Property + Casualty

Risk insurers have made great strides in underwriting and risk management. Understanding the nature of risk is essential to underwriting success and by extension, the profitability of the company. Risk insurers also seek reasonable risk versus reward in the investment portfolio to augment underwriting in good years and to offset experience in lean years.

Though alternative investments provide some opportunities, fixed income remains a staple of the risk insurer’s portfolio. Given this exposure, the ability to outperform relevant fixed income indexes without undue risk becomes the objective. It is with this in mind that AQS developed the Portfolio Excess Return Management system (PERM).

Duration matching to an index falls short of this goal. Though sound in concept, the duration match presumes marketability – liquidity – into the future . Market professionals need look no farther than 2009 when credit spreads ballooned and liquidity was nonexistent.

It is this flaw in the duration match that caused AQS to consider a platform that could exploit the confluence of new technology and information delivery.

The PERM System:

• Produces a portfolio blueprint geared towards financial performance with a level of certainty that trial-and-error modeling cannot replicate.
• Assures performance against a specified index and elevates client control by way of process transparency, thereby reducing speculation.
• Provides granular and tractable portfolio solution within a market-critical timeframe.