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Aon announces new investment service for captive insurers

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  • Topics:
    • Captives
    • Launches/New Products

Aon plc has partnered with Goldman Sachs to establish a new investment service that seeks to make it easier for captive insurers to identify and access appropriate, high-quality and yield-enhancing investments...

The service combines two complementary components to address client needs. Aon offers individual strategic advice, fund research and execution services through its experienced global team of investment specialists and practitioners. These elements are combined with a specially tailored investment platform provided by Goldman Sachs, using its market-leading Liquidity Solutions Portal, Mosaic. Together, the new service offers a one-stop shop for captives to manage their assets, from trading Aon-rated funds and viewing daily portfolio information, to automated reporting. Following a launch in Ireland, Aon plans to make the service available in other markets globally.

The Aon service will be provided by Aon’s Global Investment practice, working alongside Aon’s Captive & Insurance Management Group (ACIM). ACIM works with captives with over $175 billion of assets worldwide, while Aon’s Global Investment practice advises clients on more than $3.5 trillion of assets. The new Aon United service leverages this combined insight and expertise to advise captives on a broad range of investment opportunities and introduce captives to the platform as an avenue to access these opportunities. At its launch on 1 October 2020, a selection of Aon buy-rated mutual funds from four prominent fund managers were available on the platform, with further additions expected as the service expands.

Tim Currell, partner and head of Insurance Solutions, Global Investment at Aon, said:

“We believe that there are some simple steps that captive insurers can take to improve their expected investment outcomes without increasing risk - and this new service gives them the means.

“Since the global downturn in 2008, we have seen some captives favour a low-risk approach to asset management, with some holding a significant portion of their assets in cash deposits. Given the prolonged low global interest rates over recent years, this has resulted, for some, in low or negative returns with assets potentially losing value in real terms. This challenging dynamic has been accentuated during the COVID-19 crisis.”

Tim Currell continued:

“Captives could instead be diversifying into areas such as money-market funds or introducing other highly liquid assets. We know that deciding what to invest in and finding high-quality fund managers can be a challenge - most captives don’t have in-house teams with significant resources or the expertise to do this. Complying with the reporting requirements for this kind of portfolio management and trading can also present a new operational burden.

“But with the combined expertise to bring the best of Aon to our clients, this service offers captives a means to make the most of a broad range of investment opportunities – and with that the potential to improve outcomes while not having to take on the extra operational and compliance burdens themselves.”

Michael Siegel, global head of the Insurance and Liquidity Asset Management business at Goldman Sachs, said:

“We are excited to partner with Aon and to provide a new range of asset management products from an array of asset managers to Aon’s captive insurance client base. Market volatility has changed what firms invest in for cash management purposes and how firms invest. We look forward to working with Aon to bring technology solutions to the forefront of liquidity and other risk considerations.”

 

Key features of the service include:

·       Tailored advice on the captives’ investment strategy

·       Access to a range of Aon buy-rated funds, chosen for captives and available on the platform

·       Range of asset types, initially including money-market funds and bond funds

·       An easy-to-use web-based portal which allows captives to manage their assets from anywhere at any time

·       Support from Aon in executing client-directed trades

·       Comprehensive reporting suite to ease the burden of regulatory reporting

·       Introduction to an investment platform provided by Goldman Sachs. The platform and its underlying technology is based on Goldman Sachs' market-leading Liquidity Solutions Portal, Mosaic. The Portal already manages over $190 billion of assets globally for insurance and other institutional investors as part of its $630 billion liquidity platform.