For insurers, fixed income must do more than generate returns. It needs to provide stability, preserve liquidity, and help match investments to liabilities. At Bliwa Livförsäkring, these considerations shape an approach that prioritizes diversification and capital preservation while leaving room for selective risk-taking. Fredrik Fors, CIO of the Swedish insurer, discusses how its liability profile influences portfolio construction, why Bliwa remains cautious about private credit, and how manager selection and transparency underpin its investment process.
Bliwa’s insurance liabilities play a central role in its asset allocation. Fixed income accounts for approximately 60 percent of the portfolio, providing income, stability, and diversification. “Fixed income is supposed to provide the things you want from a risk perspective: diversification, stability, and a cushion or safety net for your portfolio,” Fors explains.
“Fixed income is supposed to provide the things you want from a risk perspective: diversification, stability, and a cushion or safety net for your portfolio.”
Fredrik Fors, CIO of Bliwa Livförsäkring.
The insurer’s relatively short liability profile also limits its appetite for interest-rate risk. “We have a somewhat different situation from a typical insurance company, with a shorter liability profile. That puts certain constraints on how we construct the portfolio,” says Fors, who joined Bliwa as CIO in 2025 after a long career in fixed income. “As a result, we maintain a shorter duration on the fixed-income side and try to minimize our interest-rate risk.”
Bliwa’s allocation reflects its preference for combining liquid, lower-risk investments with a broader range of fixed-income exposures. Around 25 percent of the portfolio is allocated to money market investments, while a further 30-35 percent sits in what Fors describes as the insurer’s other fixed-income category. The allocation combines investment-grade credit with higher-yielding exposures, including high-yield bonds and selected private-market strategies such as direct lending.
Liquidity remains an important consideration within the money market allocation. Much of this exposure is held through short-term money market funds, providing flexibility given the relatively short duration of the insurer’s liabilities and the need to manage its liquidity profile. “We need to maintain some liquidity, partly because of our short liability duration and partly because forecasting our liquidity needs can sometimes be challenging,” Fors says.
Against this backdrop, Bliwa is considering whether a modest increase in credit risk could improve returns. Fors sees scope to adjust the allocation selectively rather than make a broad shift towards less liquid investments.
“Within fixed income, we could move a little further along the risk spectrum to increase returns. That is something we may well do in the near term.”
Fredrik Fors, CIO of Bliwa Livförsäkring.
“We may adjust our allocation to seek somewhat higher returns rather than focusing primarily on minimizing risk,” Fors says. “Within fixed income, we could move a little further along the risk spectrum to increase returns. That is something we may well do in the near term.” He adds that Bliwa’s overall approach remains similar to that of other insurance companies, although “we may maintain a somewhat shorter duration.”
A selective approach to private credit
Fors does not expect Bliwa to make a substantial move into private credit simply because the asset class has attracted greater attention from institutional investors. Fors recognizes the potential for additional income from private credit but does not see expanding the allocation as an objective in itself. “We have exposure to semi-direct lending within our fixed-income allocation, which provides more return attribution than our other, more traditional exposures,” notes Fors.
Bliwa is broadly satisfied with its current positioning and intends to remain selective when considering less liquid investments. “The private side of fixed income is an area where you need to be a little careful about where you step in,” he says. Bliwa could instead introduce a dedicated high-yield fund with a clearly defined mandate. “What might change is that we could introduce more clearly defined strategies, perhaps a high-yield fund with a clear high-yield strategy,” Fors says.
“If we are looking to take on more risk, we could do that in other parts of the portfolio, such as equities, through thematic investments or through other alternative strategies.”
Fredrik Fors, CIO of Bliwa Livförsäkring.
Fors is reluctant to make the asset class carry too much of the burden of generating additional returns. “If we are looking to take on more risk, we could do that in other parts of the portfolio, such as equities, through thematic investments or through other alternative strategies.”
Manager Selection and the Importance of Transparency
Bliwa invests in fixed income exclusively through funds rather than managing its own bond portfolio. With a relatively small investment team, external managers provide access to a range of strategies, but Bliwa retains responsibility for determining which exposures fit its portfolio requirements. Fors says the process begins by identifying the desired exposure before evaluating potential managers.
“We start from the top down, first deciding whether we want exposure to something like high yield,” Fors explains. “We can then issue a request for proposals to see what is available, or screen the strategies offered by our existing managers to identify anything we might want to add.”
The selection process combines internal expertise, investment committee discussions, quantitative analysis, track-record assessment and due diligence. Beyond performance, Fors emphasizes the importance of transparency and communication, especially when a strategy encounters difficult market conditions. “When everything is going well and returns are coming in, everyone is happy. But what happens when things go the other way?” Fors asks. “Do you stick to your profile? Do you stick to your strategy? It is important to understand how you communicate with each other.”
“When everything is going well and returns are coming in, everyone is happy. But what happens when things go the other way?”
Fredrik Fors, CIO of Bliwa Livförsäkring.
For Fors, a manager’s behavior under pressure matters as much as its stated investment approach. “Transparency is one of the main things I always emphasize and ask about,” he says. Bliwa also favors managers with a local presence where possible, allowing for closer interaction and a better understanding of the insurer’s needs. “We are a relatively small insurance company, although we are still growing, so our needs may differ from those of larger investors,” Fors says.
A strategic allocation amid continued market volatility
Fors does not expect interest-rate expectations or continued market volatility to trigger major changes in Bliwa’s strategic fixed-income allocation. “I don’t think we will make any major changes in response to that,” he says. “We trust our process: diversify, work with high-quality managers, and make sure the investments and strategies align with what we want to invest in and what we expect to get out of them.”
“We trust our process: diversify, work with high-quality managers, and make sure the investments and strategies align with what we want to invest in and what we expect to get out of them.”
Fredrik Fors, CIO of Bliwa Livförsäkring.
A higher interest rate environment has nevertheless broadened the range of opportunities available to investors. “Today, it is a little easier to find good investments that generate returns or provide diversification without having to take on too much risk,” Fors concludes.
This article is part of HedgeNordic’s “Alternative Fixed Income” publication.
