SWOT Analysis - A Blueprint for Success

A SWOT Analysis will identify internal strengths, weaknesses, external opportunities and threats to each component of your insurer’s investment process.

The SWOT analysis acts as a road map for future changes to the investment process.

We find a SWOT Analysis to be the best way to develop a blueprint and prioritization of how and where to improve the investment process.

Conducting a SWOT Analysis consists of the following steps:   View Sample

1. Obtain Information Regarding Financial Condition and Investment Portfolio

These documents include: financial statements, cash flow forecasts, claim payment information, investment policy statement, information related to the regulatory framework that the company operates under (state regulation citations for review), most recent board report, investment management and custodian agreements and contacts, quarterly investment management reports, quarterly return streams for all portfolios, holdings for all portfolios, etc.

At this time we would also have initial conversations with the insurer’s management or investment committee to determine company objectives and constraints. Though this seems like a great deal of information, most insurers are able to assemble and provide this information within a few days.

2. With the Provided Information, SAA will Complete a SWOT Analysis on the Insurer’s Investment Process Value Chain

The SWOT analysis will identify internal strengths and weaknesses, as well as external opportunities and threats to each component of the insurer’s investment process. We find that the SWOT analysis is the best way to set out a “road map” to guide the work and the relationship with the insurance company.

These components include the following:

Strategic Asset Allocation
SAA evaluates items, such as target and ranges for major asset classes, minimum average credit rating, book yield, taxable v tax-exempt mix, etc.

Investment Policy
A standard Investment Policy has many basic requirements. SAA will review if any requirements are missing and what improvements might be made. This may include a GIPS standard requirement for performance reporting, minimum credit rating, industry concentration limits, etc.

Peer Group Analysis
SAA compares overall allocations and strategies amongst similar insurers and determine if the differences between the insurer’s structure and of those peers make sense or if further evaluation is necessary.

Investment Manager Responsibility & Evaluation
SAA will evaluate the capabilities of your investment manager(s). This includes insurance asset management experience, expenses and fees, available analytics, fit with recommended asset classes, etc.

Portfolio Monitoring
Portfolio Monitoring goes beyond simply monitoring what the investment manager does. SAA will review your insurer’s portfolio monitoring process to ensure it includes areas such as compliance, other than temporary impairment, stress testing, and analysis of overall and specific risk exposures, etc.

Performance Measurement and Analysis
The Performance Measurement and Analysis process goes beyond simple comparisons to the benchmark and reviews yield and total return performance on a risk adjusted basis and against larger databases of manager performance. Most insurers are also keenly focused on downside risk which is important given the risk inherent on the business side of an insurer. SAA will recommend what measures are missing from your evaluation process and what areas are of strength.

3. Prioritize and Address the Most Important Issues and Results from the SWOT Analysis with the Insurance Company

SAA and the insurance company will prioritize the work that needs to be completed to address the most important aspects first. In some cases, the SWOT analysis identifies changes that need to be made immediately with the insurer’s investment manager roster or other aspects of the investment program.

Complete the form below to request a SWOT Analysis. An SAA Principal will contact you to discuss next-steps and provide a quote.


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