We asked more than 1,000 insurance investment professionals across business lines how they choose and utilize external asset managers for our 2021 Insurance Investment Survey.
The results are in: Insurers are looking to external asset managers for their industry expertise, particularly as insurers add more private asset classes to their portfolios.
In our survey, we asked insurers to identify their top three criteria for choosing an external asset manager. Their choices included performance, insurance client expertise, overall investment strategy advice, specific product expertise, risk transparency, reporting quality/customization, and cost/fees.
Performance topped the list at 62%. This result is not surprising. An asset manager’s main role is to advise clients and guide their investments toward high performance, relative to benchmarks. But what else are insurers looking for? The next-highest response was insurance client expertise at 46%. This response is also not surprising, given that insurers need someone who understands their industry.
About 30-40% of respondents selected either cost and fees, overall strategy advice, or specific product expertise. Finally, about 20% of respondents put risk transparency or reporting quality in their top three.
Our survey covered how many managers insurers use, what percentage of their portfolio is externally managed and what type of external management insurers plan to use in the future.
About 70% of insurers surveyed use up to five investment managers for their assets. Twenty percent use 6-10 managers, and 9% use 11 or more managers.
Seventeen percent of insurers surveyed have their entire portfolio externally managed, and 40% of insurers surveyed have half or more of their portfolio externally managed. Our survey results also showed that insurers who use external managers for at least half of their portfolio plan to increase or maintain that relationship.
Finally, we asked insurers what type of external asset management they plan to use in the future. They responded with 61% public bonds, 49% public equities, and 44% alternative assets.
For more insights into insurance investment trends, including the growth of private assets and top asset classes for 2021, download the full 2021 Insurance Investment Survey Report here.
To learn more about investment strategies for insurers, profiles of clients served (by region, business lines, company size), and insurance AUM in specific strategies, download the 2021 Insurance Investment Outsourcing Report.