Investment Process

Massimiliano Maggioni and Giuseppe Turchetti
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Massimiliano Maggioni: University of Milano
Giuseppe Turchetti: Sant’Anna School of Advanced Studies

Chapter 22 in Fundamentals of the Insurance Business, 2024, pp 471-485 from Springer

Abstract: Abstract 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.

Keywords: Financial wealth management; Investment; Profitability; Security; Liquidity; Diversification; Strategic asset allocation (SAA); Investments; Tactical Asset Allocation (TAA); Credit default swap (CDS); Liquidity risk; Market risk; Interest rate risk; Exchange rate risk; Share or equity risk; Real investment; Credit investment (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/978-3-319-52851-9_22

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