European insurance companies have continued to outsource management of their investments to outside firms, according to a newly published report.
The study, commissioned by research firm Novantigo, also found that smaller insurers with less than €5 million in assets under management are more inclined to expand their use of external asset managers.
The report, ‘2025 Outlook: Insurance Asset Management in Europe – Outsourcing Trends and Opportunities for Asset Managers’ also found that the pace of growth of outsourced investments is forecast to slow over the next five years.
Between 2019 and 2024, the size of assets that were outsourced to third party managers grew from US$1.2 trillion to $1.4 trillion. This is set to continue through 2028 by which time assets are forecast to reach $1.6 trillion.
However, there will be a deceleration in returns. The compound annual growth rate (CAGR) between 2019 and 2024 was 1.7% but this is expected to drop to 0.8% from now to 2028.
In terms of geography, French insurers are most likely to increase their share of externally managed assets (68%) which is almost twice as high as UK (38%) and German (31%) counterparts.
The report also looks at asset allocation and found that nearly a third (31%) of the outsourced strategies were private investments. The preference for private investment was strongest in the UK and Germany with structured credit, private equity and infrastructure the most popular alternative asset classes.
The survey also found that the majority of insurers intend to increase their private asset allocations in the next 12 months. The survey also found that there was a difference in the asset allocations of insurers based on their size.
“Larger insurers tend to be more aggressive in diversifying their exposure across different private asset classes and are seeking niche investment opportunities, while smaller insurers, typically with limited allocations to private assets, are looking to expand their exposure across various private asset strategies,” said Andre Schnurrenberger, co-founder and managing partner at Novantigo.
The report studied 467 outsourced mandates and funds from a survey of 130 European insurers.
