Conning - Conning Allocation Optimizer™
Type of System
Strategic Asset Allocation
Type of platform
What are the typical implementation costs?
Costs: Starting at USD $50,000.
How long does your software take to implement on site?
The Conning Allocation Optimizer™ is software-as-a-service, so no installation is required. Implementation time depends on the client requirements for the stochastic asset returns, along with the complexity of the optimization – for example if liabilities or regulatory capital is to be modeled. Implementation therefore typically ranges between one month and three months.
Most recent significant update:
Conning’s FIRM® Portfolio Analyzer and ADVISE® Enterprise Risk Modeler have long supported strategic asset allocation using the integrated Investment Optimizer tool. Recently this functionality has been re-architected as software-as-a-service, with an improved user interface, faster optimization algorithms, and an open model which allows users to integrate the tool with their existing stochastic models from third-party providers. These updates have also coincided with the tool being rebranded as the “Conning Allocation Optimizer™”, which can now be used as a fully standalone strategic asset allocation product or integrated with the existing Conning toolset.
Planned future enhancements:
An Agile approach provides regular releases of new features:
- The ability to adjust investment returns for each asset class directly within the tool.
- New functionality to optimize the portfolio with respect to regulatory capital requirements, including both U.S. and European solvency regimes.
- A new objective function which can optimize the portfolio on an accounting basis.
How does your solution integrate with third-party systems or in-house systems?
The Conning Allocation Optimizer™ is an SaaS product which can be integrated with any model that produces stochastic asset returns.
Conning’s GEMS® Economic Scenario Generator, FIRM® Portfolio Analyzer, and ADVISE® Enterprise Risk Modeler all produce asset returns which are compatible with the Conning Allocation Optimizer™. FIRM® and ADVISE® are both also capable of producing liability cash flows, statutory reserves, and tax information which can be used as inputs into the Allocation Optimizer for a more comprehensive analysis of the optimal investment strategy.
What is the key attribute of your product(s) that differentiates it from your competitors?
The Conning Allocation Optimizer™ benefits from Conning’s decades of experience both as an investment manager and as a developer of stochastic modeling software. Unlike many competitor products, the Allocation Optimizer uses a stochastic approach to strategic asset allocation, utilizing thousands of sets of asset class returns and liability cash flows to evaluate hundreds of potential investments strategies and generate a risk-reward efficient frontier. The stochastic nature of the analysis means that clients can select alternative risk measures aside from the traditional standard deviation measure, including Value-at-Risk and Conditional Tail Expectation metrics. The tool is also differentiated by its ability to incorporate company-specific investment guidelines and solvency constraints, and therefore can consider the full risk profile of an enterprise when identifying an optimal investment strategy.
The browser interface of the product is laid out in an intuitive manner, with documentation and instructions baked into the application to support novice users, enabling day-one productivity. The interface also allows users to easily compare alternative strategies against the optimized efficient frontier at the click of a button.
What trends are you seeing in terms of customer demand?
We are seeing a widespread trend of institutional investors demanding strategic asset allocation tools that employ stochastic methodology, because such a methodology allows them to investigate the tails and downside risks of their portfolios. Increasingly, software-as-a-service is also becoming a “must have” rather than a “nice to have”. Overall, we expect to see continued strong demand for the Conning Allocation Optimizer™ as insurance companies and pension funds evaluate their investment strategies in light of evolving solvency regulations and the economic impact from COVID-19.
Conning’s Allocation Optimizer™ delivers critical insights to improve investment performance and manage portfolio risk.