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May 19, 2022 at 02:57 PM
Investment firms managed about $1.8 trillion in North American insurance company general account assets for outside insurers in 2021, according to the latest Insurance Investment Outsourcing Report.
The Insurance Asset Outsourcing Exchange and Clearwater Analytics, the manager of an accounting software system, based the report on data from 58 asset managers.
For a look at the top five third-party managers of North American insurance assets, see the gallery above.
What It Means
In some cases, the same big money manager could be managing what, on the surface, look as if they would be completely separate client assets, such as 401(k) fund options, IRA fund options, annuity index or fund options, annuity guarantees and life insurance policy guarantees.
A retail financial professional with an interest in holistic client asset diversification might want to know whether the same money manager was managing both a client’s main target date fund and the assets supporting the client’s main whole life insurance policy.
A financial professional with an interest in institutional money management might want to look for ways to match insurers with assets to manage with investment companies that hope to expand their third-party insurance asset management operations.
The Definitions
The Insurance Investment Outsourcing Report team was led by David Holmes, who is a partner at Eager, Davis & Holmes, and Steve Doire of Clearwater.
The report team looked only at management of “general account” assets, or insurers’ own assets, not at management of the client assets in the separate accounts used in variable annuity contracts and some other products.
Some companies known best as money managers own insurers, and some companies known best as insurers sell investment management services to competitors.
The Insurance Investment Outsourcing Report team classified assets as “affiliated general account assets” if the client organizations were “owned in whole or in part by the manager’s investment firm, its affiliates, or parent company,” according to the report.
The team classified assets as “third-party general account assets” if the assets were managed for insurers that were “not owned in whole or in part by the manager’s investment firm, its affiliates, or parent company.”
The Context
The investment outsourcing report team has surveyed insurance company investment professionals separately and found that 14% of the companies handle all investments in-house, 17% outsource all investment management functions, and 69% use a mix of in-house and outside investment managers.
Insurers may use outside managers to save money, or to focus their own resources on managing certain types of assets.
The outsourced North American insurance assets account for 55% of the $3.3 trillion in assets sent out of house by insurers all around the world.
The Federal Reserve Board says the United States alone has a total of $135 trillion of domestic financial sector assets, including $6.4 trillion in life insurance company general assets and $3.4 trillion in life insurance company separate account assets.
Mutual funds, by way of comparison, have $22 trillion in financial assets, and exchange-traded funds have $7.2 trillion in financial assets.
(Image: Antonio/Adobe Stock)
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