Why APAC insurers average 35% of assets with external managers

Allocations range from 24% to 45% across firms managing a combined $2.6t.

Asia-Pacific (APAC) insurers are increasing their use of external asset managers as private market investments expand, according to new research from Clearwater Analytics. 

The study found that insurers in Hong Kong, Singapore and Australia now place an average of 35% of their assets under external management, with allocations ranging from 24% to 45% across surveyed firms managing a combined $2.6t.

The trend is set to accelerate. About 67% of insurance asset management executives expect more of their portfolios to be handled by external managers over the next five years. 

Only 22% foresee a shift back in-house, whilst 11% expect no change.

Clearwater’s findings show that the shift is driven mainly by the growing acceptance and stronger reputation of external managers, followed by better transparency and reporting. 

Asset managers also pointed to improved control over portfolios, analytics and risk monitoring as reasons behind the rise in outsourcing.

Traditional motives such as cost-cutting or lack of in-house expertise ranked the lowest. 

This suggests insurers are relying on external partners not to save money, but to meet increasing demands around data, reporting and private-market investment capabilities.

Shane Akeroyd, Chief Strategy Officer and President for APAC at Clearwater Analytics, said insurers are turning to specialist managers as private markets take up a larger share of portfolios. 

He noted that technology and platform improvements are giving insurers greater oversight, making external management more attractive.

Most respondents expect more M&A activity ahead, and with private markets projected to account for about one-third of allocations, the report says external expertise will play a bigger role in helping insurers manage complex assets across the region.