The goal of Asset Liability Management (ALM) is not to maximize the return of the asset portfolio, but rather to maximize the asset portfolio's performance relative to your underlying liabilities. The breadth of available investment instruments and an ALM practitioner's ability to put them together with purpose can create opportunities in an otherwise challenging environment.

Plan sponsors generally want to minimize the liability shortfall probability, given a desired return. Alternatively, you may want to maximize your funding ratio, given a specified risk appetite.

Whatever your objectives, we will design a solution that takes a holistic approach considering all assets and liabilities, finds the best opportunities among all asset classes, and works within your risk appetite.

Take control of your plan

For many plan sponsors, utilizing multiple managers can provide style diversification and a degree risk reduction. However, aggregating data across multiple managers and making investment decisions in a timely manner can be very challenging. We can help you take control of your plan with our completion management and glidepath implementation services.

Completion Management Framework

• Timely measurement of funded ratios and hedge effectiveness
• Consistent liquidity and cash flow management
• Proactive rebalancing without disrupting underlying managers
• Robust plan performance and attribution analysis

Execute with Speed and Efficiency

Most plan sponsors who are looking to reduce risk also wish to do it over time and under favorable market conditions. The reality is reporting lags and lengthy decision-making processes often make the ability to react in a timely manner a challenge. Our glidepath implementation services allow us to act immediately to rebalance your portfolio when the desired triggers are reached.

Make the Shift to Managing Relative to Underlying Plan Benefit Obligations

We understand that implementing an ALM framework requires making the shift from solely managing to market-based indices, to managing relative to underlying plan benefit obligations. To this end, it is critical that plan sponsors retain a clear sightline to plan performance and attribution.

Timely and Transparent Reporting

We utilize our comprehensive ALM reporting platform to provide our clients timely and transparent information about their strategy.

Total Plan Reporting Items:

• Asset and liability benchmark valuation
• ALM immunization statistics
• Liquidity characteristics
• Performance and attribution
• Risk dashboard

Fixed income is often the cornerstone of a successful ALM solution. Given the unique nature and term structure of a typical liability schedule, many institutional investors require solutions that are highly customized or structured. We offer a spectrum of highly customized solutions to help you meet liability obligations.

• Cashflow matching strategies generally involve structuring a specialized bond portfolio dedicated to funding a prescribed set of liability payouts over time. This matched-funding technique reduces the uncertainty of investment results related to fulfilling specific liabilities, while minimizing potential reinvestment costs.
• Laddered bond portfolios can often be an effective strategy to match an investor's duration and risk preferences. With cash flows essentially diversified over time, investors obtain a balanced position between the two primary sources of interest rate risk – cash flow reinvestment and market price volatility.
• Immunization strategies generally seek to minimize interest rate risk while retaining some degree of manager discretion to pursue lower costs or higher returns. The primary objective is to structure a portfolio such that its value will meet or exceed the present value of its underlying liabilities across a set of interest rate changes.
• Horizon matching can be an effective hybrid strategy. This approach is an immunization strategy with an added constraint that it be cash-matched in the first few years. The advantage is that the liquidity needs are provided for in the initial cash-flow matched period, where a liability schedule may be known with greater certainty.

An overlay strategy uses derivative instruments or leverage to gain portfolio exposures beyond those provided by the underlying physical investment portfolio.

Overlay strategies are typically used by plans to match liabilities or free up capital for redeployment into high-quality income, equity or real asset strategies. We offer a variety of overlay strategies that can help you hedge your liability risk without sacrificing return.

• Bond Overlay strategies allow investors to achieve greater interest rate exposure without having to put up additional capital. When selecting the instruments to implement a bond overlay program, liquidity and cost should be considered as they vary significantly by instrument. Instruments include total return swaps (TRS), interest return swaps (IRS), bond forwards and repurchase agreements (repos).
• Provincial Spread Overlay strategies. From time-to-time, spreads in nominal provincial bond yields relative to Government of Canada yields represent a tactical opportunity with the potential to capture attractive yield. When used in combination with real return bonds (RRBs), this strategy can be attractive to indexed pension plans as an alternative to the small and illiquid provincial RRB market.
• Options-Based Overlay strategies can be effective tools to manage the asymmetric funded status risk often faced by pension plans. For example, an equity collar can be used to protect against downside tail risk assuming the plan is willing to forego upside returns above a certain level.

A Deep Understanding of Unique Objectives

Our client-focused approach allows us to operate in a consultative fashion, serving a multitude of property & casualty, reinsurance and life & health insurance clients with $23.0 billion assets under management.

Insurance investing is not a set-and-forget exercise but rather a dynamic process that requires ongoing monitoring and revision as the environment insurers face changes. Our insurance Asset-Liability Management (ALM) framework begins and ends with our clients’ objectives.

Access to Full Breadth of Public and Private Markets

Our dedicated ALM team draws on our breadth of investment solutions and resources, including one of Canada’s largest fixed income teams, an independent credit research process, and specialists in the areas of real assets, derivatives, and equities markets.

• Interest Rate Sensitive Assets; Public Bonds, Preferred Shares, Investment-Grade Private Debt, Commercial Mortgages, High-Yield Bonds
• Variable Return Assets; Passive and Active Equities, Low Volatility Equities, Risk Managed Equities, Real Estate, Infrastructure

Consultative and Flexible Portfolio Management:

Often acting as an extension of our clients’ internal teams, we approach the implementation and ongoing management of insurance mandates in a highly collaborative fashion.

We recognize that the successful management of insurance company investment can be quite dynamic. Our portfolio management process is nimble and flexible so that we can respond to changes in client objectives and find opportunities in various market environments.

Timely Customized Reporting:

We understand the data intensity our insurance clients need to meet their reporting requirements. Every client is unique, so as part of the onboarding process, we schedule client discussions to determine reporting requirements and establish services levels.