LOUISVILLE, Ky. -- Insurance companies could hire as many as 400 external investment managers during the next two years to manage their reserve and surplus assets, according to a recent Eager & Associates survey.
With an eye to total return and portfolio diversification, insurance companies are looking for alternative investments and specialized asset classes to garner better performance than their more traditional fixed-income or balanced portfolios.
Although the opportunities are out there, managers don't seem to fare as well in meeting the needs of the insurance companies that want to hire them, according to the survey, titled "Insurance Companies' Use of External Managers."
Insurance companies and their consultants were asked to rate investment managers on performance, investment approach, knowledge of insurance industry issues, fees, services beyond investment management and systems/modeling capabilities. The insurers and consultants were given a list of 25 well-known managers they either now use, used in the past, or are considering hiring. The list of managers was put together by Eager through research that included several investment management databases; Tracker, Eager's proprietary database; and other insurance industry publications. Asked to rate the managers on a scale of one to five, the overall grade was average, said David Holmes, director of market research.
Questionnaires went to 1,622 domestic non-captive insurance companies and 14 of the investment management consulting firms that handle manager searches for insurance companies.
Eager & Associates, which has been monitoring the use of external managers by the insurance industry since 1992, is a business strategy consultant to investment management firms.