Insurance companies outsourced almost $2.8 trillion to the 50 largest money management firms managing non-affiliated insurance assets, a 54% increase from four years earlier, Pensions & Investments data show.
More specifically, the top 10 firms managed $1.08 trillion in outsourced, non-affiliated general account insurance assets. That was up 30.1% from four years earlier.
The assets are even more concentrated in fixed income than they were four years ago, statistics on the non-affiliated general account assets show: 93.4% in fixed income in 2014 vs. 92.8% four years ago. Still, insurance companies are moving beyond traditional core fixed-income strategies.
George Caffrey, head of the insurance investment advisory group at Towers Watson & Co., New York, said the low yields obtained from core fixed-income investments since the financial crisis have caused insurance companies to seek out better-yielding fixed-income strategies such as high yield, bank loans and emerging market debt, and alternatives like private equity and real estate.
Even insurers that have preferred to manage assets in-house have made decisions to outsource, Mr. Caffrey said. “Insurers that don't have the internal expertise for specialized mandates are seeking high-quality third-party managers to invest their assets” he said.
Wellington Management Co. LLP manages the most non-affiliated insurance assets — $234 billion as of March 31 — P&I's survey of money managers that run money for insurers shows. Wellington jumped to first place from third four years earlier. Despite the good news, spokeswoman Anne Mahoney said no one at the company would comment.
BlackRock Inc., top ranked in 2010, dropped to second, with $230 billion. Pacific Investment Management Co. was third, with $224.7 billion, up from fourth place four years ago; Deutsche Asset & Wealth Management was fourth, down from second place in 2010, with $196.3 billion; and Goldman Sachs Asset Management was fifth with $160 billion, its ranking unchanged.
BlackRock was first and Deutsche was a close second among money managers with the most non-affiliated general account assets from insurers: BlackRock managed $198.6 billion; Deutsche, $196.3 billion as of March 31.
Third was Goldman Sachs, with $105.2 billion, up from seventh in 2010. Goldman Sachs' general account insurance assets jumped 104.6% during the four years between surveys.
Macquarie Group, with $100.6 billion in assets, was fourth, jumping from 54th in 2010. Macquarie's dramatic rise was the result of including for the first time the outsourced insurance assets managed by Delaware Investments, which it acquired in 2010.
Wellington was fifth, with $92.2 billion, down from fourth in 2010.