2017 Investment Symposium

Transcription

1 2017 Investment Symposium Session 14: The Chief Investment Officer/Chief Risk Officer Panel Moderator: Larry Zhao, FSA, CERA Presenters: Sadiq S. Adatia, FSA, FCIA, CFA Josh Braverman Breege A. Farrell, CFA Michelle Moloney, FSA, CFA SOA Antitrust Disclaimer SOA Presentation Disclaimer

2 The CIO/CRO Panel Sadiq Adatia, CIO of Sun Life Global Investments Josh Braverman, CIO of AXA US Breege Farrell, CIO of Unum Michelle Moloney, CRO of Protective Life Larry Zhao, FSA, CERA, CFA, PhD March 10 th, 2017

3 Sadiq S. Adatia, FSA, FCIA, CFA Sadiq joined Sun Life Global Investments in 2011 as Chief Investment Officer. He brought with him strong expertise in managed solutions and tactical asset allocation. Throughout, his investment strategy has focused squarely on protecting investor capital while still providing the growth they need to reach their financial goals. It s a strategy that has been embraced by clients, with Sadiq s team overseeing almost $15 billion today. Sadiq s investment knowledge is also sought after in the broader investment community, and is frequently asked by media outlets like CNBC, BNN, CBC, Bloomberg and Reuters for his insights. Before joining Sun Life Global Investments, Sadiq was Chief Investment Officer at Russell Investments Canada. Prior to that, he worked at Mercer Canada as Business Leader for Investment Consulting for Central Canada. Sadiq is also a CFA Charterholder, and is a Fellow both of the Society of Actuaries (Investment Specialty Track) and the Canadian Institute of Actuaries. 2

4 Josh Braverman Josh is Senior Executive Vice President, Chief Investment Officer and Treasurer of AXA Financial, Inc. He is also Senior Executive Director, Chief Investment Officer and Treasurer for AXA Equitable Life Insurance Company. Josh also leads the Derivatives & Hedging team. As Chief Investment Officer, Josh is responsible for asset liability management, asset allocation and overall investments strategy for AXA s general account investment and pension portfolios. Josh leads the Treasury Department and Derivatives & Hedging teams responsible for managing the company s financing and liquidity requirements as well as developing and implementing the company s derivatives and hedging strategies. He is also president and chief executive officer of AXA Corporate Solutions Life Re. Prior to joining AXA, Josh was global head of Derivatives of AEGON. Previously, he worked for the U.S. Treasury Department as a sovereign debt advisor, Deutsche Bank as director of Mortgage Derivative Trading, and Goldman Sachs as vice president, Fixed Income Proprietary Trading. Josh earned a Bachelor of Science in economics from the Wharton School of the University of Pennsylvania. 3

5 Breege Farrell, CFA Breege is Executive Vice President, Chief Investment Officer at Unum since August 2013, after having joined Unum as Senior Vice President and Chief Investment Officer in April Before joining Unum, she held a number of executive-level investment positions within The Allstate Corporation, a personal lines insurer, including as Senior Managing Director of Allstate Investments, LLC and certain affiliated companies from January 2010 to April 2011, and as Managing Director of these companies from August 2004 to January Breege is a CFA charter holder of the CFA Institute. Ms. Farrell earned a Bachelor of Science in Economics, Spanish and Psychology from the Emory University and an MBA in Management Strategy and International Finance from the New York University. 4

6 Michelle Moloney, CFA FSA Michelle is the SVP & Chief Risk Officer of Protective Life Corporation. In her role, she leads the Company s Enterprise Risk Management (ERM) program, providing independent oversight of enterprise risks, including insurance, actuarial and product, credit, trading and hedging, market, interest rate and equity, operational, regulatory and reputational. Michelle previously worked in a variety of management, risk and strategy roles at AEGON Group, McKinsey & Company, Swiss Re, and Manulife Reinsurance, amassing more than twenty-five total years of financial services experience, including most recently serving as Senior Vice President, Strategy & Regulation for the Reinsurance Division of Wells Fargo in Charlotte, N.C. Michelle received a joint honors bachelor of mathematics in actuarial science and statistics from the University of Waterloo, in Waterloo, Ontario, Canada. She is a Fellow of the Society of Actuaries and a CFA charter holder. 5

