He will be based in London and report to Stephen Acheson, Executive Director, Global Strategic Partnerships. This is a new position and Richard will enhance the capabilities of Standard Life Investments to support, strengthen and grow the insurance asset management business with clients around the globe.

Richard joins from JP Morgan where since April 2010 he was Executive Director (Insurance & Pensions Solutions), responsible for advising institutional clients on investment strategy, investment & risk solutions and managing insurance assets under Solvency II.

Commenting on the new appointment, Stephen Acheson, said: “Standard Life Investments has a long heritage in managing insurance company assets and Richard is a senior strategic hire. He is an Investment Actuary with extensive financial markets and investment expertise and brings a wealth of experience of the global insurance industry. His understanding of institutional investor requirements will complement and strengthen our existing capabilities. Richard is highly regarded within the insurance sector and will work closely with our global clients to ensure that Standard Life Investments remains a market leader in innovative investment solutions across all asset classes and in the management of insurance assets.”

Commenting on his appointment, Richard Pereira said: “I am delighted to be joining Standard Life Investments, one the world’s largest managers of insurance assets with a long history of serving the needs of insurers across the globe. The Insurance Solutions team’s combination of thought leadership in investment innovation and insurance expertise is impressive. I look forward to working with clients to deliver new investment solutions designed to meet their evolving requirements.”

Richard is a Fellow of the Institute & Faculty of Actuaries (FIA) (specialism in Investment & Asset Management); a Fellow of the Institute of Chartered Accountants in England & Wales (FCA); a Chartered Member of the Chartered Institute for Securities & Investment (Chartered MCSI); and holds a First Class BSc (Hons) Degree in Mathematics from Imperial College London.

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The survey shows that European insurers feel they are unlikely to be able to generate sufficient future returns to meet guaranteed rates for all their policyholders, and that regulatory modernisation and change may make it more challenging for traditional business models to strengthen income streams and make necessary strategic asset allocation changes.

56 interviews were carried out with senior insurance investment executives representing over €2.4trn, or around 30%, of pan-European insurance assets under management.

The survey identified five key themes:

1. Increasingly, European insurers may no longer be able to generate sufficient future returns to meet guaranteed rates to policyholders.

• The expected future annual return (based on existing investment strategies) of 2.4% is below the 2.7% respondents need to meet future policyholder requirements (based on current guarantee levels).

2. In response, many European insurers are considering undertaking significant strategic (SAA) and tactical asset allocation (TAA) changes to improve yield.

• Risk appetite appears to be rising. Half of insurers expect to reduce sovereign fixed income exposure, while over 60% expect to increase allocations to real estate and/or alternatives.
• However, the survey highlights a ‘north/south’ divide on asset allocation, with Southern European countries having more confidence in existing investment strategies due in part to higher domestic yields on their sovereign fixed income.

3. Insurers’ investment freedom is affected by Solvency II.

• 73% of insurers indicated that the forthcoming EU Directive is affecting the way they design investment portfolios as the taking of asset risk now requires appropriate risk-capital and a fuller understanding of the risks being taken.

4. Outsourcing asset management activity is increasingly attractive, but there are concerns about fund management capacity and the number of asset managers able to meet complex insurer requirements.

• 44% of European insurers are looking to outsource management of one or more asset classes.

5. Insurer business models and profitability are under pressure from a structural shift away from guaranteed savings to unit-linked structures.

• 43% of insurers stated they were unable to price new guaranteed investment products at competitive rates.

When the survey was conducted over the summer, European insurers felt they had further work to do before they would be completely ready for Solvency II. As evidenced by the many internal model approvals that have been announced recently, very good progress has been made in the interim.

Stephen Acheson, Executive Director, Standard Life Investments said: “European insurers’ business strategies and traditional business models are being fundamentally challenged due to the combination of the long-term low return environment, Solvency II and the ongoing need to deliver on promised guarantees.

“The survey highlighted a clear theme of insurers looking to outsource to the external asset management industry. However, it also highlights a belief among insurers that the number of credible outsourcing partners is declining.

“It is important to remember that Solvency II was conceived and developed in a very different economic environment. Since our survey completed, fundamental questions about the design and performance of the Solvency II balance sheet in the current low interest rate environment have begun to be raised.

“For example, in the UK the PRA has recently pointed out that, as a consequence of low interest rates, the risk margin is leading to higher capital requirements and volatility. So the Solvency II development and implementation issues that the European industry has been working on over recent years will certainly not end on 1 January 2016.”

Standard Life Investments has 69 insurance clients investing balance sheet assets in over 20 countries, representing an AUM of £137bn (as at 30/06/15).

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