key decisions.

We use an open-architecture platform, not affiliated with any one asset manager, giving us a true independent perspective. This allows you to customize solutions to match your specific requirements regarding returns, liabilities or liquidity. The platform also helps you execute your strategy, through your in-house team, external managers, or a combination of both.

Alternative asset classes, including private markets, can offer insurers many benefits — returns that are less correlated to public markets, important sources of diversification, and ways to invest in and support the real economy. However, accessing and maintaining these strategies is not straightforward. There are layers of complexity and cost through origination, due diligence, legal work and relationship building — all before any investment has been made.

We can help you navigate these challenges in a way that suits your strategy and requirements.

  • Advice: You keep control of your investment strategy and implementation, while we provide research, operational, legal and due diligence support.
  • Directed implementation: This approach lets you keep control of investment decisions and manager selection, deploying and implementing strategies through our platform.
  • Delegated implementation: Our specialists work with you to create a bespoke investment strategy and approach, implemented through our platform using segregated mandates or pooled funds.

Our investment specialists around the world place importance on integrating sustainable investment considerations when defining strategies, monitoring and selecting managers, and implementing selected strategies. 

We have been at the forefront of sustainable investment strategies for more than a decade. Our large team of specialists across the globe can advise you on all aspects of ESG investing, DEI investing and impact investing. Our aim is to help you construct a complete strategy and portfolio designed to protect your company against risks and capture long-term opportunities. We also aim to help protect your company’s reputation.

We are committed to embedding a focus on sustainability across our advice and implementation work. To that end, we are a signatory to the United Nations’ Principles for Responsible Investment and our ESG beliefs and Sustainable Investment Policy, both of which are freely available to help you understand how we operate in this field.

We have also published detailed research modeling the path to a net-zero economy and its implications for investors’ portfolios.

Portfolio management approaches that work for you

Our experienced team has the knowledge and insight to help you navigate the many challenges facing insurance organizations. Backed by the broadest spectrum of services in the market, our relationship can evolve as your needs evolve, so we can support you for the long haul.

VIDEO GOES HERE

How we helped a large insurer adjust its portfolio operating model

The issue:

A global marine insurer needed to adjust to a new operating model. The process highlighted the company’s limited internal resources and inability to execute and nimbly adapt its investment strategy.

The in-house team wanted to retain control of manager selection but also explore new investment opportunities that capture yield, including moving into private markets.

The solution:

We began working with the insurer in an advisory capacity before progressing to an implemented consulting and discretionary delegated asset allocation relationship. The insurer was able to retain its existing fund managers while expanding and diversifying with managers we helped find.

We introduced detailed data and risk analytics, which enabled the insurer to enhance its governance structure. This also helped simplify and streamline the company’s operating model across multiple group entities and reduce costs.

Portfolio management solutions for insures

  • Sustainable investment solutions

    We specialize in creating some of the leading sustainable investment strategies to help ensure your portfolio can navigate tomorrow’s climate challenges. Drawing on two decades of experience, our global team delivers research, advice, tools and solutions to help you manage your risk profile while seeking favorable returns along your journey. 

  • Alternative investment solutions

    We help you generate new ideas and uncover innovation across all asset classes, through private markets or hedge funds, which are aligned to your objectives. Some of our strategies include co-investments, infrastructure, real estate, secondaries, natural resources, private equity, venture capital and a wide variety of hedge fund strategies.

  • Outsourced CIO

    We offer research, tools and solutions to help you deliver on your investment goals. Consider us your outsourced CIO (OCIO), working as an extension of your team to address issues such as governance and due diligence, risk mitigation, sustainability, alternative investment and cost management. We flex our services to suit your needs and objectives.

  • MercerInsight® asset manager research

    MercerInsight®, an alliance with eVestment, provides access to data, analytics, Mercer’s forward-looking asset manager ratings, and our research across both public and private markets. Contact us today to gain access to asset manager research for better-informed investment decisions.

  • MercerInsight® Community strategic research platform

    MercerInsight® Community is designed to enable dynamic sharing of strategic insights and opportunities among asset owners and managers from Mercer and the global investment industry at large. This membership-based digital solution provides timely access to the latest insights curated for your interests, helping you make better-informed investment decisions. 

Have confidence in our breadth and depth in alternative investments*

164B

US$164 billion in global alternatives assets under advisement

26B

US$26 billion in global alternatives under management

240

240 alternatives professionals

30

30 years' experience in private markets

27

27 offices globally

Have confidence in our breadth and depth

Our specialized insurance investing team has decades of experience advising insurers and designing portfolios to meet specific liability profiles and help achieve desired investment outcomes.
423B

We advise on more than US$423 billion for 118 insurance clients around the world.

30+

Our dedicated global team of insurance investment consultants and analysts has more than three decades of experience working with insurers.

305B

Our Investment Solutions business manages US$305 billion on behalf of clients of all types globally.

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    See our important notices

    1. Fees and savings are not guaranteed
    2. Mercer cannot guarantee access to opportunities.  Access is at the discretion of the investment manager.
    3. Mercer does not provide legal advice. You should contact your attorney before making any decisions with legal implications.” I might even clarify or remove “legal” since we don’t provide Legal advice so I’m not sure why that is in here.