International Insurance Company
International insurance company – Optimizing strategic asset allocation
- The company struggled to maintain sufficient net income margin in a low credit spread environment
- Urgently needed to improve earnings while staying within risk appetite boundaries and protecting solvency
- Contemplated high yield strategies as a solution
Straterix’s analytical solution was used to analyse and optimize company’s balance sheet and income statement:
- Analyzed the current and various contemplated alternative asset portfolios, under thousands of scenarios
- Worked with the client to interpret the outcomes and arrive at robust, optimal allocation strategies
- Decide on an optimized investment strategy that is appropriate for a wide variety of market environments
- Adjust risk limits dynamically to increase earnings within stated risk appetite boundaries
- Demonstrated that expected returns on high yield indices is lower than treasury yield. This was caused by low credit spreads not covering expected losses in high-yield bonds
- Client increased yields by giving up some liquidity in their portfolio and, in special situations, investing in high yield