Apex currently provides flexible outsourced CIO services to insurers. Activity includes asset allocation, cash optimisation, third party manager search and selection, ALM, supporting regulatory change, enhancing operational practices and infrastructure, and so on. Case study examples:

1. Cash and liquidity optimisation. Apex designed a liquidity management framework for a client, significantly reducing cash drag by reallocating unnecessary liquidity to investment portfolios, including the use of synthetic currency hedging. The process added c. 35bp to PBT.

2. Asset allocation. In 2012, an Apex client had sought to reallocate a significant proportion of government debt to credit. Both the incumbent consultant and the third party asset manager had supported the Client in a failed proposal to the Client’s Board. Apex reworked the proposal to present a fuller picture of the expected exposures, a proper assessment of risk, and an appraisal of risk/reward benefits. The proposal was made in the first person, rather than from external parties, and set out clearly and logically. The proposal was well received by the Board who authorised all requirements therein by the Client’s management. This reallocation added at least c. 75bp to annual PBT. An additional reallocation of a separate fixed income portfolio shortly thereafter added a further c. 25bp.

3. Third party manager review, search and selection. Larger consultants may offer a preferred supplier approach, but for insurance companies, this approach just isn’t suitable. Insurance clients are varied in nature, with investment functions often driven by  unique traits and requirements, meaning one size definitely does not fit all. We have supported clients in establishing the most suitable fit of asset manager for their specific needs, providing a bespoke review and search function on a highly competitive fee basis.

4. Structured product assessment. A Client had received an approach from a bank recommending investment in a CPPI structured deposit product, linked to a basket of absolute return funds, with a turnkey LoC replacement for funds deposited at Lloyd’s. Apex provided the client with a complete assessment of the pros and cons of the product in the context of the Client’s objectives, to facilitate management’s investment decision. Furthermore, Apex highlighted other areas of the portfolio that the Client might consider optimising first, as well as other suitable ways of achieving exposure to the respective allocation.

5. Infrastructure review and management information. A Client was concerned that a limited information flow, based mainly on sporadic third party manager data, detracted from the Client’s ability to quantify Group-wide exposures and fully appreciate the (lack of) risks within the portfolio. Apex designed and rapidly created monthly/ quarterly management information for use by the Client’s investment committee, Board, and parent company. The new reports enabled the Client to make essential challenges of third party asset managers, facilitated reallocation decisions, and provided a more complete understanding of aggregate exposures, risk and reward.