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That survey, based on actual 2014 numbers provided by the insurance industry, found outsourced assets were up 8.6% from 2013. The Outsourcing Asset Exchange has done its survey for only two years.
Regardless of the percentage increase, consultants who help insurers find external managers contacted for this story are unanimous in their view that the search for extra yield is pushing more insurance companies to outsource part of their assets.
“The low-yield environment is one of the key drivers for increased outsourcing,” said Sunny Patpatia, president and CEO of Patpatia & Associates.
Mr. Patpatia said insurers are hiring external managers to add investment strategies beyond traditional core fixed income — a staple investment that can account for more than 90% of an insurer's general account — as they attempt to make up for the low interest rates.
Mr. Patpatia said the search for yield has been a boon to firms offering alternatives as well as those with specialty offerings, like emerging markets equity or high-yield fixed income. Large firms with multiasset capabilities also have been in a good position to benefit as insurers look to diversify their portfolios, he said.
Traditional external insurance money managers that mainly specialize in core fixed income strategies have been hurt by the trend, Mr. Patpatia said.
He said insurers are choosing to outsource assets because building in-house specialized investing capabilities from scratch doesn't often make sense economically, never mind the difficulty of finding the right talent.
“Why bother at that point? It's more logical to hire an experienced manager with specialty expertise,” Mr. Patpatia said.
James Gillard, vice president-credit rating criteria, research and analytics at rating firm A.M. Best Co., Oldwick, N.J., said the overall net investment gain for the insurance portfolio for life insurers dropped to 4.92% at the end of 2014 from 5.37% at the end of 2010 because of low-yielding core fixed-income assets.
Mr. Gillard said a 10-year Treasury note that would have yielded 4.8% in 2006 now yields 2.5%.
He said property and casualty insurers also have seen declines in net yield returns to 3.6% at the end of 2014 from 3.8% at the end of 2010.
Alternative assets produced a yield for life insurers of 7.1% in 2013 and 7.3% for property and casualty insurers, according to a Patpatia & Associates analysis. In comparison, life insurers in the same year saw a 5.2% yield from their fixed-income portfolios, while property and casualty insurers saw a 2.8% yield.
Mr. Patpatia said because life insurers can estimate their payouts from mortality calculations, they are able to invest in longer-duration assets with better yields than property and casualty insurers.
Life insurance firms are able to invest to a greater extent in private placements and below-investment-grade securities, which generate a yield premium over investment-grade public bonds, he said.
Property and casualty insurers have greater needs for liquidity to pay out claims in a disaster, so they can't take big bets on riskier fixed-income securities because they might have to sell in a down market, Mr. Patpatia said.
Still, much of the outsourcing occurs at the margins because insurers often manage core fixed-income assets — mandated by insurance regulators to be their dominant asset class — internally.
One of the largest life insurers in the world, Prudential Financial Inc., Newark, N.J., manages most of its $400 billion general account internally, but the firm has $8 billion invested in more than 100 external private equity funds and about 75 hedge funds, said Scott Sleyster, senior vice president and chief investment officer, in an interview.
“Prudential runs one or two sleeves of various hedge funds within its asset management businesses, but if you want to construct a well-diversified hedge fund or private equity fund, we can't do that, that's not the business we are in,” Mr. Sleyster said.
But other major insurers are building in-house investment staffs for alternatives.
Prior to the 2008 financial crisis, insurers outsourced mainly because they thought it was more cost-efficient than internal management, said Robert Goodman, managing director and global head of insurance relationships at Goldman Sachs Asset Management in New York.
But he said the rationale changed after the crisis.
“What we have seen more recently in the low-rate environment is a much greater focus by most insurers on turning to external advisers for ideas, and in some cases mandates, regarding yield enhancement,” Mr. Goodman said.
An April survey by Goldman Sachs of 267 chief financial officers and chief investment officers of insurers around the world, representing $6 trillion in assets, found 26% of respondents are looking to outsource hedge fund investing in the next 12 months; 22%, private equity; 23%, emerging markets equity; 23%, U.S. investment-grade corporate bonds; and 20% middle-market loans.