7 Interest Rates & Portfolio Yields PRU: New money rates are ~3.5%, while portfolio run-off in the next few years is ~4.25%. Need 75bps to close the gap between the new & the roll-off of the books. MetLife: New money rate rose 26 bps from 2.89% in Q3 to 3.15% in Q4. Need the 10y UST yield to hit 3% to eliminate the drag and breakeven on reinvesting. What are your new money rates? How do you deal with the gap or yield compression? 6

8 Interest Rates & Portfolio Yields Busy next week for global central banks Interest rate on FOMC Dot plot appears to have turned the corner How does the macroeconomics affect your investment and risk management processes & strategies? How do you adjust to the model forecast errors? 7

9 Strategies, Asset Classes, Trumponomics Fixed Income Is the secular bull market in fixed income ended, meaning limited returns for duration risk? Any strategic or tactical reallocation? What is your view on the credit spread in a rising rate environment? Equity Will rising rates eventually hurt equity valuations, limit diversification? Will a strong USD and rising US rates hurt EM equities? Alternative Investment Do you see AI attractive? Opportunities in Real Estate or Structured? How do you balance their liquidity and complexity? Trumponomics Have you made any strategic or tactical shifts under the Trump Administration and his policies (tax, immigration, trade, environment, regulations)? 8

10 FX: USD, GBP, CAD $, JPY Strong US $, weak British Pound, weak Canadian $? Oil/Gold? Broad timeline and geopolitical risks March 31, 2017 Deadline for triggering Article 50, 2-year negotiation timetable begins Apr/May 2017 French Presidential Election (Le Penn vs. Fallon?) Oct 2017 German elections March 2019 Likely Brexit date, start of transition May 2020 UK General Elections 2020s Scottish referendum? Impact: Unum UK had a solid Q4 growth in (6.7%). Do you hedge any FX risk or inflation risk to smoothen out earnings volatility? Loonie and Brent crude moved in tandem; With Brent rose and Trump to advance Keystone XL pipeline, will the Loonie strengthen? Impact SunLife? In 2015, Protective Life acquired Dai-ichi Life, the 2 nd largest private life insurer in Japan. Yen strengthened over 10% since election. FX hedges? 9

11 Regulations: ACA, Dodd-Frank, DOL ACA: Unum had a strong quarter and a great year in 2016; but back in 2013 when the mandate went into effect, there was a decline on nearly every segment of sales in Unum US and Colonial Life, though persistency was strong. Do you expect to see an impact on sales with the ACA repeal & replacement? How will this affect your investment & hedging strategy, given the hindsight of 2013? Dodd-Frank: Significantly affected banking and derivatives industry DOL: Huge impact on insurance sales and business model? New NAIC Capital/Reserve framework: Significantly impact VA block in terms of reserve/capital, liquidity, RBC, which will inevitably impact hedging and investment strategies How do you factor in regulatory changes into your decision-making process? What is your view on these changes in the near future? 10

12 FinTech & Cybersecurity The traditional insurance industry has stayed almost the same for over a century. FinTech is disrupting traditional financial service providers, providing innovative solutions and digital experiences for convenience, accessibility and tailored products Loans, wealth management have already been disrupted Home insurance to Airbnb or auto insurance to Uber (sharing economy) How is your firm responding to FinTech? Have you considered investing/funding FinTech? How do you deal with the IT & cyber security? 11

13 No. 1 Concern & No. 1 Career Advice What keeps you up at night? What is your biggest concern from the investment or risk management perspective? What is your No.1 career advice to the aspiring investment actuaries who just start their professional career? 12

14 Q/A Session