Latest news with #reserveManagement
Zawya
25-06-2025
- Business
- Zawya
Franklin Templeton organises inaugural Reserve Management Summit
RELATED TOPICS UAE RELATED COMPANIES Franklin Rsc Franklin Rsc Dubai Fincl Official Institutions managing over $7.3 trillion in assets cite dislocations in the U.S. Treasury market and trade war as long-term key risks for markets Dubai - Franklin Templeton hosted its inaugural Reserve Management Summit (the Summit) in London which brought together central bank policymakers and reserve managers representing over $7.3 trillion in sovereign assets, to discuss key topics and exchange views on the global economy. At the Summit, Franklin Templeton Institute surveyed these reserve managers and central bank representatives to gather insights on the key challenges, risks, and strategic priorities shaping reserve management in the years ahead. The survey captured responses on macroeconomic expectations, asset allocation shifts, and future-looking investment trends. Below are selected highlights: Top Challenges and Macro Views 53% of participants cited dampening portfolio volatility as the single largest challenge facing reserve managers in 2025, followed by achieving return objectives (27%) and liquidity management (20%). On interest rate expectations, 38% each expect the U.S. 10-year Treasury yield to remain between 4.50% and 5.00% and 4.00% and 4.50% by year-end, while 15% foresee yields rising above 5.00%. Strategic Allocation Shifts Gold was seen as the asset class most likely to increase in strategic allocation over the next three years (31%), followed by global equities (23%). Respondents were evenly split across other asset classes, with 15% each pointing to emerging market debt, private credit, and investment-grade credit as areas of growing importance. When asked specifically about credit allocation, 75% of respondents expect to increase allocations to investment-grade corporate credit over the next five years. When asked which emerging market allocation over the next three years, 42% of respondents selected emerging market hard currency debt, highlighting a preference for relatively lower-risk exposure within the asset class. Only 8% expect to increase allocations to either emerging market local currency sovereign debt or emerging market equities, while another 42% indicated none of the above, suggesting a cautious or selective approach to emerging market investments in the near term. Currency Outlook While the U.S. dollar currently holds a 65% share of global reserves, only 50% expect that share to remain within the 60–70% range over the next five years, with 39% anticipating a drop to 50–60% and 11% expecting it to drop below 50%. Long Term Shifts, Innovation & Risks Over the next decade, 53% believe the rise of a multi-polar world of reserve currencies will be the most likely force to revolutionize reserve management practices, followed by digital assets (27%) and the separation of investment and liquidity management functions for reserve managers (20%). Stable coins (46%) and tokenization of private assets (38%) were identified as the most transformative financial innovations over the next decade. The greatest perceived risk to global capital markets through 2030 was split between a potential trade war (40%) and dislocations in the U.S. Treasury market (40%), followed by the loss of the U.S. Dollar as the primary reserve currency (20%). Stephen Dover, Chief Market Strategist and Head of the Franklin Templeton Institute, highlighted the evolving strategies of reserve managers as they seek diversification to mitigate risk. He commented: 'While Treasuries remain their primary holdings, there is a growing interest in expanding into other fixed income assets, equities, alternative currencies, and gold. Additionally, they are exploring the transformative potential of stablecoins and the tokenization of private assets, signalling a shift that could reshape financial strategies for the future.' Sandeep Singh, Head of CEEMEA & India and Co-Head of the Global Official Institutions Group at Franklin Templeton said, 'In an era defined by rapid technological, geopolitical, and economic transformation, no single institution holds all the answers. Our survey reveals a decisive shift among reserve managers toward diversification, innovation, and risk-aware strategies. At Franklin Templeton, our commitment extends far beyond investment products—we are deeply focused on delivering innovation, exceptional client service, and thought leadership that supports the needs of the reserve managers.' Franklin Resources, Inc. [NYSE:BEN] is a global investment management organisation with subsidiaries operating as Franklin Templeton and serving clients in over 150 countries. Franklin Templeton's mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company offers specialisation on a global scale, bringing extensive