INSEAD Reports 2nd Year Of Financial Drag From Covid-19

Inside an INSEAD classroom. The school reported a second straight year of financial losses, along with lots of evidence that a turnaround is likely

Covid-19 continued to be a financial anchor at one of Europe’s premier business schools last year. But the school says smooth sailing may be just ahead.

INSEAD, which has France’s top-ranked MBA program according to The Financial Times and the overall best program in Europe according to ours, saw revenues plunge for a second consecutive year in 2020-2021, down double-digit percentages from pre-pandemic levels, driven into the red by the continued struggles of its executive education programs. Total revenues at the Fontainebleau, France-based school with campuses in Singapore, Abu Dhabi, and San Francisco slipped to €218 million ($239 million at current exchange rates), down about 8% from €236 million ($259 million) in 2019-2020 — and 22% from €280 million ($307 million) in 2018-2019, the last full financial year before Covid-19.

“There is no denying that Covid-19 has continued to have a major impact on INSEAD finances,” the report reads. “As waves of the pandemic continued to cripple the world, ongoing restrictions, especially in Asia, delayed the financial recovery that we had initially hoped for.”

Source: INSEAD


Last spring, INSEAD reported a 16% drop in revenues in 2019-2020. That drop-off would have been worse — perhaps in the same realm as this year’s losses — had Covid-19 impacted the entire financial year; instead, fortunately for the school, INSEAD had a strong first half that allowed it to offset the coronavirus storm. Not so in 2020-2021. Though it boasted strong enrollment in other degree programs, INSEAD’s executive education continued to suffer because of high rates of deferred entry to open programs fueled by ongoing restrictions to travel, which in turn spurred companies to delay customized programs. INSEAD’s annual report shows that executive programs were again 32% of all revenues, same as last year — but that is down from 43% the previous year.

The report is a model of transparency, but it also does a good job offering the sunny side. And there are many bright spots to highlight — among them that revenues from degree programs rose sharply over the course of 2020-2021, helping to balance income loss from executive education. Fundraising, too, was a big positive, exceeding expectations and “again justifying our long-term investment in this component of our financial model and underlining the success and importance of our current campaign: A Force for Good.”

Some major assets further give INSEAD cause for optimism looking ahead to an end to the pandemic: healthy cash reserves, a strong endowment — bolstered by a one-time increase in annual support from supporting foundations from the usual 4.2% to 7.1% — and significant returns on investments (see table below). Meanwhile, the school saved money on travel and events, as well as a continued freeze on hiring and salary.

“Looking to the future, we are upbeat, as Executive Education participants begin to return to campus and our Degree Programmes maintain a strong position in the market,” the report reads. “We have already repaid around a quarter of our entire special pandemic-related loans, and the restrictions on recruitment and salaries imposed during the pandemic have now been lifted. As befits a world emerging from crisis, our forecasts remain conservative, but our unique business model and long-term strategy will help us seize the opportunities that will take us to a brighter global future.”

INSEAD Investment Portfolio Performance


While wreaking havoc on world economies, Covid-19 conversely contributed to record-breaking returns in the INSEAD Endowment.

“Following the slump in GDP growth the previous year, 2021 saw a return to growth, accelerated by increased household savings and continued supportive monetary and fiscal policies of historic proportions. As a result, global equities rose by 28.2% over the course of 2020/2021, buoyed by strong liquidity flows,” the report reads. Trouble signs emerged, however, in rising inflation, sparked by increased demand, disrupted supply chains, and higher prices for goods and services prices. “By the end of our reporting period, the future course of central bank policies in the U.S. and the EU had become uncertain, which in turn led to increased volatility in government bond markets.”

Because of a 69% return from its private equity portfolio — as well as “some tactical reallocations at the height of the pandemic, and overweight allocations to the technology and biotechnology sectors” — the INSEAD Endowment in 2020-2021 posted its highest-ever returns, up 28.3% in EUR terms and up 28.1% in local currency terms.

“Thanks to the generosity of our donors and the performance of our investments, the total value of the endowment increased to €355 million as of August 2021,” the report reads. “The investment portfolio, in EUR terms, returned +28.3% in the academic year 2021 and +12.4% per annum over the last three years.”


As it did last year, INSEAD highlighted its classroom innovation to offset the negative financial news. As Peter Zemsky, dean of innovation, says, “The pandemic has been a moment of truth for INSEAD’s entrepreneurial DNA. Would we be able to adapt and reinvent ourselves fast enough? I am incredibly proud of how faculty, staff and the whole community have embraced opportunities for innovation.”

Among the noteworthy teaching advances: The school made “great strides” in the use of virtual reality “to offer truly immersive learning experiences.” The school now has a large and growing bank of VR case studies, ranging from negotiating boardroom encounters to embarking on a mission to Mars.

“In the last year, virtual reality has been used to transport MBA students to the beaches of Cape Verde to help save turtles, to Malawi’s national parks to confront issues of poaching and sustainability, and to Tanzania, where they advised the NGO Miracle Feet on ways of scaling their mission to provide life-altering operations for children suffering from clubfoot,” the report reads.

Adds Ithai Stern, professor of strategy and academic director of the INSEAD VR Immersive Learning Initiative: “In all these cases, VR has enabled the students to better understand the setting and challenges and thus develop better real-world solutions for the organization’s core strategic problems.”


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