Increasing number of US insurers outsourcing investment portfolios

Written by Adam Cadle

08/08

More US insurers are turning to third-party asset managers to oversee their investment portfolios, according to AM Best analysis, with the life/annuity segment showing the most significant activity.

AM Best said this shift is particularly evident among mid-sized life and health insurers, which increasingly rely on unaffiliated investment managers to manage large portions of their portfolios as they seek to remain competitive in the annuity market.

According to AM Best’s analysis, over 43% of life/health insurers engaged a single third-party investment manager to actively manage at last 10% of their invested assets – an increase from 32% in 2016.

Furthermore, the percentage of insurers outsourcing more than 50% of their portfolios to unaffiliated managers rose to 35.5% in 2024, up from 26.8% in 2016. AM Best attributed this trend in part to the continued involvement of private equity and asset management firms in the insurance space.

The report noted that while P&C insurers are more likely overall to use third-party managers, growth in outsourcing among this group has remained relatively flat.

Unaffiliated annuity writers are much more likely to outsource a significant portion of their portfolios compared to those affiliated with larger insurance groups. Nearly half of unaffiliated annuity companies outsourced more than 50% of their invested assets in 2024, compared to just 27% of affiliated firms. AM Best said this is a response to increased competition, particularly from larger entities backed by asset managers with deep investment expertise.

AM Best’s analysis also included data on which asset managers are most frequently given decision-making authority by insurers. It identified BlackRock as the most commonly listed manager, followed by New England Asset Management, Conning Asset Management, Wellington Management, and JP Morgan Asset Management.

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