TAKING THE REINS

Greater traceability, governance and reporting procedures under the Solvency II / IORP II proposal requirements are of much importance to insurers and pension funds, especially if their assets are held with external managers or in exter- nally pooled funds. In order to sufficiently meet the deadline on 1 st January 2014, insurers and their external asset mana- gers must make sure their relationship is strong to ensure a smooth transition process.

but also as indications as to why their selected asset mana- gers may not be achieving the set target.

Asset managers must therefore strive to enhance the granula- rity of information given to institutional investors to maintain the relationship as well as demonstrate to potential clients the reasons for their performance and why they’re the best choice. The size of investments of institutional investors also means that asset managers must be able and willing to align fee levels to the interest of investors and enhance their compe- titiveness, resulting in a stronger ability to garner the assets available.

Conclusion: what do asset managers need to fix?

While the traditional foundations of strong performance and low fees hold true, institutional investors are expectant of greater information regarding their investments, not only for reasons of respecting their investment criteria and principles,

Figure 9

What insurers/pension funds need...

Risk measurements

“Compliant” products

Strong controls

Data

Reporting

Solvency II / IORP II

What the AM industry should do

• Provide the data required for insurers’calculations • Renegotiate Service Level Agreements • Meet the outsourcing needs of insurers • Provide reporting and KPIs • Adapt systems to provide on-time data in the correct format and adequate frequency • Establish permanent controls over data quality

• Offer new products to meet the challenges of Solvency II • Propose risk management services • Review investment mandates • Assess the capital requirements led by investment funds • Provide support for assets valuation

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