Gareth Mee, chief investment officer for both Legal & General’s assurance society and institutional retirement division, is the guest for this episode of The Professional Investment Podcast. His news story of the week is LCP’s forecasting up to £550bn in buy-ins over the next decade.
We discuss how these vast capital flows are attracting new market entrants with private equity firms snapping up L&G’s competitors while others, such as Phoenix Group, are looking to raise more capital. We also examine whether run-on is a realistic option or likely to be a reality for only a few paternalistic schemes with finance directors unscared by DB trauma.
CIOs at insurers will have their work cut out for them over the next decade as they look to invest that £55bn a year. Gareth explains why he prefers sovereign to corporate debt and how insurers can avoid over-inflating asset prices in the face of such significant capital flows.
We talk about how insurers are innovating to broaden their investment universe into asset classes that might otherwise not sit well in their regulatory framework – and how they avoid taking this too far. Gareth says he most excited about investing in emerging and frontier markets.
We examine how insurers manage their sustainability risks. As providers of hurricane and flood insurers, these organisations are at the sharp end of climate change and need to ensure these risks are balanced in the assets they invest in. We discuss how insurers are thinking about a nascent asset class like natural capital.
We debate whether insurers are neglecting the development of deferred annuities for the DC as they are too distracted by the buy-out bonanza. Gareth addresses the frustrations felt by those looking to develop retirement income for workplace pensions.
ABOUT THE GUEST:
Gareth Mee Chief Investment Officer Legal & General Assurance Society and Legal & General Institutional Retirement.
Gareth is Chief Investment Officer of Legal & General Assurance Society (LGAS) and Legal & General Institutional Retirement and oversees the investments for the insurance business globally.
Legal & General is a UK FTSE 100 insurance and asset management business, with market capitalisation of $19bn and operating profits of $2bn. LGAS is the UK regulated entity through which all of its UK insurance business is written. The investment team oversees investments of c. £100bn in UK, US and Bermuda and across both the retail annuity and institutional retirement annuity business.
For the first three years of his time at L&G, Gareth was CFO of Legal & General Capital and then CIO of its private markets business within asset management. During this time, he served as Board Director of its US real estate development business and its Retirement Villages business.
Prior to his career at Legal & General, Gareth spent nearly 20 years at EY; latterly as the partner leading its Global Investment Advisory, UK actuarial and sustainable finance consulting practices. He is an active volunteer within the Actuarial Profession, having served on the Life and Finance & Investment Boards as well as chairing working parties covering private market investments and procyclicality.
⸻
🔗 https://lotsmoore.co.uk/
⸻
Chapters:
00:00 – Introduction & Welcome
00:12 – Charlotte Moore introduces Gareth Mee
02:34 – Investment flows into the insurance sector
04:47 – Rethinking efficiency and focus in asset management
07:02 – Addressing industry misconceptions and accusations
09:21 – Legal & General’s investment pipeline for the coming year
11:44 – The role of traditional assets in UK insurance portfolios
14:09 – Exploring sub-investment grade and private credit markets
16:34 – The sustainability conundrum in institutional investing
18:47 – Managing illiquidity and sub-investment grade debt
21:11 – Balancing long-term commitments with short-term pressures
23:30 – Key takeaways and Gareth’s closing thoughts
24:05 – Charlotte Moore wraps up the episode