Cerulli: Outsourced GA assets to grow at 7.5 percent clip

As insurers look for new sources of attractive returns, they are employing outside institutional asset managers. As insurers look for new sources of attractive returns, they are employing outside institutional asset managers.

Outsourced non-affiliated insurance general account assets reached $1.2 trillion in 2013, and will account for 23 percent of total insurance general account assets in 2014, according to new research. Cerulli Associates disclosed this finding in a new report, “Insurance General Accounts: Opportunities in an Underserved Market.”

The report assesses the management of insurance general account investment portfolios in the U.S. and insurance companies’ increasing interest in outsourcing investment functions to institutional investment managers. The report also examines the nature and constraints involved in managing insurance company balance sheet assets, outlines the evolution of insurers asset allocation decisions and analyzes what changes may result in the movement of billions of dollars in the coming years.

“Relative to declining or lower growth, such as corporate defined benefit plans, the growth of insurance general account assets continues to be attractive to asset managers,” says Alexi Maravel, associate director at Cerulli. “The pace of new outsourced investment mandates has come in fits and starts in recent years, but we expect solid growth in assets going forward as insurers diversify their investment portfolios away from investment-grade fixed income.”

The report adds that as insurers look for new sources of attractive risk-adjusted returns, they are increasingly employing outside institutional asset managers in areas where they may not have the internal investment resources. Cerulli estimates that outsourced assets will grow at an annual rate of 7.5 percent over the next five years.

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