The survey also found 22% of global insurers planned to outsource more of their portfolio in the next 12 months, while 58% planned to outsource the same amount.
A reduction in fees by external managers of insurance assets is also leading to more outsourcing, said George Caffrey, head of the insurance investment advisory group at consultant Towers Watson & Co. in New York.
“The cost of managing these assets has dropped significantly,” he said.
As external money managers garner more insurance assets, they have been able to reduce fees because of increased scale, Mr. Caffrey said. Increased competition among external managers for insurance assets also is driving fees lower, he said.
“Insurers are finding that external managers can manage their assets cheaper than if they managed it themselves,” Mr. Caffrey said.
He would not offer specifics on the amount of the reductions but other consultants, talking on background, said the fee for managing core fixed-income mandates has dropped to less than 15 basis points in some cases, half of what it would have been 10 years ago.
The Insurance Outsourcing Asset Exchange survey found that as of Dec. 31, BlackRock (BLK) Inc. (BLK) was the largest manager of global insurance assets with $239.95 billion; followed by Deutsche Asset & Wealth Management, $194.71 billion; Goldman Sachs Asset Management, $111.63 billion; Guggenheim Investments, $101.42 billion; Wellington Management Co. LLP, $96.51 billion; Conning Inc., $89.88 billion; Delaware Investments, $87.5 billion; Pacific Investment Management Co. LLC, $79.3 billion; J.P. Morgan Asset Management (JPM), $77.84 billion; and General Re-New England Asset Management Inc., $67.98 billion.
While some big insurers don't outsource insurance assets or only do so on a limited basis, a February report from J.P. Morgan Prime Brokerage said hedge fund managers seeking to deepen their relationships with insurers should seek out larger insurance companies instead of middle-market and smaller insurers.
“Accordingly, any dialogue with such firms likely would entail a lengthy, high-touch education process with only modest prospects for any actual allocations,” the report said.
Major insurers already have allocations to hedge funds and are better prospects, the report said.
Often, smaller insurers don't have the capabilities to outsource because their financial reporting and compliance systems don't have the ability to track and report outsourcing, said Steve Case, a senior investment consultant with Mercer in New York.
“Their pipes don't link with external managers,” Mr. Case said.
This article originally appeared in the August 24, 2015 print issue as, "Insurers increasingly sending assets outside".
Published: Oct. 15, 2017 at 05:29 p.m.
Updated: Oct. 15, 2017 at 09:15 p.m.
Tom Brady added to his list of incredible feats Sunday afternoon.
With the New England Patriots' 24-17 victory over the New York Jets, Tom Brady became the all-time leader for the most career regular-season wins by an NFL quarterback. He earned his 187th career win, breaking a three-way share for the lead he held with Peyton Manning and Brett Favre.
Including playoffs, Brady has an NFL-leading 212 career victories.
Most regular season wins by a starting QB.
Most postseason wins by a starting QB.
My ideal match must be a lady who I can spoil with walks on the beach and elegant dinners, theatre and live shows. Someone who can share my love of animals, good food and culture. A lady who would like to travel and explore the world with me.
sting1 hasn't asked any friends to write a recommendation yet.
Crews will continue working on the pipes throughout the night until repairs are complete.
Photo provided by TN American Water.
UPDATE: Tennessee American Water says that water service has been restored to most of their customers in the Lookout Valley area.
Customers may experience air in water lines and/or discolored water. Running a large, cold water faucet (such as a bathtub) will help to quickly flush out water lines.
TN American Water says they experienced two water main breaks under the railroad tracks, one of which required the replacement of some 70 feet of pipe.
PREVIOUS STORY: A large number of Lookout Valley customers will be affected by a water main break Wednesday night as crews continue making repairs.
A spokesperson for Tennessee American Water says there are two damaged pipes that are both under railroad tracks.
In order to isolate the pipes to begin the repairs, the spokesperson says crews had to turn off the water, affecting a large area.
