Conning Q&A Discusses Potential Yield, Diversification Opportunities of Esoteric ABS

March 07, 2024

Less Traditional Collateral but Potentially Greater Rewards  


HARTFORD, CT – March 7, 2024 – Leading global investment management firm Conning has posted a Q&A on esoteric asset-backed securities (ABS) to help insurers learn more about an asset class that is of growing interest given its potential yield and portfolio diversification opportunities. 

“The asset class features strong liquidity and may improve portfolio diversification, valuable attributes for insurers,” said Mike Nowakowski, managing director and Head of Structured Securities at Conning. “While not as well-known as more traditional ABS collateral such as credit card receivables, esoteric collateral – shipping containers, data centers, consumer loans are some examples - has a great deal of information available for analysts to study. Gathering and formatting the data may take additional work on our part but it may be worth the potential reward.” 

The asset class can be compelling on a relative basis versus more traditional insurance portfolio holdings such as corporate bonds. Esoteric ABS “offers investors a similar (or higher) spread level to longer duration investment-grade corporate bonds, but at a fraction of the duration exposure,” Nowakowski said. 

“Ratings upgrades are common as many deals amortize over time and build credit enhancement in the process,” he added. 

Nowakowski explained why a short-duration, fixed income asset may be a wise complementary allocation to floating-rate strategies given the U.S. Federal Reserve’s suggestion that interest rates may be coming down later in the year. 

He also discussed the current market dynamics driving esoteric ABS performance and how Conning stress tests esoteric ABS. 

To view the Q&A, click here.


* * *



Conning (www.conning.comis a leading investment management firm with more than $214 billion in global assets under management as of December 31, 2023.* With a long history of serving the insurance industry, Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America. 

*As of December 31, 2023, represents the combined global assets under management for the affiliated firms under Conning Holdings Limited (CHL) and Cathay Securities Investment Trust Co., Ltd. (SITE). SITE is a separate entity under Cathay Financial Holdings Co., Ltd which is the ultimate controlling parent of all Conning entities.


# # #


Media Contacts

Myra Lee
+1 860-299-2278