Value-Based Investing

Is it important that the investments within your portfolio are reflective of your values? How does this concept impact performance? These are two of the questions that frequently come up in discussions with insurance company presidents and should be properly addressed. Moreover, the following discussion addresses these questions and the impacts of value-based investing on performance.

Parkway Advisors strongly believes that Christian principles are appropriate in developing and growing an ethical organization. These principles are incorporated in our strategic initiatives and our internal principles of performance. We are also very confident that the consistent application of these principles has dramatically assisted in our success as an advisor.

We also believe that consistency in life is paramount to success. It is important to be the same person whether dealing with family, friends, work or charities. It is also important to understand that every insurance company is unique. The culture, history, products, members/policyholders, employees, historical performance and values of your company are wonderfully unique and the reason your firm has value to its clients.

Moreover, after personal discussions with many insurers, we have determined values are very important to your organizations as well. Some of you actively embrace the helpers of people concept and participate in community development. Others take pride in their background and culture. When these values are shared by your employees, management, members or policyholders, the relationships are in most cases more developed and lasting. The key is being genuine and consistent. In many instances these values are reflected in the groups to whom you choose to market your products.

The specific strategy is unique for each insurer and is based entirely upon your values and direction. For some, it means an active strategy to incorporate the investment in companies that also promote the same values. For others, it might be meaningful to “screen” potential investments for companies that participate in products or values that are not consistent with the values embraced by your organization. This style of investing adds consistency to your organization and allows those that embrace these same values to connect and identify with your company. It also allows employees to feel good about their work and to tie work to more important concepts of life.

Many companies have considered value-based investing; however, some do not know where to start or are afraid of a potential impact to return. An effective strategy that is tied to the company values may actually enhance the performance of the insurance company as a whole due to the characteristics discussed above. Most important is the loyalty of policyholders and employees. Again, we are all human and looking to have meaning in our work and relationships. When shared values are honestly communicated, we are more likely to have a better relationship.

How does a value-based investment strategy impact the performance of the company’s investment portfolio? If applied correctly, the answer should be that there is not an impact either way. Risk for an insurance company must always be controlled through diversification in light of surplus and any applicable IMR/AVR reserves and by investing in securities that are consistent with the products that are sold by the company. Performance should always be viewed in terms of surplus and net investment income. If value-based investing is applied while these other aspects are emphasized, investment performance can remain higher than that of the competition while achieving the other traits discussed above. The only potential negative is that a solid strategy can mean more diligent work through active research of investments. However, sometimes the most meaningful and rewarding things in life require work.

The key to an effective value-based investment strategy is being genuine and consistent with the application of your values. It must also be clearly defined in your investment plan and be able to be communicated to all parties related to the insurance company. A value-based policy can add to the overall performance of the company when the values are shared by employees and customers. When this is the case, an effective strategy can help develop relationships and increase the respect of an organization.


Parkway Advisors, L.P. is an investment advisor registered with the Securities and Exchange Commission offering investment management, consulting, and accounting and reporting services. This material is for your use only and has not been independently verified and thus we do not represent that it is complete and should not be relied upon as such. The opinions expressed are our opinions only. Past performance is no guarantee of future performance and no guarantee is made.

For More Information

We welcome your inquiry and can be reached by mail at Parkway Advisors, L.P., P.O. Box 5225, Abilene, Texas 79608 or by phone at (800) 692-5123 or by fax at (325) 795-8521. A copy of our Form ADV, Part II is available upon request.

For more information, please emailĀ [email protected].