ILIM has been at the forefront of Liability Driven Investments (LDI) development and innovation in the Irish market. 

In 2006 ILIM leveraged its existing expertise to formally establish an experienced Financial Engineering team providing client specific LDI and bespoke asset/liability modelled solutions for the bond mandates of a significant number of Ireland’s large pension schemes. 

Our team has built a suite of unit-linked funds spanning both the real and nominal curves and is available to investors of all sizes and our offering continues to evolve to meet the needs of our clients.

What is LDI?

LDI is an investment strategy based on ensuring the cash flows of the DB Scheme will fund all future liabilities. In other words, seeking to manage the solvency or  funding level volatility of a pension scheme on a proactive basis. For many pension funds, this is how likely the assets of the scheme are to meet the scheme liabilities.

LDI will bring many benefits to investors, including increasing the ability to diversify investments, introduce greater efficiency to the matching portfolio and potentially enhance return at a portfolio level due to flexibility to invest across asset classes.

LDI specifically focuses on the different actuarial valuations of liability cash flows and how the asset investment strategy can be positioned to minimise and/or control the impacts of changes in these actuarial valuations. This approach allows greater confidence in the scheme’s ability to meet its pension promise without compromising return or increasing long-term funding costs.

 

Our Approach

Pinpointing the optimal LDI execution strategy is an interdependent and evolving process. We engage in collaborative interaction, leveraging our vast experience and knowledge of the pension sector in Ireland to help our clients evaluate the broader investment challenges, solvency risks and ultimately structure a solution that seeks to meet their needs. The following schematic illustrates our consultative approach.

 

 

Phase 1 – Discovery

Understand asset & liability behaviour, identify solvency impacts, actuarial consultation, agree LDI goals

Phase 2 – Design

Align to investment strategy, measure and quantify LDI risks, develop execution strategy

Phase 3 – Execution

Efficient delivery, transparency, simple, aligned to de-risking glide path

Phase 4 – Monitor

Measure hedge effectiveness, assess ongoing changes within the investment portfolio, continue alignment with de-risking glide path, ongoing trigger-point monitoring

Reasons to partner with ILIM

Our clients benefit from our extensive LDI experience, working with best-in-class execution, our long-term continued commitment to the Irish market and, most importantly, our extensive knowledge of the challenges facing Irish pension trustees. We offer the following benefits to our clients.

  • A market leader: LDI is only a single part of the ongoing investment strategy, but is often one of the first steps in a holistic Asset Liability Management (ALM) Strategy for a scheme on a journey to fully funded status. Future long-term investment strategies we offer include cashflow-driven investments, longevity risk management, annuity products, among others.
  • Flexibility: Not only will we design and monitor our solution and the specific risks hedged, we do this in detailed cooperation with our clients. As your LDI manager, we will work within the investment strategy you have developed and cooperate with your current managers to ensure we provide the best-in-class execution and monitoring, while clients retain their investment flexibility and decision making. We believe this is a key benefit of our solution. It ensures our business goals do not impact the solution design, the goals of the scheme, and the investment outcome for the members.
  • Efficiency: Our LDI solution will maximise the efficient use of the assets to hedge financial risk. This efficiency will release assets for re-allocation to potentially higher-yielding investments, thereby increasing investment returns at a portfolio level.
  • Our pooled solution: Working with a leading execution partner, we can efficiently deliver the oversight and transparency required to manage the most complex LDI solutions, while also delivering a simple and understandable outcome for trustees. Our pooled solution will leverage ILIM’s investment expertise, risk management capability, ethos of transparency, client focus and deliver a partnership that will help our clients to achieve their future lifecycle plans.

 

Our team

The LDI team comprises a broad group of seasoned professionals with specific expertise, including investment management, risk management, quantitative analysis, actuarial oversight, derivatives experience, trustee impacts, governance, and market research. Our team can draw on the intellectual capital necessary to develop and implement an effective LDI solution for each of our clients.

Key Contacts

 

  • Colin Cunningham

    Head of Liability & Capital Management Programmes +353-1-704-2159 Email

    Colin joined ILIM in 2017 to build on Irish Life’s de-risking solutions for Irish pension funds.

    Colin has unique experience as Chairman of Danske Bank DB pension scheme that has pursued an aggressive de-risking strategy in recent years, while managing an in-house LDI solution for over 10 years. He also introduces an alternative view of potential investment opportunities for Irish pension funds to manage their long-term liability profiles.   

    Prior to joining ILIM, in his role as Treasurer and Head of Danske Bank Markets in Ireland, Colin was a member of both the Executive Board of Danske Bank in Ireland and the Executive of Danske Bank Markets global business. Colin has over 25 years’ management and execution experience in treasury, capital markets, investment management and investment banking transactions. Colin has a MBA from Smurfit Business School, is a Certified Investment Fund Director, Banking Director and completed the Stanford LEAD program.  Colin is a fellow of the Institute of Banking in Ireland and a member of the Certified Investment Fund Director Institute.

  • John Thornton

    Senior Fixed Income Manager +353-1-856-3073 Email

    John is part of the active Fixed Income team in ILIM.

    Prior to joining ILIM in 2011, John worked for UBS in London, helping to re-establish a bond trading desk for European asset-backed securities (ABS), and was an executive director within the UBS credit trading department. Before this, he held roles in London at RBS and J.P. Morgan, across both primary and secondary ABS markets. Prior to his work at J.P. Morgan, John worked for Canada Life in Dublin. While working in life assurance, he qualified as an actuary, before moving to London.

    John graduated from University College Dublin in 2002 with a bachelor’s degree in Actuarial and Financial studies.

  • Darragh O’Dowd

    Head of Portfolio Solutions +353-1-704-2048 Email

    Darragh is Head of ILIM’s Portfolio Solutions team. He is responsible for the overall design and management of Irish Life’s MAPS, Ireland’s fastest growing retail multi-asset solution. Darragh and his team are also responsible for helping our clients, across all distribution platforms, design portfolios congruent with their specific objectives and constraints.

    Darragh joined ILIM in 2007 as a Quantitative Analyst within the Quantitative Strategies Group. Darragh currently lectures “Quantitative Methods in Finance” to MSc Finance, MSc Quantitative Finance and MSc in Aviation Finance students at UCD Michael Smurfit Graduate Business School on a part-time basis. Prior to joining ILIM, Darragh worked as a research assistant and also taught various courses for the Finance Department at UCD including Corporate Finance, Econometrics, and Financial Modelling.

    Darragh earned a Bachelor of Commerce (BComm) from University College Dublin in 2000, a master’s degree in Quantitative Finance from UCD Michael Smurfit Graduate Business School in 2002, and a master’s degree in Statistics (MSc) from UCD in 2013. He holds both the Chartered Financial Analyst (CFA) and Chartered Alternative Investment Analyst (CAIA) designations.

How can we help?

Irish Life Investment Managers (ILIM) is the appointed asset manager to Irish Life Group Limited. ILIM is committed to innovating and leading the market with best in class investment solutions designed to meet the specific investment needs of our clients. Call us at: +353-1-704 1200 or email [email protected]

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