capabilities in fixed income, equity, alternatives and multi-asset solutions. With more than 1,500 investment professionals, and offices in major financial markets around the world, the California-based company has over 75 years of investment experience and approximately $1.57 trillion in assets under management as of 31 May 2025. The firm established its presence in the region setting up in the UAE in 2000. The office in Dubai is now the hub for Central & Eastern Europe, Middle East and Africa (CEEMEA), supporting retail and institutional investors across the region including some of the world's largest sovereign wealth funds, central banks, family offices and global private banks based locally. Building on this established regional presence, Franklin Templeton further expanded its commitment to the Middle East with the opening of its Riyadh office in March 2024. This press release is intended to be of general interest only and does not constitute professional advice. Franklin Templeton and its management groups have exercised professional care and diligence in the collection and processing of the information in this press release. Franklin Templeton makes no representations or warranties with respect to the accuracy of this document. Franklin Templeton shall not be liable to any user of this report or to any other person or entity for the inaccuracy of information contained in this press release or for any errors or omissions in its contents, regardless of the cause of such inaccuracy, error or omission. Any research and analysis contained in this document has been procured by Franklin Templeton for its own purposes. Please consult your financial advisor before deciding to invest. Issued by Franklin Templeton Investments (ME) Limited, authorized and regulated by the Dubai Financial Services Authority.
Associated Press
24-06-2025
- Business
- Associated Press
Strategic Reserve Management in Property & Casualty Insurance
GA, UNITED STATES, June 24, 2025 / / -- This study is pleased to present a seminal study examining reserve management strategies across 45197 company-line-year observations from 2000-2012. The research pioneers line-of-business-level analysis to disentangle insurers' multidimensional incentives—tax optimization versus solvency management—through structural reserve adjustments. Employing two-way clustered fixed-effects models and regulatory policy shocks, the study establishes causal evidence of strategic reserve allocation patterns previously undocumented in actuarial literature. A new study published in the KeAi journal Risk Sciences examined how insurance companies manage reserves. Specifically, the researchers investigated how managerial incentives affect insurers' reserving practice across lines of business (LOBs) and accident years (AYs). 'Because the tax discount factor the tax authority assigns varies across LOBs and AYs, insurers with stronger tax-saving incentives will be inclined to manage reserves across both LOBs and AYs,' explains lead author Pingyi Lou from Fudan University. 'In contrast, since the Risk Based Journal Pre-proof Capital (RBC) regime specifies different industry worst-case factors across LOBs, insurers with stronger incentives to increase their RBC ratio will be inclined to manage reserves across LOBs.' Regarding income-smoothing incentives, only the overall level — and not the composition — of reserves is of consequence. Thus, the authors predict that there will be no similar systematic patterns in reserve manipulation by insurers based on income-smoothing incentives. 'Using a Firm-LOBYear sample, we found that both tax incentives and RBC incentives affect the level of reserve errors (REs) and the composition of Res,' adds Lou. 'These results enable us to infer different managerial incentives from insurers' reserving behavior.' The findings serve as actionable insights for Solvency II and NAIC frameworks, emphasizing the need to monitor reserve distribution patterns rather than aggregate levels. 'Practitioners will benefit from evidence-based guidance on balancing tax deferral benefits against regulatory capital requirements,' says Lou. 'Based on the results, we advocate for enhanced audit independence and refined RBC risk factors to mitigate systemic reserve management risks.' References DOI 10.1016/ Original Source URL Funding information We are grateful for the helpful comments from the editor, two anonymous referees, George Zanjani (Discussant) and the seminar participants at ARIA 2019 Annual Meeting. We acknowledge the financial support from the National Natural Science Foundation of China (72403056, 72173005), the Major Grant of Social Science Foundation of China (23&ZD178). All errors are our own. Lucy Wang BioDesign Research email us here Legal Disclaimer: EIN Presswire provides this news content 'as is' without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
