Insurer asset management
EXHIBIT 2: RANKING OF FIRMS MANAGING INSURANCE COMPANY ASSETS NON-AFFILIATED GENERAL ACCOUNT (GA) AND SUB-ADVISED INSURANCE ASSETS (SA)
2009 GA BlackRock
Deutsche Insurance Asset Management Wellington Management
Pacific Investment Management Company Goldman Sachs Asset Management
GR-NEAM Conning
State Street Global Advisors PineBridge Investments
JPMorgan Asset Management
191.27 172.80 72.75 45.26 54.10
79.48 77.00 69.95 32.08 26.08
($ billions) SA
77.44 34.30 90.58 73.25 34.07
0.24 0.00 1.47
20.58 14.46
Total
268.71 207.10 163.33 118.51 88.17
79.72 77.00 71.42 52.66 40.54
GA
120.35 150.20 47.51 30.17 37.17
62.65 74.84 50.39 0.00
21.35 Subadvised assets are separate account insurance product portfolios managed by third-party asset management firms. 2008
($ billions) SA
43.67 26.70 70.33 52.72 30.29
0.32 0.00 2.99 0.00
14.41 Total
164.01 176.90 117.85 82.89 67.46
62.97 74.84 53.37 0.00
35.75
internally. It was time to put a better focus on the investment portfolio and to figure out how it translates back to the balance sheets, assets and liabilities, and core businesses.”
Greater attention to investments started to be paid by managements
and boards of insurance companies as the financial crisis took hold, adds Kristen Dickey of BlackRock, Inc., “with the result that we are now starting to see larger outsourced mandates”. Dickey, who is head of the financial institutions group within the global client group of BlackRock, the number 1 insurance asset manager in IAM’s 2009 rankings, was referring to an important trend—multi-asset class mandates—that is helping large firms become even more dominant in the insurance asset management business.
To illustrate how dominant they are, in 2007, the year before the crisis climaxed, the top 10 firms already handled 72 percent of outsourced insurance assets reported by IAM. By the end of 2009, though, their market share had increased even further, to a colossal 79 percent.
After a remarkably strong year, BlackRock itself took first place in 2009
for outsourced general account insurance assets in IAM’s primary rankings table (see Exhibit 1). Second was Deutsche Insurance Asset Management, followed by GR-NEAM, Conning, and Wellington Management. Propelling BlackRock to the top of the general account leader board was a 59 percent year-on-year jump to $191.27 billion. Deutsche, while giving up its perennial top spot to BlackRock, also had an excellent year, ending with $172.80 billion. Wellington’s fifth place was driven by a 53 percent increase to $72.75 billion.
When sub-advised insurance assets are added to general account assets
(see Exhibit 2), BlackRock and Deutsche were also in first and second place, with $268.71 billion and $207.10 billion, respectively. Wellington
Alex McCallum is the editor and co-founder of Insurance Asset Manager. Their web site address is
www.insuranceassetmanager.com
November 2010 | INTELLIGENT INSURER | 47
Management came third, followed by PIMCO and Goldman Sachs Asset Management.
But even though the crisis gave the large firms a stronger-than-ever grip on insurance outsourcing, the potential opportunities presented by this expanding market have attracted a string of newcomers as well as reviving the interest of firms that had been absent for a time. New to IAM’s survey were Aviva Investors, Breckinridge, Guggenheim, Income Research, Miles Capital, PineBridge (formed from the investment advisory and asset management businesses of American International Group, Inc. (AIG) and majority-owned by Pacific Century Group), Smith Affiliated and TCW. Returnees included Advent, Loomis, Sayles and SSI (formerly Froley, Revy).
The impact of the crisis, and perhaps other corporate strategic factors,
nevertheless appeared to cause a handful of major firms to reduce their commitment to the sector and, as a result, they declined to participate in IAM’s survey. The absentees included heavyweights such as GE Asset Management, Morgan Stanley and Prudential.
Notwithstanding these few dropouts, the financial crisis definitely
accelerated a secular trend toward the outsourcing of insurer assets, according to industry consultant Jeff Margolis of Margolis Advisory Group, who said that a strong upsurge in insurer outsourcing inquiries and activity not only took place after the market shock of 2008 when the dust began to settle, but has continued right through 2010, with prospects for 2011 looking good too.
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