Discover Questions to Ask Your Investment Manager

These are just a few of the important questions you should be asking your investment manager(s) as you discuss your investment process, using InsurerCIO's reports as a starting point for discussions.

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Credit Duration


What You Should Ask Your Investment Manager:

Are you combining credit and interest rate risk within a given credit rating? Why is this the case (if so)? Have you considered the risks inherent with that strategy and are we being compensated for taking that risk? How?

Average Credit Rating


What You Should Ask Your Investment Manager:

Given that our Moody’s default factor is x.xx% for our portfolio, do you think we are being compensated for the portfolio credit risk we are taking and why? (If true) Why has our Moody’s expected default factor increased (decreased) over time?

Book Yield Trend


What You Should Ask Your Investment Manager:

Why did our book yield trend in the manner shown on the graph? What do you expect this graph will look like if we projected it over the next few years, assuming no change in rates, rates moving up/down by x basis points? (If the expected trend in book yield is insufficient) How can we prudently ‘bend the curve’ to a better than projected result?

Asset Allocation Change


What You Should Ask Your Investment Manager:

Why did a given asset class increase or decrease over time? What are your investment theses and how do they relate to your investment strategy for our company?

Risk Allocation


What You Should Ask Your Investment Manager:

Why does my portfolio have this amount in ‘risky assets’ (non-investment Why does my ‘risky asset’ portfolio have this mix? When was the last time allocation to see if it is part of the correct strategic asset allocation for our expected long run return from this ‘risky asset’ portfolio? What is the the ‘risky asset’ portfolio? In a ‘worst case’ scenario, how will our surplus be would this impact relevant ratios, like the Best Capital Adequacy Ratio?

Credit Rating Detail/Summary


What You Should Ask Your Investment Manager:

Why did a given credit rating category increase? Was this due to a purposeful strategy on your part, or were upgrades/downgrades by the rating agencies a primary reason and to what extent? Specifically, what securities are on your credit ‘watch’ list and why? Why should we continue to hold or sell these securities?

Duration Profile


What You Should Ask Your Investment Manager:

What is your strategy for taking interest rate risk? Are you trying to over/underweight duration versus the benchmark and why? How would movements in the yield curve effect our portfolio?

Credit Exposure


What You Should Ask Your Investment Manager:

Please explain the rationale behind owning some of these largest positions. (If there is an unusual large position or positions) What is your investment thesis behind holding this security? What are the risks? How are we being compensated for that risk?

Unrealized G/L


What You Should Ask Your Investment Manager:

Please explain why our unrealized gain/loss is unusually high in a given credit rating. Given our company’s policy to limit realized losses (if that is the case), how much flexibility do you have in managing the portfolio? Is it sufficient flexibility or should we consider loosening any restrictions for realized losses or other factors and why?

Change Over Time Report


What You Should Ask Your Investment Manager:

Why did our portfolio book yield, duration, unrealized gain/loss change from last quarter and last year? What do you expect going forward?

Implied Portfolio Liquidity


What You Should Ask Your Investment Manager:

Are we taking on too much or too little liquidity risk? Do you think our portfolio is sufficiently liquid and why? (If appropriate) Are there asset classes we should consider where we can be compensated for taking on liquidity risk and why?

Potential Impairment Report (OTTI)


What You Should Ask Your Investment Manager:

Which of these securities are you most concerned with and why? Are there any securities not on this list that are on your ‘credit watch’ list and why?

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