At the 2014 NABRICO Conference, held September 17-19, 2014, Mike Kelch, CFA, AAM Senior Portfolio Manager and Dan Byrnes, CFA, AAM Senior Portfolio Manager both spoke to separate sessions of conference attendees: insurance company professionals whose companies provide attorneys across the United States and Canada with professional liability insurance.

Mike Kelch, along with Alan Fine, CPA, JD from Brown, Smith, Wallace, LLC, presented on the topic of “Tax Modeling: Considerations for Effectively Implementing Trades Between Taxable and Tax-Exempt.” Mike focused on the process for determining a tax-exempt allocation and other considerations for insurers when thinking about tax issues. AAM’s proprietary tax model was covered as a useful tool to help determine an appropriate allocation and how underwriting profitability can influence an insurer’s tax-exempt allocation. Relative value of tax-exempt versus taxable securities was discussed as well as various technical drivers within the tax-exempt market. Alan covered Alternative Minimum Tax (AMT) implications, Other-Than-Temporary-Impairment (OTTI), and master limited partnerships (MLPs) as additional topics relevant to insurers when think about tax issues.

Dan Byrnes, CFA, Senior Portfolio Manager, spoke about “Investment Considerations for Insurance Companies in the Current Market Environment.” He began his presentation by focusing on considerations for developing an appropriate investment strategy, including determining the goals of the portfolio, investment policy construction and appropriate levels of various investment risks. Then he discussed other Enterprise Risk Management tools and processes insurance companies should consider adopting. Finally, he closed with a discussion of Federal Reserve monetary policy, relative value in the fixed income market and the outlook for various risk assets in a rising interest rate environment.

In addition to having two speakers, AAM was a Silver Sponsor and attended the conference.

Disclaimer: Asset Allocation & Management Company, LLC (AAM) is an investment adviser registered with the Securities and Exchange Commission, specializing in fixed-income asset management services for insurance companies. Registration does not imply a certain level of skill or training. This information was developed using publicly available information, internally developed data and outside sources believed to be reliable. While all reasonable care has been taken to ensure that the facts stated and the opinions given are accurate, complete and reasonable, liability is expressly disclaimed by AAM and any affiliates (collectively known as “AAM”), and their representative officers and employees. This report has been prepared for informational purposes only and does not purport to represent a complete analysis of any security, company or industry discussed. Any opinions and/or recommendations expressed are subject to change without notice and should be considered only as part of a diversified portfolio. Any opinions and statements contained herein of financial market trends based on market conditions constitute our judgment. This material may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or targets will be achieved, and may be significantly different than that discussed here. The information presented, including any statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Although the assumptions underlying the forward-looking statements that may be contained herein are believed to be reasonable they can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. AAM assumes no duty to provide updates to any analysis contained herein. A complete list of investment recommendations made during the past year is available upon request. Past performance is not an indication of future returns. This information is distributed to recipients including AAM, any of which may have acted on the basis of the information, or may have an ownership interest in securities to which the information relates. It may also be distributed to clients of AAM, as well as to other recipients with whom no such client relationship exists. Providing this information does not, in and of itself, constitute a recommendation by AAM, nor does it imply that the purchase or sale of any security is suitable for the recipient. Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, inflation, liquidity, valuation, volatility, prepayment and extension. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.