Willis Towers Watson announced the transfer of its UK Insurance Investment Solutions Group (IISG) to the company’s Insurance Consulting and Technology (ICT) UK Life business – a move that aims to help insurers improve their investment strategies.
The move, which became effective on April 1, 2018, is designed to ensure the consultancy remains well placed to help property/casualty and life insurers optimize their investment portfolios in a highly regulated, competitive and low-return environment.
The IISG’s investment services include setting strategic investment objectives, strategic asset allocation, asset liability management, hedging review and solutions, internal model validation, investment management organizational design, establishing risk tolerance and improving governance, said WTW in a statement.
Keith Goodby, head of Insurance Investment Solutions Group at Willis Towers Watson, said: “Whilst ensuring the IISG retains its unique offering and close links with the investment business, transferring to the ICT business will offer tighter integration of our insurance and investment capabilities, driving efficiencies in the service and the ability to uniquely develop Willis Towers Watson’s investment proposition for insurers.”
“Insurers are grappling with a continued low-yield environment and shifting regulations, driving changes to their asset strategies, business models and risk appetite,” said Marcus Bowser, sales & practice leader, UK Life Consulting at Willis Towers Watson.
“While these changes have created some obstacles for insurers, they also represent an opportunity to consider how best to enhance their returns in a risk controlled and capital efficient way,” he said.
Willis Towers Watson cited the various external factors that are increasing demand for better asset allocation to raise investment yields, including:
- Market outlook of risks are skewed to the downside over the medium term
- Solvency II and Prudent Person Principle have forced more focus on and a deeper understanding of requirements for the management of insurers’ assets and investment risk
- Regulatory developments such as MIFID II and PRIIPs are increasing the complexity of investment management for insurers
- Product innovation is driven by the need to enhance yields on investment products
- Increased systemic market riskdue to global linkage of markets through technology leading to more volatile outcomes
- Sustainable investments are becoming a significant and more visible concern for many insurers as a result of the reputational risks associated with being left behind.
Source: Willis Towers Watson