May 27 2014
Portfolio Management for insurance companies is something that is linked to two kinds- the first would be portfolio diversification and the second would be ‘quantitative portfolio regulations’, which is limited to holdings of certain types of asset within the portfolio. Portfolio management mainly carries much weightage with insurance companies because of the need for asset-liability management in insurance company portfolios.
Good portfolio managers will be ones who focus on investing not simply to gain returns and attempt to minimize risk, but also cover reserves for the claims of the company’s policy holdings. The good portfolio manager will also attempt to preserve the solvency- both economic and regulatory of the company- while also earning the return that works with the company’s use and expenses of capital funds.
Furthermore, portfolio management will also be preferred if the portfolio managers keep abreast of the regulatory policies and rules that bind the company and work on ensuring that the managers develop their strategy as such. Furthermore portfolio managers must work hard to ensure that long term value must be created and given place by undertaking a strategy of investment that will not only utilize, but optimize the investment risk return portfolio.
Even more, portfolio management would be preferred if it includes the management and understanding of risks. Good portfolio managers should also understand and be able to optimize on the opportunities which good portfolio management would allow in the first place.
Preferred portfolio management should help offer investors a consultative, comprehensive approach in order to enable them to achieve their goals. Insurance companies will later also go for portfolio management that can aid in the customization of portfolio duration, credit quality, maturity sector, and a lot more to help meet the clients’ investment needs. What portfolio management does is also ensure that an insurance company’s clients are sure of their investments and goals- this makes things easier for both them and the company itself:
Portfolio managers help in the assessment of goals such as:
- Determining your (insurance company’s’ investors) investment personality
- Are the investments planned to fund your (the insurance company’s investors’) retirement?
- Do you (the insurance company’s’ investors) plan to fund your retirement?
- Do you (the insurance company’s’ investors) need a current income stream from your portfolio?
- And the last two things:
- Are the assets in the portfolio all your (the insurance companies) investments or they only a certain portion of your investments?
- And lastly, is there any special need for tax consideration such as the need to offset gains?
To conclude, portfolio management is preferred by insurance companies if the portfolio management at hand is the kind that allows insurance companies and organizations to be able to keep better track of their clients and if it allows the clients to know the kind of investments that they are making and how to be able to look after their investments better at the same time.