Invesco Insurance Insights

This newsletter brings the latest topics impacting insurers, aimed to help those managing investment portfolios while considering an insurer’s business, regulatory and solvency needs.

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Welcome

For the third edition of Invesco Insurance Insights in 2025, we explore how a bottom-up approach can optimize fixed income portfolios— through a carefully considered process of bond selection.

This edition of Invesco Insurance Insights shifts from a top-down strategic asset allocation focus to a bottom-up approach for enhancing portfolio efficiency at the security level, particularly within broad fixed income portfolios. Leveraging our advanced analytics platform, Invesco Vision, we demonstrate how insurers can screen, constrain, and optimize bond selections to achieve greater portfolio efficiency.

Key steps include:

  • Screening: Applying filters for ratings, liquidity, optionality, ESG factors, and issuer limits.
  • Constraints: Setting parameters for credit quality, duration, Solvency II spread risk, ESG metrics, and liability matching.
  • Optimization: Focusing on enhancing desired metrics to construct an efficient portfolio.
  • Expanding the Universe: Assessing diversification benefits by extending the scope of eligible bonds.

The process illustrates how iterative screening and optimization can improve selected metrics while keeping specific parameters well managed. It also emphasizes the importance of regular portfolio reviews and combining top-down and bottom-up approaches for resilience.

As always, we welcome your feedback and invite you to reach out for a more interactive discussion.

 

Jaijit Kumar, Head of Asia Insurance Solutions
Quick take: Insurance Insights 3rd edition 2025

Quick take: Insurance Insights 3rd edition 2025

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Transcript

Hello everyone, in our third edition of our Insurance Insights newsletter of the year, we’ve taken more of a bottom-up approach, showing how this can complement the more top down perspective of the prior two editions. 

It’s not always about looking at new asset classes, there are ways to make existing portfolios more efficient as well. Here, we take an example of an allocation to broad public fixed income and assess ways to potentially optimize this exposure, certainly relevant today given yields are still reasonably attractive.  We use our in-house portfolio analytics system, called Vision, and we progressively go through the main steps involved, selecting a universe, screening bonds, putting in constraints, selecting which portfolio parameter to optimize, and finally looking at a list of individual bonds from which to construct or adjust the portfolio. The content of the newsletter this time uses a lot of charts to convey how the analysis can be carried out. Such a process is, of course, best explained via an interactive demo and we would be happy to arrange such a session with you.

We hope that this will help you in your on-going management of portfolios in this constantly changing environment, and we look forward to any comments or suggestions that you may have.

Thank you.

Insurance Insights 3rd edition 2025

Transcript

Hello everyone, in our third edition of our Insurance Insights newsletter of the year, we’ve taken more of a bottom-up approach, showing how this can complement the more top down perspective of the prior two editions. 

It’s not always about looking at new asset classes, there are ways to make existing portfolios more efficient as well. Here, we take an example of an allocation to broad public fixed income and assess ways to potentially optimize this exposure, certainly relevant today given yields are still reasonably attractive.  We use our in-house portfolio analytics system, called Vision, and we progressively go through the main steps involved, selecting a universe, screening bonds, putting in constraints, selecting which portfolio parameter to optimize, and finally looking at a list of individual bonds from which to construct or adjust the portfolio. The content of the newsletter this time uses a lot of charts to convey how the analysis can be carried out. Such a process is, of course, best explained via an interactive demo and we would be happy to arrange such a session with you.

We hope that this will help you in your on-going management of portfolios in this constantly changing environment, and we look forward to any comments or suggestions that you may have.

Thank you.

Invesco Insurance Insights 3rd edition 2025

For the third edition of Invesco Insurance Insights in 2025, we explore how a bottom-up approach can optimize fixed income portfolios— through a carefully considered process of bond selection.

Insurance investment insights

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Insurance Insights

Enhancing Fixed Income Portfolios

In previous editions of our 2025 Insurance Insights newsletter, we focused on a top-down approach – looking for enhancements at a strategic asset allocation level through regular reviews and a selective addition of asset classes that complement existing portfolios. In this edition of the newsletter, we take a slightly different perspective by adopting more of a bottom-up approach – particularly for broad fixed income portfolios. 

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Previous editions

The macro outlook and implications for asset allocation

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Insurance Insights

Fed policy signals and yield curve dynamics

Fed policy signals and yield curve dynamics David Chao and Thomas Wu from Invesco’s Global Market Strategy Office share their macro outlook for Q3 2025. Despite seasonal market weakness, resilient credit demand and anchored inflation expectations support a constructive environment, with selective opportunities emerging across fixed income markets. 

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Related content

BACK TO TOP

  • Investment risks

    The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. Diversification and asset allocation do not guarantee a profit or eliminate the risk of loss.

    Invesco Solutions (IS) develops Capital Market Assumptions (CMAs) that provide long-term estimates for the behavior of major asset classes globally. The team is dedicated to designing outcome-oriented, multi-asset portfolios that meet the specific goals of investors. The assumptions, which are based on 5- and 10-year investment time horizon, are intended to guide these strategic asset class allocations. For each selected asset class, IS develop assumptions for estimated return, estimated standard deviation of return (volatility), and estimated correlation with other asset classes. Estimated returns are subject to uncertainty and error and can be conditional on economic scenarios.  In the event a particular scenario comes to pass, actual returns could be significantly higher or lower than these estimates.

    Vision

    Invesco Vision is a decision support system that combines analytical and diagnostic capabilities to foster better portfolio management decision-making. Invesco Vision incorporates CMAs, proprietary risk forecasts, and robust optimization techniques to help guide our portfolio construction and rebalancing processes.  By helping investors and researchers better understand portfolio risks and trade-offs, it helps to identify potential solutions best aligned with their specific preferences and objectives.

    The Invesco Vision tool can be used in practice to develop solutions across a range of challenges encountered in the marketplace. The analysis output and insights shown in the document does not take into account any individual investor’s investment objectives, financial situation or particular needs. The insights are not intended as a recommendation to invest in a specific asset class or strategy, or as a promise of future performance. For additional information on our methodology, please refer to our CMA and Invesco Vision papers. 

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