Investment Environment Challenging Insurers

Insurers continue to entrust management of some of their assets to third party investment managers.

According to “Insurance Asset Outsourcing Analysis,” a report from the Insurance Asset Outsourcing Exchange, a record 290 investment mandates were outsourced in 2010, up from 256 in 2009 and almost double the 149 reported in 2008. Based upon the Exchange’s Insurance Asset Tracker database, the report is tracks newly outsourced investment mandates by insurance companies to investment managers.

“Difficult financial markets as well as the slow economy continue to challenge insurance companies’ earnings,” says David Holmes, partner in the Louisville, KY-based consulting firm Eager, Davis & Holmes.  “They have become more open to the notion that the outside expertise and resources of an investment manager or consultant can make a difference.”

The report also finds that the asset value of new mandates outsourced from life/health companies exceeded those from property/casualty companies for the first time in 2010.  “Asset outsourcing is historically more frequent among property/casualty companies,” Holmes adds.  “The life/health companies are typically larger, and larger insurance companies are beginning to outsource to third party investment managers more often.”