Investment flexibility & front-office decision making with a sound back office

Thursday, April 15, 2021 | By Scott Kurland, Managing Director

Investment flexibility & front-office decision making with a sound back office

As insurance investment portfolios have become increasingly complex, global and diversified, batch-based processing models and legacy platforms struggle to keep pace with investment decisions being made across multiple markets, time zones and public/private assets. Legacy technologies, infrastructures, and processes are causing insurers to manage investment portfolio allocations and diversification based on stale and incomplete portfolio data that may be a day or more old.

By accelerating middle and back-office processes through tightly integrated, highly controlled and modern technology solutions, insurers can improve the timeliness and accuracy of the portfolio data on which they make critical investment decisions. To accomplish this, insurers need to automate and speed up transaction processing, corporate action and event notice handling, counterparty reconciliations, valuations and accounting updates. This becomes even more imperative as insurers diversify investment portfolios into more complex, illiquid asset types where access to partner capital statements and related investment activity documentation is even less standardized and readily available—and often delivered on a lag.

To keep up with the growing complexity and evolution of investment portfolios, insurers should evaluate solutions that provide the tools to effectively implement timely back-to-front processing across the full suite of asset classes, including but not limited to fixed income, equities, derivatives, syndicated bank loans, commercial mortgages, alternative investments and other private assets.  Some of the criteria for evaluation include:

  • Integrated infrastructure—Having core middle and back-office processes on a single platform, with tightly integrated data sources, helps create “one source of truth” and reduces risk.
  • Holistic portfolio views—Consolidate processing and accounting for all asset types with a more complete and accurate view of the portfolio.
  • Non-standard data capture—New technologies like Optical Character Recognition, Machine Learning and Natural Language Processing can efficiently extract unstructured data from paper documents and PDF files in an automated fashion.
  • Tri-party reconciliation and exception management—A timely and accurate book of record relies on the ability to reconcile transactions, cash, positions and general ledger data among custodians, external managers, investment accounting platforms and trade order management systems on a daily basis.
  • Integrated risk and performance analytics—Insurers and alternate investment managers need an analytical layer that enables them to run risk and performance analysis directly off of current, consolidated investment data with flexible shock analysis and what-if scenarios.
  • Operational domain expertise—Human oversight and domain expertise are critical to ensuring all processes are working as they should, and many firms choose to outsource or co-source those functions that are non-core to their business, in order to improve scalability and free up their resources for higher-value functions.

Singularity is SS&C’s next-generation, AI-driven investment operations, accounting and analytics platform used by a broad range of insurance companies and asset managers. Singularity supports all global asset classes on a single platform and can be deployed on a SaaS, fully outsourced, or co-sourced basis. To learn more about how optimizing efficiency in the middle and back-office can make the front office more effective, download our "Flip the Script: Accelerated Back-to-Front Office Processing" whitepaper.

Alternative Investments, Insurance

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