APAC insurers seek third-party managers to support private markets investments
More than a third of Asia-Pacific (APAC) insurance asset managers are turning to third-party firms to run their funds, as they increase their allocations to complex private markets products.
A survey by Clearwater Analytics (CWAN) of insurance managers, representing a combined $2.6tn (£1.9tn) in assets under management, found that, on average, 35 per cent of their portfolios are managed externally.
Across the firms surveyed, delegation to external managers ranged from 24 per cent to as high as 45 per cent.
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Around two-thirds of respondents expect a further move towards outsourcing, while 22 per cent anticipate bringing more assets back in-house. Only 11 per cent expect the balance to remain unchanged, according to the survey of insurance managers in Hong Kong, Singapore and Australia.
“The use of third-party asset managers across APAC is set to accelerate as insurers become increasingly comfortable with the practice and seek specialist expertise for complex private-market investments,” said Shane Akeroyd, chief strategy officer and president of Asia Pacific at CWAN.
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The shift towards external management is being driven mainly by the improving reputation of outside managers and greater acceptance of using them, with enhanced transparency and reporting ranked as the second-strongest driver, the survey found.
By contrast, a lack of internal expertise and cost-cutting were cited as the least important reasons for outsourcing.
“It is striking that the trend is not primarily being driven by a desire to cut costs or a lack of in-house expertise,” Akeroyd added.“Generally, the shift is being driven by technology and the growing use of platforms that give insurers the control and transparency they need. With 96 per cent expecting increased M&A activity and private markets set to represent a third of allocations, external expertise becomes a competitive advantage.”
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