Combined Assets

The Trust recorded an overall investment gain of 3.8% net of fees. A return of 2.0% on bonds, which form the majority of the portfolio, was supplemented by a 19.3% gain on equities and a 8.5% gain on hedge fund of funds.

The portfolio allocation has remained stable throughout the year with a marginal increase in equities in the fourth quarter.


The portfolio allocation has remained stable throughout the year with a marginal increase in equities in the fourth quarter. The matching portfolio, held to back combined net claim liabilities and comprising a mixture of highly rated government and corporate bonds, continues to be managed on a ‘buy and maintain’ basis, holding individual bonds to maturity, with dynamic management of overall portfolio duration and hence interest rate risk. This portfolio is used to provide collateral for the reinsurance obligations of the Trust to SMUA and SMUAB.

The remaining surplus portfolio is principally invested in two absolute return bond funds run by investment managers who have managed investments for the Trust for a number of years. These funds are complemented by an investment in a global equity index fund and investments in two hedge funds of funds which have a strong record of superior risk-adjusted performance. This allocation aims to deliver an appropriate return while carefully managing credit and interest rate risk and maintaining a comfortable margin of capital above the requirements for a Standard & Poor’s financial strength rating of A.