Insurance companies outsourced a record $1.76 trillion to external money managers as of Dec. 31, up 13.5% or $210 billion from a year earlier and up 60% or $660 billion from 2008.
About $1.2 trillion of the total came from general accounts and $560 billion from separate accounts, according to a report on a survey of 53 money management companies that specialize in insurance company investment outsourcing. The survey was released Friday by Insurance Asset Manager, a news and information service covering insurance asset management.
Alex McCallum, the editor of IAM's survey and its news service, wrote in a cover letter accompanying the full survey that the 10 largest insurance investment outsourcers accounted for 77%, or $920 billion, of the total general account assets managed, up from 75% the prior year. He noted that the 20 largest firms held 91.7% or $1.1 trillion of total general account assets.
BlackRock held firm command of the top slot with $302.2 billion in combined general and separate account outsourced assets as of Dec. 31, followed by Deutsche Insurance Asset Management with $236.5 billion; Wellington Management, $186.6 billion; Pacific Investment Management Co., $161.4 billion; and Goldman Sachs Asset Management, $104.2 billion.
PIMCO also managed an additional $304.1 billion in insurance assets from parent company Allianz SE and other affiliated companies, Mr. McCallum said in a telephone interview.
Mr. McCallum said in an interview that the survey did not track how much growth came from investment returns vs. net inflows.
As for reasons for the strong growth in insurance asset outsourcing, Mr. McCallum said in the interview “there's been a lot of talk in the past year about the challenge of low yields in fixed-income markets and the search for alternative investments which may provide better investment returns. Many insurance companies don't have sufficient expertise in-house to invest in alternative asset classes and so turn to external investment outsourcers. Among the asset classes that are gaining favor among insurers looking to outsource investments are emerging markets, real estate, real assets, hedge funds and others.”