Life Insurers Should Plan for Stress: Barings' Insurance Head

What You Need to Know

Some say life insurers should match long-duration benefits with long-duration assets, but Griffin disagrees.
One thing Griffin does worry about: Bad insurer choices about asset durations.

Ken Griffin is in charge of helping life insurance and annuities keep their promises to your clients.

Griffin is the new head of insurance solutions at Barings, a Charlotte, North Carolina-based asset management arm of MassMutual. Barings has about $349 billion in assets, including $223 billion in insurance assets under management.

Griffin will work with insurers to manage some of the investment portfolios that support life insurance, disability insurance, long-term care insurance and annuity benefits guarantees.

He earned a bachelor’s degree in business from the University of North Carolina at Chapel Hill, then went to work as an actuarial analyst at a property and casualty insurer.

He moved into the life insurance and annuity world, as a director at Swiss Re, in 1999. He worked for 16 years as head of insurance solutions at Conning, and about five years as head of asset-liability matching strategy at Brighthouse Financial, before joining Barings in July.

We asked Griffin, via email, what he’s seeing in the world of life insurance company assets now that markets are more volatile and interest rates are heading higher.

THINKADVISOR: For insurers that issue life insurance and annuities, what kinds of arrangements or strategies have worked especially well, or especially poorly, over the past year?

KEN GRIFFIN: Given the huge market swings in rates and spreads we have seen over the past year, the best strategies are those that diversify the risk profiles of insurer investment portfolios.

This would include increased allocations to asset classes that pay an illiquidity premium.

Poor strategies include companies that attempt to duration match their liabilities which requires poorly timed “duration chasing.”

During periods of volatile rates, companies extend duration when rates are low and liability durations have increased, and shorten duration when rates are high.

What effect, if any, have you experienced as a result of the COVID-19 pandemic, the upheaval in Europe, and fluctuations in exchange rates? What have you learned from that?

Longer-term strategic views can help weather the storms experienced over the last couple of years.

Knee-jerk reactions to market events are never appropriate, though the inclinations to react may be quite strong.