We are delighted to share with you a new paper by M&G Investments, which examines residential mortgages and consumer loans, a fast growing area of interest for insurers given the current constrained yield environment.
Consumer finance is one of the largest and most diverse credit asset classes in Europe, and is particularly attractive for insurers, given its capacity, favourable capital treatment under Solvency II as counterparty rather than market risk, and concurrently high returns on capital.
The paper focuses on the case for investing in European residential mortgages and consumer whole loans, and explore the specific benefits available to insurers making a strategic allocation to the asset class over the long term. It also examines the potential impact of adding residential mortgages to an investment portfolio in terms of additional portfolio-level diversification benefits and lower overall solvency capital requirements under the standard formula.
Please click here to view this paper.
In the below video, Russell Lee, Head of Insurance Solutions, Jerome Henrion, Director of Private Assets, Fixed Income and Matt Jones, Director, Fixed Income at M&G Investments also discuss in more depth the themes raised in the paper.