US insurance asset needs are as diverse as they are broad. As Wellington, winner of the asset manager of the year award, says: "No two clients are same, and neither are any two portfolios we manage."
The asset manager's work stands out due to its focus on customised solutions for insurers that has led it to substantial innovation.
For example, the team at Wellington has built out a proprietary suite of technology to help insurers understand and implement trade programs for purposes of income maximization or gain/loss harvesting. In late 2021 Wellington engaged with one non-benchmark relative client who, faced with the prospect of higher interest rates, wanted to better optimize reinvestment to maximize net, after tax income.
Wellington used its portfolio optimizer to examine the achievable book yield on reinvestment at various points along the rate curve. It combined that work with scenario analysis under different interest rate assumptions to understand the trade-offs from reinvesting immediately or waiting to reinvest at theoretically higher future rates. When it came time to implement the solution, Wellington utilised its liquidity aggregator and preferred insurance security universe to source preferred bonds for the go-forward strategy.
Wellington has also been very active in the ESG investment space.
In 2021, it launched its first insurance mandate where ESG was a key objective along with return. For the specific mandate, the portfolio’s average ESG score must be better than the benchmark index.
Another client requested reporting on the carbon impact of their taxable municipal portfolio. Municipals are generally considered ESG friendly, since they exist to benefit the greater good.
However, municipal carbon emissions data is not available through the large, widely used databases such as MSCI. Wellington delivered on the request for nearly the entire portfolio through alternative data sources, and bottom-up analysis from its credit research analysts of the underlying issuers in their portfolio.
Over the last year, the manager has also added new investments for clients, including middle market CLOs and commercial real estate CLOs.
