Survey Shows World's Largest Insurance Companies Lean on Outside Expertise

(October 18, 2010) — A recent survey shows the financial crisis has prompted insurers to increasingly rely on investment outsourcing, with third-party general account assets under management topping the $1 trillion mark for the first time. This trend is echoed elsewhere in the asset owning world — while investment outsourcing at pensions, endowments and foundations is fraught with potential conflicts of interest and issues of transparency, control, and cost, few argue this isn’t an ideal solution for many of the world’s small to mid-sized funds.

The study revealed the effects of the financial downturn, which encouraged more and more large insurers to embrace external investment talent to supplement their in-house capabilities.

The 2010 Insurance Asset Manager (IAM) Annual Survey revealed a total of $1.47 trillion in insurance company general account and subadvised assets as of December 31, 2009, representing an increase of 32% compared with the previous year’s total of $1.11 trillion.

According to the results, BlackRock ranked in first place in IAM’s Survey, ending 2009 with a 59% year-on-year jump in general account insurance assets to $191.27 billion. Deutsche Insurance Asset Management came in second with $172.8 billion. GR-NEAM and Conning came in with $79.48 and $77 billion respectively, followed by Wellington Management with $72.75 billion.

The study analyzed data from 50 US-based investment firms that specialize in managing outsourced insurer assets.

Consultancy firms like Rogerscasey have benefited from this trend toward investment outsourcing. Adam Tosh, managing director of investment solutions at Rogerscasey, has witnessed this greater push for outside management by asset owners. “Many organizations of a certain size don’t have enough expertise and resources to hire enough of their own staff, and they’re often looking to outsource their chief investment officer function,” he told aiCIO. “We’ve been a consultancy for 40 years and we’ve stood next to the people steering the ship,” he said. Enticed by cost-savings and greater expertise, firms of all types are leaning toward outside help to assume responsibility of investment management, Tosh explained.