Insurance-focused investment managers post robust growth
The eighth annual Insurance Investment Outsourcing Report – 2021 Edition finds substantial growth in insurance companies’ use of third-party investment management solutions. Forty-nine insurance-focused investment managers report non-affiliated general account (GA) assets totaling $2.9 trillion on a global basis as of year-end 2020. A “same sample” of investment managers reporting their non-affiliated insurance assets both this year (2020 YE) and last year (2019 YE) show 15% growth over the course of the year on a global basis.
Behind the numbers
The high double-digit growth results from insurers seeking to leverage the scale, services, and specialized expertise offered by third party investment management firms, and occurred despite headwinds from insurance industry consolidation and challenges of COVID. Three specific elements played a role in 2020’s AUM growth.
Some very large mandates sought third-party manager solutions in 2020, and found homes with investment managers well-equipped with the scale and services to meet the needs of large insurance companies.
Insurers have significantly increased outsourcing to specialized investment mandate solutions over the past several years, particularly in specialized fixed income strategies and alternative investments. These mandates are often funded with cash flow, and their growth has become more apparent in reported outsourced AUM year over year.
“Inorganic growth” has occurred over the course of 2020, including divestures such that assets formerly managed by investment firms for affiliated insurance companies are now reported as non-affiliated, and from mergers/acquisitions between investment management firms or insurance companies.
Fast-paced growth will continue
David Holmes, founder of the Insurance Asset Outsourcing Exchange and publisher of this report, observes, “The investment management industry has proven a nimble and reliable resource in response to insurance companies’ changing investment needs. Third party investment management is driven by the need for specialized investment expertise and scale. That won’t change in the foreseeable future.”
This year, the Insurance Asset Outsourcing Exchange partnered with Clearwater Analytics to publish the report on an interactive micro-site. Clearwater Analytics provides investment analytics and reporting solutions for investment managers and insurance companies.
Steve Doire of Clearwater Analytics explains, “Across our clients, we see material growth in allocations to non-traditional asset classes such as bank loans, private placements, commercial mortgages and private funds/LPs with a variety of underlyings. Insurers of all sizes are considering new asset classes via the scale and expertise of specialty managers.”
About the Insurance Investment Outsourcing Report
The report, in its eighth year running, profiles investment management firms who offer the specialized resources and expertise required to manage insurance companies’ investment assets. The Insurance Investment Outsourcing Report is published by the Insurance Asset Outsourcing Exchange, the insurance-focused research arm of Eager, Davis & Holmes LLC. New this year, Clearwater Analytics is partnering with the Exchange to boost the report’s efficacy in industry coverage and distribution.
View the report on the interactive micro-site, hosted by Clearwater Analytics: Interactive Micro-Site