In accordance with the Danish Insurance Act § 177, we will report on the key elements of our investment strategy and our use of capital managers.
Our investment strategy is designed to fulfill our long-term commitments to customers. The strategy includes listed equities as a key element in securing insurance responsibilities and focusing on customer interests being protected.
We offer a range of different products to our customers. Based on each product's risk capacity and other restrictions, including a focus on investment costs and preferences for weighting responsible investment, the overarching strategic goal is common to all portfolio investment strategies: To establish a composition of assets that generates the best possible long-term returns. The specific formulation of the investment strategy is determined in accordance with the adherence to the Prudent Person Principle, which constitutes the overall framework for insurance companies' asset management. Velliv's equity investments are long-term and aim to support long-term value creation for customers. Among other reasons, this is why there is an exceptionally high degree of diversification across regions, countries, and industries in the underlying investment companies.
The majority of our equity investments are made through external asset managers. These asset managers must support value creation for customers and must comply with Velliv's investment restrictions, including "Velliv's Policy for Responsible Investment and Active Ownership.
The investment strategies of the asset managers are selected and established in accordance with Velliv's strategy for listed equities and the overall investment strategy at Velliv. The investments contribute to robustness, diversification and value creation in Velliv's investment portfolio.
The mandate of the asset managers is to invest optimally within the guidelines outlined in a management agreement, which includes a benchmark for the mandate. Velliv ensures that the overall investment strategy aligns with the profile and duration of Velliv's insurance obligations. Velliv continuously evaluates whether the strategies exhibit the desired characteristics and performance. Generally, asset managers are compensated with an asset-dependent fee and without a predetermined expiration date. However, all agreements on listed equities can be terminated at short notice.
The external asset managers are also assessed on their work to integrate sustainability and responsible investment considerations into their investment decisions. The processes, activities and resources of the external managers are evaluated annually and are part of the ongoing monitoring and follow-up on Velliv's external asset managers.