Outsourced insurance assets to grow 8.1% p.a. in next four years

The Insurance Asset Outsourcing Exchange is forecasting continued global growth in outsourced insurer general account assets over the next four years.

A recent report by the Exchange, Insurance Asset Outsourcing Size and Growth – 2015, sees average annual increases of 8.1% on a global basis by 2019.

The forecast is expected to hold up despite a 26% decline in new mandates during the first half of 2015, according to the Exchange, a service of investment consultancy Eager, Davis & Holmes (EDH) of Louisville, Kentucky.

EDH partner David Holmes said, "We have already seen significant ebbs and flows in outsourcing activity during the post-financial crisis era. We saw a similar pause in 2011 and this should be no different."

Holmes explained, "New mandate hires foretell cash flow to outsourced assets. New mandates from insurers are often funded by current and future cash flow, rather than shifts and transitions from other invested assets. The heightened level of new manager hires over the past three years builds the foundation for outsourced asset growth."

Over the next few years, Holmes said, factors likely to be a positive influence on insurer outsourcing to asset managers and advisors include investment market volatility, regulatory clarity and innovations in accounting and risk control systems.

While North America will continue to lead in fresh mandate and asset numbers, Asia/Pacific-Japan is likely to grow faster.

Possible negative factors cited by Holmes include slow economic growth and a faster pick-up in merger & acquisition activity – the latter factor often encouraging, at least initially, a return to in-house investment management.

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