Time Horizon: The time horizon for the surplus segment of a P&C insurance company is long. Given the long time horizon, non-life insurance companies actively manage their portfolios for maximum capital appreciation opportunities.

Liquidity: Since the surplus segment represents the long term-portion of a P&C company’s overall portfolio, liquidity is not the primary concern. In contrast, liquidity to pay claims is a major consideration for the fixed income segment of assets. With low liquidity needs, the surplus portion can pursue more attractive returns in areas other than fixed income. If successful, this can enhance a firm’s ability to compete more aggressively on premiums. 

Laws and Regulations: Regulatory considerations are slightly less onerous for non-life insurance companies than for life companies. An asset valuation reserve (AVR) is not required, but risk-based capital (RBC) requirements have been established. Otherwise, non-life companies are given more leeway in choosing investments.

Taxes: Non-life insurance companies are taxable entities. Hence, tax considerations play an important role in formulating the IPS. Tax issues are complex, though, so frequent discussions with appropriate tax counsel are advised. 

Unique Circumstances: The financial status of the non-life company is very important in assessing the management of investment risk and liquidity requirements. A significant surplus position influences market competitiveness in setting premium rates