We understand that the investment needs of insurance companies are often multi-dimensional and different from other institutional investors. Accordingly, we have developed extensive expertise in managing fixed income portfolios for insurance companies. Specifically, we have developed strategies and analytical tools, detailed below, to meet the requirements of our insurance company clients.
Strategic Asset Allocation
Our customized strategic asset allocation analysis determines the target allocation between core assets (investment grade fixed income) and non-core assets (e.g., equities, real estate, foreign securities), subject to client-specific guidelines. Non-core assets, such as equities, can be added to a portfolio not only to enhance return, but also to reduce risk. The traditional asset-only approach to portfolio management—considering the asset allocation separately from the entire business, is not sufficient for insurance companies due to the volatility and return profile of underwriting operations. Our investment process aims to identify the optimal portfolio within the context of insurance operations by examining the unique asset-liability considerations of our clients.
Tax Optimization
Our tax optimization process is designed to provide the maximum after-tax income for insurance company clients. The process endeavors, based on rigorous analysis, to determine the optimal security blend of taxable and tax-exempt investment alternatives. As a result, by matching alternative tax liability to regular tax liability, Brookfield Investment Management is able to maximize after-tax income.
Asset/Liability Management
Our proprietary asset/liability management ("ALM") analytical models continually analyze insurance company balance sheets to establish a target duration for portfolios to minimize risk to economic surplus from changes in interest rates. A successful ALM process allows an insurance company to fund its liabilities and to develop new and profitable businesses in a capital market with continually changing interest rates.
Investment Accounting and Reporting
We offer a full range of investment accounting and reporting services tailored to the specific needs of insurance company clients. Included among these are statutory and GAAP/PGAAP accounting reports, tax reporting and electronic annual statutory filings. Brookfield Investment Management's accounting system is capable of generating complete "as of" reporting for a full range of securities for portfolios on an individual or consolidated basis. In providing these services, we liaise with the SVO on an ongoing basis and are involved with NAIC requirements. We monitor, in conjunction with Princeton Financial (the developer of the PAM software for the PFS/PAM accounting platform that we use), evolving regulatory issues in order to make sure that the system is maintained.