Managers’ Insurance Assets Reach Record Level

Insurance company assets managed by third-party U.S. investment firms rose to a record $1.75 trillion at the end of 2010.

The 2010 increase, according to the Insurance Asset Manager Preliminary Survey – 2011 Edition, was 13% higher than the year-end 2009 figure of $1.55 trillion. This was highlighted by industry leader BlackRock reaching $300 billion in total insurer assets under management (AUM) – a first, according to  Insurance Asset Manager’s (IAM) survey of 53 firms active in this specialized field. 

Of the $1.75 trillion in third-party insurer AUM at year-end 2010, $1.2 trillion consisted of insurer general account assets, an increase of 9% compared with $1.1 trillion a year earlier. According to a press release, the subadvised assets total of $560 billion showed a 22% increase over the year-end 2009 figure of $460 billion.    

Another first in 2010 was both BlackRock and Deutsche Insurance Asset Management breaking through the $200 billion level for insurer general account assets, IAM’s primary rankings category.  BlackRock finished the year with $205 billion and Deutsche with $203 billion.  Adding $97 billion of subadvised assets increased BlackRock’s total insurer AUM to $302 billion.  

Third place in IAM’s general account category was taken by Wellington Management Company ($82 billion), followed by Delaware Investment Advisors ($77 billion) in fourth place, Conning & Co. ($76 billion) in fifth, with State Street Global Advisors, GR-NEAM, Goldman Sachs Asset Management, PIMCO and JPMorgan Asset Management making up IAM’s top ten.  

PIMCO had the sharpest increase of all the major players – a 60% jump to $53 billion, while tenth position was gained by JPMorgan with a 43% increase to $37 billion.PIMCO was the leader in the subadvised category with $108 billion, followed by Wellington ($105 billion), BlackRock, Goldman Sachs and Deutsche, in that order.  

"The outsourcing trend continues unabated," said Robert Young, head of PIMCO's insurance business. "We continue to see the large insurers exploring partnerships with high quality, deeply resourced managers.”

A major factor behind the current outsourcing trend is the low-yielding environment which is leading insurers “to look beyond traditional fixed income to emerging markets, equities and certain alternative investments to generate yield and income," said Matt Malloy, head of global insurance solutions for JPMorgan Asset Management.

Richard L. Sega, Conning’s chief investment officer, commented: "The rate of change in the markets is relentless. Investors and regulators are increasing their demands for sound risk and capital management.  An insurer's success depends not only upon a strong financial position and market agility, but also the ability to adapt their strategies to these changes, incorporate them into their investment portfolios, and communicate these things with clarity to all constituencies."  

When affiliated assets, which amounted to $900 billion, are added to the third-party assets total of $1.75 trillion, the size of the insurance investment market handled by the survey’s 53 participants expands to $2.65 trillion. Nineteen of the 53 reported affiliated assets. The top three were PIMCO ($304 billion), AllianceBernstein ($103 billion) and Hartford Investment Management Company ($94 billion).