U.S. Insurance General Accounts 2021
Adopting New Strategies for Global Challenges
Building Out Insurance Focused Business
- Highlight the growth of the overall insurance general account market
- Examine outsourcing behavior among insurance providers
- Explore several major themes in servicing insurance general account mandates such as: relatively high service requirements, allocation trends due to low interest rates, and other trends evolving from the COVID-19 pandemic
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Insurance general account assets represent one of the largest institutional investment channels and the addressability of those assets is growing as more insurers choose to outsource a portion of their portfolio. In response, firms across the investment universe from investment consultants, asset managers, and private equity managers are looking to build out insurance focused businesses.
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A Note from the Author
Insurers Navigate the Low-Interest-Rate Environment
Christopher is a senior analyst on the Institutional team where he supports multiple reports annually, including the annual outsourced chief investment officer (OCIO) report, and various strategic consulting projects throughout the year. He also regularly contributes to The Cerulli Edge—Institutional Edition, The Cerulli Edge—U.S. Edition, and The Cerulli Edge—U.S. Monthly Product Trends.
Christopher was a Senior Analyst at Mercer working within their executive compensation practice before joining Cerulli in 2018.
Full biography here.
For the second consecutive year, insurance general accounts experienced robust asset growth (7.5%) and total investment returns for all three major insurer types. However, insurers are focused on the future and their ability to continue meeting their investment return targets. Historically low interest rates have created a challenging market environment for insurers to meet their return targets, pushing insurers to consider investment strategies outside of public investment-grade fixed income.
- A majority (56%) of insurers have increased their exposure to alternative fixed-income investments such as private credit.
- Large life insurers intend to increase their allocations to infrastructure (83%) and real estate debt (67%), which are common strategies for hedging against inflation.
- Health insurers increased their cash holdings to 18.5% to manage the strain on liabilities caused.
In order to obtain yield, insurers will need to invest in complex investment strategies that may go beyond their internal expertise. This may cause an increase in outsourcing from insurers. Learn more about the state of insurance general accounts, climate change risk, outsourcing opportunities, and more with our latest report, U.S. Insurance General Accounts 2021: Adopting New Strategies for Global Challenges.
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