Swedish insurer Folksam is looking to increase derivatives usage within its SEK175 billion (USD24.67 billion) of assets under management.Rikard Lundgren, investment department head, said interest-rate swaps are already being used but the plan is to increase use of derivatives across asset classes. The move is part of a strategy to capture returns above benchmarks, according to DW sister publication Global Money Management. Lundgren declined comment on the size of the move into derivatives.
The insurer is shifting to an absolute return strategy from a relative return approach within Folksam Kapitalförvaltning, its asset management arm. As a part of the process it may also outsource management of an undetermined portion of its assets. Lundgren said aside from a small alternatives allocation, Folksam Kapitalförvaltning manages all of the insurer's assets.
It will take at least a year until the new system is in place and external managers can be considered, according to Lundgren.
The insurer's investment portfolio includes insurance portfolios, discretionary mandates and mutual funds. Because of their differing requirements and risk limits each portfolio has a different allocation target.
The Swedish insurer joins European peer Aviva, whose asset management arm Morley Fund Management is also revamping its management strategies to allow for increased use of derivatives (DW, 11/13).