Insurers: Liability-driven Investing for Insurers

Erik Vynckier

The European insurance industry manages approximately €9 trillion of assets for a mix of customers. This comprises the primary insurers: life insurers, non-life and health insurers, and the reinsurance industry. The life insurance industry manages savings for retirement, as many pensions take the form of insurance policies. Besides, in a number of countries pension funds are legally established and regulated as mutual insurance companies. Long-term liabilities also come up in the non-life sector, as claims on long-term disability and income support for clients affected by adversity, such as traffic and work-related accidents with long-lasting effects. The health insurance sector in some countries collects disproportionately more premiums at young, healthy ages than are paid out to these age cohorts in the same calendar year, in an effort to maintain stable health cover premiums for the same cohorts later in life, and this creates a pool of early surplus premiums to reimburse future health liabilities. Reinsurers (such as the pension buy-out companies) paying out on long-lasting life contracts and covering the long-term liabilities of non-life companies also need to monitor and