About the Investment category


The #investment category is used for discussion around Capital Pool investment strategies, updates from the Investment committee, and as a way for members to connect directly with Investment committee members.

Why invest?

The main purpose of investing assets from the Capital Pool is to provide an additional driver for growing the size of the Capital Pool, thus:

  • enhancing the profitability of the mutual as a whole, and
  • enabling it to further protect the members against risks by creating capital, which can be used for writing additional covers

In the medium/long term, investing in yield-bearing assets makes us competitive with traditional insurance companies. Insurance companies typically invest their entire pool of assets and measure the yield obtained, treating it as one of the major drivers of profitability and competitive advantage.
From Swiss Re’s 2018 Sigma 4 Report, for non-life insurers the weighted 10-year average (2008-2017):

  • Net investment result as a % of net premiums was 9.8%
  • The investment yield on the assets held was 3.6%

If Nexus Mutual wants to disrupt these embedded models of insurance, we need to be able to compete with the asset returns obtained by the legacy insurance system. Thankfully, with the proliferation of DeFi yield-bearing opportunities and the emergence of ETH staking, such options are becoming more available.

For users, there are a wide array of protocols available within the Ethereum and DeFi ecosystems to deposit ETH/tokens to obtain a yield, be it in the form of direct ETH staking, yield farming opportunities, or even buying tokens and NFTs directly in the hope that they appreciate in value. Deploying the capital pool into yield-bearing assets will provide NXM holders with another source of value appreciation and increase our competitiveness versus existing and emerging uses for ETH.