Barriers to Entry: Permeating the Insurance Company Investor Segment (J.P. Morgan)

KEYWORDS: Insurance Investors, Barriers, hedge fund

Authors:

J.P. Morgan

Organizations:
  • J.P. Morgan

Summary:

In order to enhance relationships in the insurance investor segment, it is necessary to understand the strictures within which these companies operate concerning hedge
fund allocations. There are several hurdles that insurance companies face in terms of their ability to allocate capital to hedge funds, the most obvious of which is the risk-based capital regime to which such firms are subject.

Despite the myriad constraints that insurance companies face in making hedge fund investments, there are various tailwinds driving an overall increase in allocations among this segment. The current and forecasted rate environment has brought into question the sustainability of the traditional insurance company overweight fixed income model. As a result, insurers are looking to alternatives, and hedge funds specifically, as a prospective component of the solution. Understanding the strategies, structures and other attributes of hedge funds that are palatable for insurers is paramount for any manager seeking to permeate this segment.

Insurance Investors & Hedge Funds

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