U.S. bonds make up the largest portion of outsourced insurance assets, according to a survey by Patpatia & Associates, Berkeley, Calif., a consultant that tracks insurance outsourcing.
The survey found 62.5% of outsourced assets in 2013 were in U.S. bonds, up from 53.6% in 2011. The survey does not break down the assets between core and high-yield bonds, but Sunny Patpatia, president and CEO, said much of the increase in fixed-income outsourcing has been in non-core, higher-yielding strategies. The 2013 figures are the most recent survey data available.
The survey found that outsourcing of alternative investments made up 6.7% of total outsourcing in 2013, up from 4.8% in 2011.
Foreign bonds made up 18% of outsourced assets in 2013, down from 22% in 2011; total equities made up 7.2% in 2013, down from 15.4%; and cash and short-term investments made up 3.2%, down from 4.1% in 2011. The remaining asset classes were mortgage loans, 1.8% in 2013, up from 0.1% in 2011, and real estate, 0.6% of outsourced insurance assets in 2013, up from zero.