Present insurers are expected to offer comprehensive investment strategies. Thirty years ago, few managers developed insurer-focused solutions. Today, that expertise has expanded significantly and continues to grow, with trillions of dollars being outsourced to specialist managers.
Clearwater’s annual Insurance Investment Outsourcing Report (IIOR), created in collaboration with DCS Financial, highlights this ongoing trend. A decade ago, the report tracked 43 managers overseeing $1.7 trillion in assets. Fast forward to 2025, participants have surged to 90 managers with a staggering $4.5 trillion in total AUM.
How Did We Get Here?
Outsourcing was primarily done by smaller insurers, typically those with $150 million or less in assets, because they lacked scale, resources, or appropriately skilled external management. Savvy investment managers saw the opportunity and formed teams dedicated to managing the various constraints and objectives of insurer “balance sheet” assets—notably book income focus, regulation, and accounting classifications.
Insurance asset managers now bring an array of insurer-specific models and services including ALM, industry and peer analytics, sophisticated customized reporting, as well as income and cash flow projections to name a few.
As the outsourcing trend continues, we see larger insurers utilize these specialist managers. Many outsource their core fixed income, while others keep it internal, adding specialty and private asset class offerings.
Private Asset Expansion
Public fixed income remains the dominant outsourced asset class. However, recent years have shown a surge in insurer allocations to private and alternative markets.
The 2025 IIOR highlights this shift:
– 70% of reported AUM remains in public fixed income
– 15% is now in private fixed income
– 10% is allocated to public equities
– The remaining 5% is in private equities and alternatives
Notably, private market investments account for a full 20% of reported AUM—a nearly threefold increase from 7% recorded a decade ago. This underscores insurers’ evolving portfolio strategies and their increasing comfort with alternative assets.
Market Evolution
What’s driving the rise in insurer outsourcing, the expanding manager landscape, and the growing allocation to private markets?
The investment markets have evolved to include more types of alternative strategies. Insurance asset managers have gained deeper knowledge in structuring them for accounting and regulatory purposes. They bring expertise to help insurers understand the asset classes and how they can fit into an insurer’s overall investment strategy. These insurers also gain access to private markets that were previously more difficult to tap into. Managers leverage scale and technology to implement strategies and generate returns that exceed the capabilities of most insurers’ internal platforms.
In the next blog, we’ll focus more on trends of insurer investments within private markets.
See how your strategy compares—download the report to benchmark against the market.