Roughly 69% of insurance companies outsource at least some portion of their general account assets to unaffiliated investment managers, up from 64% in 2002, according to a new survey from Eager, Davis & Holmes LLC, a strategic consulting firm in Louisville, Ky.
The survey also showed the average percentage of assets outsourced to external managers increased at an even greater clip — 68% of insurance general account assets are now managed externally, compared with 56% in 2002, the last time the survey was conducted.
The Eager, Davis & Holmes survey canvassed 84 insurance companies with a total of more than $1.1 trillion in assets.
More insurance companies are focused on diversifying their general account portfolios, said David Holmes, partner.
"Like many institutional investors, insurance companies want to decrease their risks and increase their returns," which is why they are hiring outside managers to invest in more specialized asset classes, said Mr. Holmes.
At the same time, insurers are steadily pumping new cash into their general account pools as they bring in more money from premiums, creating new opportunities for new pools of investments, he said.
Insurance companies have largely invested their general account assets in core fixed-income portfolios.
On average, insurance companies had, at the end of last year, 81.6% of their assets in fixed income, 5.1% in cash, 2.5% in alternative investments, 2.1% in equities, 1.2% in real estate and 7.5% in "other" asset classes, the survey showed.
And, over the next 12 to 24 months, a number of insurance companies — particularly those with more than $1 billion in general account assets — expect to increase their investments in each of these assets classes.