In its investment strategy, Suva defines how it invests its financial resources and how it weights the different asset classes.
Short and succinct
Suva invests in a broadly diversified portfolio of asset classes. Each asset class has a different risk/return profile. The asset classes are weighted in such a way that the return Suva is required to gain by law can be achieved over the long term with minimal risk.
How we invest
Suva's investment strategy is to spread its financial resources across a mix of safe and high-yield asset classes to create an appropriately blended portfolio. Around half of the assets are invested in government and corporate bonds and loans, with a further 30% in shares.
The investment strategy defines in which asset classes Suva can invest, as well as what proportion of its assets can be held in each class. Currently, more than three quarters of the portfolio is comprised of loans, corporate bonds and shares. Due to Suva's business model, this can be oriented with a long-term outlook, thereby enabling the company to act countercyclically. When selecting its investments, Suva takes into account not only financial objectives, but also sustainability aspects.
Here, you can find out which asset classes make up the Suva portfolio, and why it invests in them:
Liquid assets: In order to pay its benefits to its insurees, Suva requires liquid assets. These are invested in the money market so that they still generate a certain amount of return despite being accessible at short notice.This asset class is subject to a very low investment risk.
Government bonds: These are securities that are issued by countries to finance the national budget. Their terms are often for multiple years, during which time Suva earns interest. This asset class is very low-risk as states such as the Swiss Confederation guarantee the debt.
Loans and corporate bonds: This category includes corporate loans that are bought and sold on the stock exchange. As with government bonds, they normally have terms longer than one year. It also includes loans that Suva grants to communes and public institutions. Lastly, Suva awards private financing to larger companies. The risk of default depends upon the creditworthiness of the borrower.
Shares: This category mainly includes shares and funds that are traded on the stock exchange. Suva also invests small amounts in specifically selected equity hedged and private equity funds. These investments often support companies in their growth, help them to expand geographically, or facilitate succession planning. They can also support companies that are in financial distress or help them become competitive again. Such investments can be expected to bring in a high return, but are also subject to higher risk.
Real estate (including funds): Suva invests directly in real estate within Switzerland, thereby bringing in rental income. It invests in property abroad through real estate funds. The risk of value fluctuation is fairly low, meaning that the expected returns are higher than for government bonds.
Other: Suva invests a small volume of its financial resources in funds that move very flexibly between different asset categories and therefore cannot be assigned to a single category. The objective of this is to generate good returns for insurees in every market environment possible. The expected return is fairly high, but the volatility tends to be lower than with shares.
In its report on its financial assets (only in German, French or Italian), Suva provides extensive information about its investments in each asset class in its investment portfolio.