Cerulli estimates that outsourced assets will grow at an annual rate of 7.5 percent over the next five years.

Nine in ten of insurers’ asset managers and investment consultants rate “reaching investment goals” as the companies’ greatest challenge in the near term, a new report reveals.

Cerulli Associates unveils this finding in “The Cerulli Report: Insurance General Accounts: Opportunities in an Underserved Market.” The report examines the management of insurance companies’ increasing interest in outsourcing investment functions to institutional asset managers. The study also assesses factors involved in managing insurance company balance sheets and outlines the evolution of the carriers’ asset allocation decisions.

“Cerulli projects that insurance general account assets will be among the strongest growing institutional asset pools in the United States,” the report states. “As insurers look for new sources of attractive returns, they are increasingly employing outside institutional asset managers in areas where they may not have the internal investment resources.

“Therefore, Cerulli estimates that outsourced assets will grow at an annual rate of 7.5 percent over the next five years,” the report adds.

Among the various rationales insurers cite for dedicating capabilities to insurance asset management, the companies’ valuing of asset managers’ capabilities in specific asset classes or strategies is the leading one. Nearly 9 in 10 (89 percent) of the insurers polled by Cerulli cite this as a reason.

Two-thirds (67 percent) of the companies surveyed say dedicated capabilities continue “to be a growing and relatively uncovered area of institutional asset management.” More than half of respondents (56 percent) identify their existing relationships with insurers as a rationale.