Insurance Assets Outsourced To US Investment Managers Increase To Record $1.75 Trillion

BlackRock And Deutsche Lead IAM’s Rankings

Insurance Asset Manager LLC Insurance from the Investment Angle

Exeter, NH, June 6, 2011 -- Insurance company assets managed by third-party US investment firms rose to a record $1.75 trillion at the end of 2010, building on the strong post-financial crisis momentum that developed after 2008 when outsourced insurer assets stood at the $1.1 trillion mark.

The 2010 increase, 13% higher than the year-end 2009 figure of $1.55 trillion, 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) newly-published preliminary annual survey of 53 firms active in this specialized field.

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.

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. The subadvised assets total of $560 billion showed a 22% increase over the year-end 2009 figure of $460 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, noted  Matt Malloy, head of global insurance solutions for JPMorgan Asset Management, 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.”

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).

IAM’s survey is titled Insurance Asset Manager Preliminary Survey – 2011 Edition. It is the first of three surveys scheduled for this year. The second survey, Insurance Asset Manager Annual Survey – 2011 Edition, will be published in the Summer, and the third, Insurance Asset Manager Mid-Year Survey – 2011 Edition , in the Fall. The price for all three is $600.00.

The survey’s publisher, Insurance Asset Manager LLC, was formed in 2005 to provide a news and information service focused on the vital investment management function performed by insurance companies and third-party investment firms. IAM’s first survey showed  $680 billion in total outsourced insurance assets in 2004 and $575 billion in 2003, managed by a universe of 30 investment firms.

Explanatory Notes:
*  General Account Assets. An insurance company’s overall investment account that contains the assets that back the cash value accumulations of policyholders and surplus.  Excludes assets dedicated to “separate account” insurance products.
** Subadvised Assets. An insurance company’s separate account insurance product portfolios managed by third-party asset management firms.

The IAM Survey contains four sets of asset manager rankings, as follows:
Category 1 (Non-Affiliated General Account Insurance Assets)
Category 2 (Non-Affiliated General Account + Subadvised Insurance Assets)
Category 3 (Non-Affiliated + Affiliated Insurance Assets)
Category 4 (Non-Affiliated General Account Non-US Insurance Assets).

Media Contact:
Alex McCallum, Editor
www.InsuranceAssetManager.com
(603) 778-8179
[email protected]