Updated with correction
Money managers' non-affiliated general account insurance assets under management rose significantly in the past three years, mostly because even the giant global insurers turned to outsourcing following the financial markets' near collapse.
The 50 largest managers of non-affiliated general account insurance assets ran a total of $1.14 trillion as of March 31, up 42.7% from $801 billion as of the end of March 2007, the last time Pensions & Investments surveyed these managers.
Many money management executives identified outsourced insurance assets as a way to grow their businesses several years ago. But the market meltdown prompted more insurance company officials to hire outside firms for assets once managed internally.
“The financial crisis caused major insurers to assess their internal risk management capabilities as well as their investment management skills,” said Onur Erzan, a consultant at McKinsey & Co. in New York.
More often than not, said Mr. Erzan, they concluded their firms might benefit financially from outsourcing some of their investment operations.
In addition, midsize insurers in Europe and Asia also have begun to outsource investment management, consultants and money managers said.
“The financial downturn caused some soul-searching among insurers that managed their own money,” said Jack Corroon, managing director and head of global client business development at Conning Asset Management, Hartford, Conn. “Insurers asked themselves, "Are we really as good as we thought?'”
Conning is one of the beneficiaries of insurers' decisions to outsource more. Its non-affiliated general account insurance assets reached $76.5 billion as of March 31, an increase of 15% from three years earlier. Mr. Corroon said much of the asset increase came from new insurance clients.
Conning was third in terms of non-affiliated general account assets under management in P&I's ranking. Its assets were dwarfed by the two largest managers: BlackRock Inc., with $194.65 billion; and Deutsche Insurance Asset Management with $188 billion.