Investment Process

The chapter aims to illustrate the complementary nature of technical insurance management and asset-financial management. The overall profitability of an insurance undertaking depends on a synergy being found between technical insurance management and the financial wealth management. Transactions relating to asset management may conceptually be split into two logical moments: one is the asset management and the other is release disinvestment to meet claims or surrenders. By investments we mean special kinds of transaction through which a long-term deployment of substantial volumes of financial assets are made in order to achieve a flow of economic returns over periods of varying length. The investments of an insurance undertaking meet three fundamental requirements: profitability, security and liquidity. Diversification is a way in which the right combination of these requirements can be found. Typical investment and disinvestment processes can be split into six stages: Strategic planning—strategic asset allocation (SAA), Investment Portfolio build-up, Tactical Asset Allocation (TAA), Negotiation, Monitoring and benchmarking and Administration management. Within the process of investment and disinvestment, treasury has a responsibility for managing corporate liquidity. It deals with all issues tied to money flows, incoming and outgoing, as well as cash needs and relative applications.