Investment Process
- Strategy – An insurer, no matter the product offering, has ONE objective when it comes to the investment portfolio: Risk-adjusted return. The difficulty lies less with maximizing the “return”, but rather identifying and quanitfying the risk. AQS stands at the forefront of analyzing the liability profile or business risks of any insurer.
- Execution – Larger managers have limited investment opportunities while smaller managers suffer from excessive transaction costs. To quote the greatest investor of our time, Warren Buffett, “If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.“ AQS’ outperformance can be attributed to this “execution”.
- Review – Investment advisors would not exist if an insurer’s portfolio contained liquid investments with no credit risk (ex. Treasury securities). Insurance companies take risks to remain competitive, and AQS monitors such risks daily as a matter of necessity.
- Report – Growing a successful business involves attention to detail. Actuaries, accountants, investment advisors, and insurance companies must all work together to engineer financial statements that maximize profitability. AQS’ technical approach to the accounting and reporting is second to none, because the nitty-gritty is where differences are made.
