Skip to content

Subscribe to Asset Servicing & Fintech Insights

Discover more information in our monthly publication, the AXIS newsletter, including industry trends, product innovation, Fintech and more from our team of experts.

Insurers Deserve Customization, Too

Insurers are not homogeneous in their asset management strategies and need advanced data solutions for complex investing.


Insurers make up one of the largest asset owner categories – trailing only pension funds – with their assets comprising 15% of all assets under management globally.1 As such a large group of institutional investors, they are certainly not homogeneous in their investment strategies.

While traditionally insurance investment portfolios have been heavily allocated to lower risk fixed income strategies, many insurers in recent years have opted to invest in private assets and derivatives as they seek yield in low interest rate environments.

These increasingly differentiated approaches have left insurers needing a way to account for their portfolios to gain real and sophisticated insight into their holdings – something that only recently became possible with advanced data solutions for the insurance community.

Insurers are not homogeneous

Fixed income-heavy strategies are seen as a hallmark of insurance asset management. Most insurers maintained high allocations to fixed income for years, and many still do.  

But as the 2008 financial crisis hit, the U.S. Federal Reserve’s interest rate was pushed to near zero, climbing only as high as 2.5% until the COVID-19 pandemic hit, rates back down all over again.2

This perpetual low interest rate environment has spurred some insurers to venture away from high allocations to fixed income, placing their assets in higher-risk, higher-yield instruments such as private capital and derivatives.

At the same time, others have remained committed to primarily fixed income strategies, finding a way to create returns without taking on substantially more risk. According to Goldman Sachs Asset Management, 34% of insurers are planning to increase the overall risk in their portfolios – a significant portion that has grown over the years but is by no means the majority of the industry.3 Private equity, middle market corporate loans and infrastructure debt are growing in popularity with insurers, with 37%, 34% and 31% of insurers planning to increase their allocations to the asset classes respectively.3

The data shows that insurers are diversifying into new investment strategies and can no longer be put into one box, but what does this mean for their ability to assess their investment performance? Despite their varied allocations across asset classes, insurers require asset class agnostic data solutions and platforms. No matter what they choose to invest in, from U.S. Treasury bonds to private equity funds, insurers need to be able to rely on data that provide them a single, combined view of their full portfolios – something the industry has found hard to come by until the last several years.

Asset class agnostic solutions for insurers

As insurers have varied their strategies over the years, investment teams have become accustomed to using multiple disparate tools to manually combine data to get a full picture of their portfolio. This is because there simply was no resource on the market that could work with every asset class.

But as many insurers have increased their allocation to more complex assets outside of fixed income – particularly private investments which bring inherent valuation challenges – investment teams across the front, middle and back office have felt the need for a more broadly capable tool.

When it comes to back-office operations, many investment teams face the challenge of tracking complex portfolios on spreadsheets and the risk inherent in manual processes. By accessing the right data solution, insurers can gain streamlined views of their investment strategy via a single platform and a centralized investment book of record (IBOR).  When all data lives on a single IBOR, back-office teams are no longer conducting manual data entry and spreadsheet merging – practices that increase the risk for error. As the data is prepared for accounting processes, the books can be locked quicker with improved data integrity thanks to automated quality control checks.

Today’s advanced data solutions also allow for more robust and interactive reporting. With capabilities like detailed data analysis and customization, insurers can view and drill down into their data, benefitting front- and middle-office operations. Teams can more easily spot trends, risks and opportunities. They can quickly view the impact of portfolio changes and can access more frequent reporting, a crucial component of improved investment decisions. Gaining this type of transparency into a complex portfolio can be achieved with the right data solution and practices.

Insurers are diverse when it comes to their investment strategies, and this diversity continues to grow as more choose higher risk, higher yield investment products. As the industry continues its evolution, insurers can greatly benefit from data solutions that evolve with their changing strategies and their need to evaluate and report on more complex portfolios.


1 Boston Consulting Group “Global Asset Management 2020”, May 2020.
2 AP News, “Fed stresses its commitment to low rates as economy stumbles”, January 27 2021.
3 Goldman Sachs Asset Management, “Insurance Survey 2021”.

Christopher Dvorak

Head of Insurance Solutions
As the Head of Insurance Solutions, Chris leads all aspects of Northern Trust’s relationships with insurance companies, including their insurance asset bases, as well as their defined benefit and defined contribution plans.

Confidentiality Notice: This communication is confidential, may be privileged, and is meant only for the intended recipient. If you are not the intended recipient, please notify the sender as soon as possible. All materials contained in this presentation, including the description of Northern Trust, its systems, processes and pricing methodology, are proprietary information of Northern Trust. In consideration of acceptance of these materials, the recipient agrees that it will keep all such materials strictly confidential and that it will not, without the prior written consent of Northern Trust, distribute such materials or any part thereof to any person outside the recipient’s organization or to any individual within the recipient’s organization who is not directly involved in reviewing this presentation, unless required to do so by applicable law. If the recipient is a consultant acting on behalf of a third party client, the recipient may share such materials with its client if it includes a copy of these restrictions with such materials. In such event, the client agrees to comply with these restrictions in consideration of its accepting such materials.

© 2021 Northern Trust Corporation. Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with limited liability as an Illinois corporation under number 0014019. Products and services provided by subsidiaries of Northern Trust Corporation may vary in different markets and are offered in accordance with local regulation. This material is directed to professional clients only and is not intended for retail clients. For Asia-Pacific markets, it is directed to expert, institutional, professional and wholesale clients or investors only and should not be relied upon by retail clients or investors. For legal and regulatory information about our offices and legal entities, visit northerntrust.com/disclosures. The following information is provided to comply with local disclosure requirements: The Northern Trust Company, London Branch, Northern Trust Global Investments Limited, Northern Trust Securities LLP and Northern Trust Investor Services Limited, 50 Bank Street, London E14 5NT. Northern Trust Global Services SE, 10 rue du Château d’Eau, L-3364 Leudelange, Grand-Duché de Luxembourg, incorporated with limited liability in Luxembourg at the RCS under number B232281; Northern Trust Global Services SE UK Branch, 50 Bank Street, London E14 5NT; Northern Trust Global Services SE Sweden Bankfilial, Ingmar Bergmans gata 4, 1st Floor, 114 34 Stockholm, Sweden; Northern Trust Global Services SE Netherlands Branch, Viñoly 7th floor, Claude Debussylaan 18 A, 1082 MD Amsterdam; Northern Trust Global Services SE Abu Dhabi Branch, registration Number 000000519 licenced by ADGM under FSRA # 160018; Northern Trust Global Services SE Norway Branch, 3rd Floor, Haakon VII's Gate 6, 0161 Oslo, Norway; Northern Trust Global Services SE Leudelange, Zweigniederlassung Basel, Aeschenplatz 6, 4052, Basel, Switzerland. The Northern Trust Company Saudi Arabia, PO Box 7508, Level 20, Kingdom Tower, Al Urubah Road, Olaya District, Riyadh, Kingdom of Saudi Arabia 11214-9597, a Saudi Joint Stock Company – Capital 52 million SAR. Regulated and Authorised by the Capital Market Authority License # 12163-26 CR 1010366439. Northern Trust (Guernsey) Limited (2651)/Northern Trust Fiduciary Services (Guernsey) Limited (29806)/Northern Trust International Fund Administration Services (Guernsey) Limited (15532) Registered Office: Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3DA. Northern Trust International Fund Administration Services (Ireland) Limited (160579) / Northern Trust Fiduciary Services (Ireland) Limited (161386),  Registered Office: Georges Court, 54-62 Townsend Street, Dublin 2, D02 R156, Ireland.