Interview with Carl Moxley, Chief Risk Officer, Legal & General Retirement
Carl Moxley, our Chief Risk Officer, speaks to InsuranceERM at the Insurance Risk & Capital EMEA 2018.
Has Solvency II changed your asset allocation strategy?
[Carl Moxley]: So in general I think not and I don’t think that’s surprising. Effectively Solvency II is a risk-based regime and encourages and makes you hold capital for the risks that you run. In reality I don’t think the risks have changed before Solvency II or after Solvency II. Having a risk awareness of those credit risks that you’re running and your asset portfolio has remained and will remain for many years to come because it’s the principal that really matters. From our perspective, no it hasn’t really changed fundamentally, our asset allocation strategy.
Does liquidity in investments matter for an insurer?
[Carl Moxley]: Absolutely. I guess from an annuity provider’s perspective, key needs for liquidity are: one simply paying claims which I think is the same for every insurance company. Managing any derivative for short term liquidity needs that you may have in your portfolio. And I guess longer term as well being able to trade in your portfolio, so one of the important factors is looking at your portfolio under stress and how much liquidity you will then need to effectively make sure that you maintain the credit quality of your portfolio. Liquidity has many drivers for an insurer by short, medium and long term, that we need to think about.
Does the current trend towards illiquid investment have legs?
[Carl Moxley]:I think so. If I think about our perspective as an annuity provider, the pension scheme liabilities are long term just by their nature and illiquid assets are a natural match for those types of liabilities. I absolutely think there will continue to be demand. If I think about it also from a longer term sustainable social good perspective, the ability to invest those long term liabilities and assets into illiquid ones, so regeneration of city centres or infrastructure or supporting social housing, is something that as an insurance industry we should be actively thinking about, and I think will fundamentally ensure that those types of assets and liquidity will still continue as a result.
What value do you see in InsuranceERM’s Insurance Risk & Capital conference this year?
[Carl Moxley]: I think there’s a lot of value. One, from hearing from other risk professionals, both in terms of what’s on their minds and just getting a commonality of view I think is really helpful. Hearing from regulators as well (which I think is part of the focus today) as well as interactions with boards and so on. I think is a really positive of the conference and the convention. I think that the two days have been really good.