• UK Insurer
  • 2020
  • Fixed Income
  • GBP 20m
  • Bermuda, Europe, North America and the UK
  • TBC
  • High quality, short duration bonds to new asset managers
  • Manager research

Our specialist says:

For a multi-jurisdictional insurance group, selecting an external asset manager is about so much more than just maximising risk-adjusted returns: it is an opportunity to improve the efficiency of business operations. We needed to help the client address asset allocation—with its attendant capital and accounting implications—a dynamic and changing regulatory environment, profit margin compression and climate risk, among other challenges. Our experience in creating open, competitive tender processes was instrumental in finding the right external managers to help overcome these challenges while generating significant direct and indirect savings on a portfolio that constitutes 90% of the insurer’s total assets under management.

USD short-duration bonds

  • 102Considered
  • 36Long List
  • 13Second Stage
  • 6Shortlisted
  • 3Selected

CAD short-duration bonds

  • 87Considered
  • 18Long List
  • 7Second Stage
  • 3Shortlisted
  • 1Selected

GBP & Euro short-duration bonds

  • 88Considered
  • 24Long List
  • 11Second Stage
  • 5Shortlisted
  • 1Selected

Client-Specific Concerns

The client had developed numerous external manager relationships over the years that spanned different regions and currencies, broadly matching the geographic spread of its global business. Consequently, the insurer’s fixed income portfolio was not one whole portfolio, but rather a myriad of accounts—some large, but many quite small.

This client was intent upon finding new investment partners that could bring above-average knowledge of global capital markets to its internal team. Managers were required to provide evidence that they could deliver regular capital market expectations for all major USD-, GBP- and EUR-denominated publicly traded asset classes, as well as some other specific asset classes.

Beyond maximizing medium- and long-term risk-adjusted returns, managers were also expected to provide the client with the best possible return adjusted for regulatory capital charges, i.e. they had to demonstrate their capabilities to continuously monitor regulatory innovations across jurisdictions and integrate those changes into solutions for insurance clients.

The client also needed at least one prospective manager to implement an overlay strategy to mitigate total portfolio risks arising from duration, currency, equity, and other beta exposures.

From an operational point of view, the prospective managers had to have excellent operational infrastructure and an ability to manage smaller, sometimes temporary transitional portfolios for short periods of time to support the movement of assets for the parent company’s global insurance business. The client also wanted at least one of its new managers to provide risk monitoring at the overall portfolio level.


  • Using internal resources more efficiently:Given the comprehensive scope of this project, bfinance helped the client identify managers that could act as partners to simplify oversight of the insurer’s portfolio and investment operations—creating a streamlined solution, leveraging the managers’ broader capabilities to outsource ancillary services and thus freeing up the client’s own internal resources to focus more closely on business strategy.
  • Extracting better value for money from external managers:bfinance sought to help the client achieve better returns—and to do so in a way that was cost-effective and time-efficient. To that end, the team assisted the client in realising a 30% reduction of the total management fee package; the competitive tender process was instrumental in achieving this outcome.
  • Mitigating ESG-related risks:Separately, but significantly, bfinance also helped identify managers that could assist the company’s efforts to protect its portfolio from ESG-related risks. The bfinance team leveraged its ESG expertise to assist the client in developing an ESG risk framework and identifying candidates that offered cutting-edge integration of ESG-related factors as part of their overall investment approach (with a focus on climate impact).