Insurance companies and alternative investment managers are converging in the pursuit of higher yield investments, and we are seeing this play out in several ways: insurance companies continue to increase alternatives allocations through limited/general partnership structures and/or by acquiring alternative investment managers in order to gain deal flow and expertise. At the same time, alternative investment managers are investing in insurance companies or launching re-insurance ventures to create a steady stream of capital inflows from premiums.
This convergence, while increasing the potential for profitability, also brings new risk and operational complexity that can inhibit scale and rapidly erode hard-won gains. As such, both insurers and alternative managers are rethinking their operating models, technology and servicing infrastructures to better position themselves for success in this new environment.
When we talk with the people who are experiencing these challenges day-to-day, a common theme is a need to focus on growing assets and profitability and how this priority often conflicts, or at least competes, with the need to reduce risk and operating costs. Many of these firms currently lack the infrastructure, expertise, technology and analytics to optimize allocations and pursue new asset classes without limitations or delays, while also controlling costs.
To get more specific, the graphic below shows some of the key opportunities and challenges that insurers and alternative investment managers face, along with a wish-list of solutions that harness technology, expertise and analytics that can position them for success in this converging environment:
With SS&C’s comprehensive Insurance Solutions, insurance companies and alternative managers can leverage decades-deep insurance experience, extensive expertise and state-of-the-art technology to help solve for each of the above-mentioned profitability, transparency, data and compliance challenges while also reducing risk and operating costs. To learn more about how SS&C can help position you for success in the converging market place, please contact us.
Alternative Investments, Insurance, Retirement