Insurance: Innovate. Create. Refine...your insurance philosophy

Transcription

1 Insurance: Innovate. Create. Refine...your insurance philosophy Melissa Crawford, National Manager Insurance, Securitor and Licensee Select Mark Angus, Insurance Practice Development Manager, Securitor and Licensee Select Nick Hakes, Head of Campus AFA, AFA 1

2 Why have an insurance philosophy? How to build one? 2

3 Investment philosophy Active management, excess returns BT Investment Management is an active manager focused on generating excess returns (alpha) from bottom-up and top-down strategies. These strategies are employed across a variety of products to meet the changing demands of investors. We believe market inefficiencies can be identified and exploited. When markets are inefficient, markets and securities can be mispriced. These securities tend to revert back to what we consider to be their true or inherent value but this process can take time. An active investment approach and rigorous research aims to identify and exploit these inefficiencies. Multiple alpha sources To ensure consistency of performance, we believe it is also important to focus on signals and triggers that generate long-term flows within and across asset classes. These beliefs are captured through our investment processes, which are focussed on extracting excess returns from multiple sources. Risk management The management of risk is central to our investment philosophy and is embedded in our investment processes. We believe that risks must be understood, quantified and controlled before investment decisions are undertaken as a risk-controlled environment can improve the consistency of returns. * 3

4 Our investment philosophy and process Investment philosophy Perennial Growth's investment process is based on a 'growth' stockpicking investment style. Perennial Growth holds the belief that investment markets are not fully efficient as asset prices are sometimes driven by irrational influences. As a growth investor, Perennial Growth seeks to invest in companies that can grow their business profitably and add additional value to their shareholders. Perennial Growth seeks to invest in companies that grow in a sustainable manner. Investment process Stock selection process Perennial Growth's investment process begins with the screening of the investment universe. Many of these stocks are actively researched by the Team through a bottom up fundamental stock picking process. Stocks are eliminated based on factors such as high debt, low interest coverage and minimum market capitalisation. Detailed modelling and research is then conducted by the Team. To qualify for investment, stocks must have sustainable growth track records and offer a reasonable share price. Every potential investment opportunity is subjected to a standard range of steps in assessing key qualitative and quantitative criteria. These are: 1. Opportunity and execution Growth opportunities for the business Management to execute on these opportunities Growth opportunities for their industry. 2. Perennial Growth's sustainable growth test Cashflow growth: the indicator of true underlying growth Return on investment is the Team's measure on the profitability of growth Change in a company's return on investment indicates the trends in growth. 3. Lifecycle valuation The Team's proprietary measure of a business' valuation in accordance to growth expectations and the associated company risk. Perennial Growth places great emphasis on direct company and industry contacts and this is an integral part of the process. Perennial Growth's proprietary stock ranking model will then rank the stocks according to the above measures. Each stock is assigned a ranking according to an internally generated modelling process. The outcome of the Team's detailed research process is a list of profitable growth companies that are eligible for inclusion in the portfolio. The final portfolios are constructed according to a strict risk management and compliance regime. The main driver of Perennial Growth's portfolio construction process is the Team's desire to deliver a portfolio of growing companies that will be profitable for investors 4

5 Key elements of an insurance philosophy Calculations Claims Structuring Insurance philosophy Review Implementation 5

6 Calculations What products are we giving advice on? Income Protection, Life, TPD, Trauma, Business Expenses? What are we covering for? Debt, replace income, medical expenses? How are we calculating cover? How much debt?, How much income do we replace and for how long? Etc. 6

7 Structuring Stepped or Level Premiums? Is my advice short term or long term? Can I use a combination? Inside or outside super? What are the implications of preferred ownership structure? What commission type will we use? Stepped, hybrid, level or fee 7

8 Implementation How do I choose a provider? What key features are important? What research do I conduct? Do I rely on risk researcher or do I consider the BDM support, underwriting approach, claims process, sustainability of companies? Use of available technology? Do I utilise online applications & phone Underwriting? Workflows for insurance advice? 8

9 Review Do I have a structured insurance review process? How often do I offer a review? Every year, every 2 years? What are my legal and dealer group obligations? How often do I review my preferred Insurers? How often will I review my insurance philosophy & processes? 9

10 Claims Do I offer a claims management service? Is it documented? Does it form part of se Do I understand the claims process of my preferred Insurers? Who, What & When? Including contact numbers & relevant forms 10

11 Documenting the process Increased efficiency Understanding roles and responsibilities Reduced learning curve Expansion Speed to market Positioning for acquisition Reduced operating cost Employee retention 11

12 Key elements of an insurance philosophy Calculations Claims Structuring Insurance philosophy Review Implementation 12

13 Disclaimer This information was prepared by Securitor Financial Group Ltd, ABN AFSL & Australian Credit Licence (ACL) (Securitor) and is current at time of publication. Material contained in this presentation is an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. All case studies and examples used in this presentation are for illustrative purposes only and nothing in this presentation should be construed as an indication or prediction of future performance or results. 13