Insurance companies are increasingly turning to outsourcing of their asset management operations to manage risks and improve returns, according to Swiss Re.At the end of 2001, global insurance assets totalled approximately $11.5 trillion, said Swiss Re, adding: “Managing these assets in the current climate of declining equity markets, low interest rates and record levels of corporate bond default is a significant challenge for the industry.”
Swiss Re, one of the world’s largest reinsurance groups, said that in response, insurance companies are increasingly turning to outside experts who offer specialist skills in asset management. Pressure on investment officers to manage operational risks and increased scrutiny from rating agencies is another factor.
Swiss Re estimates that US insurers employ third-party managers to oversee $300 billion of investments (from total investments of $3.9 trillion), while European insurers outsource around $140 billion of assets (from total investments of $4.5 trillion).
“In Europe, third-party asset management has a lower penetration than in the US,” said Swiss Re. “This is principally because European insurance asset managers must maintain a local presence, in some cases for legal reasons. This creates a cost barrier to entry, reducing competition between providers and strengthening the major European institutions who already have a foothold in the market.”
Topics: Swiss Re
More on Structured Products
UBS suffers VAR exception on huge P&L swings following scheme’s launch
Dealers tout hybrid credit and equity-linked notes with Eurostoxx 50 exposure
Risk comparisons must be made easier under Priips KID, says AMF
JAC calls on regulators to co-ordinate cost disclosure rules in KID with Mifid II
Sign up for Risk.net email alerts
Sponsored video: MarketAxess
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.