Aon has partnered with Goldman Sachs to establish a new investment service that seeks to make it easier for captive insurers to identify and access investments.
The new service combines Aon’s strategic advice, fund research and execution services through its team of investment specialists and practitioners with a specially tailored investment platform provided by Goldman Sachs, using its liquidity solutions portal, Mosaic.
The partnership will see a one-stop-shop created 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 service, which will be provided by Aon’s global investment practice, working alongside Aon’s captive and insurance management Group (ACIM), will also help 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, a selection of Aon buy-rated mutual funds from four prominent fund managers was available on the platform, with further additions expected as the service expands.
Commenting on this new platform, 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.”
Currell noted: “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.”
He explained: “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.”
Michael Siegel, global head of the insurance and liquidity asset management business at Goldman Sachs, added: “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.”
ACIM works with captives with over $175 billion of assets globally, while Aon’s global investment practice advises clients on more than $3.5 trillion of assets.