PREVIOUS STORY: A water main break off Wauhatchie Pike has left two communities with little to no water Wednesday evening.
A spokesperson for Tennessee American Water (TAW) says the breaks have left customers in Lookout Valley without water and St. Elmo residents with low water pressure.
TAW says the breaks have been isolated, which means water will remain off from Wauhatchie Pike to Cummings Highway, but water pressure for other affected customers should begin to slowly build.
TAW crews will remain onsite until repairs are complete.
Only two days into 2018 Ireland is already being battered by bad weather as Storm Eleanor makes its way across the country.
Met Éireann have issued an amber warning for the country after warning that “damaging gusts” of wind could reach up to 80mph.
"Wind Warning for Dublin, Carlow, Kildare, Laois, Longford, Louth, Wicklow, Offaly, Westmeath, Meath, South Galway, Clare, Limerick and Tipperary.
"Storm Eleanor will quickly move across the country tomorrow evening and tomorrow night.
Locals on the west coast had been warned that the swell could mean certain properties are at risk of flooding and drivers have been told to factor in longer journey times.
Walkers have been advised to take particular care in areas exposed to the sea after a woman in England was swept away into the Atlantic by an especially large wave - she's currently in hospital "in intensive care".
Ferry services to and from the Isle of Man have been cancelled.
Despite this, Eleanor is set to be a much less damaging storm than Ophelia, which hit Ireland in October. Then wind speed reached 115mph, there was an estimated $70 million worth of damage across Ireland and Great Britain and three people died as a result of the storm.
Months ago the extraordinary EU leaders’ summit to ‘seal the deal’ on Brexit was conceived as a big momentum moment; a heavyweight, set-piece occasion in which Theresa May’s Brexit deal took on an unstoppable quality.
The summit atmosphere was never intended to be to be chummy, but still, this was the moment when the cover-up was applied to the negotiation room bruises and all 28 leaders agreed that these were the only viable terms for the United Kingdom to make an orderly exit from the EU.
If the Chancellor of Germany and the President of France both backed the deal for the sake of stability on both sides of the Channel, would a rump of Brexiteers really look credible when defying them?
Svechnikov recorded a power-play assist in Saturday's 3-0 win over the Stars.
The helper leaves Svechnikov just three points shy of the 30-point mark with 23 games to play. The 18-year-old Russian likely won't win the Calder this season as the league's top rookie (the Canucks' Elias Pettersson looks to have that award locked up), but Svechnikov remains a key player for the rebuilding Canes, and has elite top-six forward written all over him. From a fantasy perspective, his youth and high ceiling make him a very desirable asset, both in yearly leagues and keeper formats. Lock him up if you can.
The defenders of George W. Bush are having a difficult time with the 9/11 commission report that declared no “collaborative relationship” existed between al Qaeda and Iraq. Before the war, Bush claimed that one reason that Saddam Hussein was a threat to the United States was that he was “dealing with al Qaeda.” (He was referring to present-day “dealing.”) The 9/11 commission report challenges that key assertion. And the dogs of war have been barking since its release.
Zarqawi is a murderous thug. He apparently was the fellow who beheaded Nick Berg. He is accused of having killed an American in Jordan and being behind many of the post-invasion terrorism acts in Iraq. Supporters of the war–especially neocons–have pointed to his presumed presence in Baghdad before the war as strong evidence of an al Qaeda-Hussein connection. But the Zarqawi-in-Baghdad episode remain murky. At first, the story was that he had been in Baghdad to have a leg amputated. But a few weeks ago, at an American Enterprise Institute conference, Stephen Hayes, a writer for the Weekly Standard who has written a book on the purported al Qaeda-Iraq connection, told the audience that apparently the reason for Zarqawi’s stay in Baghdad was now believed to be a sinus or nasal problem.
It seems there needs to be more work on this front before the Zarqawi matter is resolved. And even though Zarqawi is routinely described as an al Qaeda associate, the true nature of his relationship to bin Laden is unclear. As I have previously noted, earlier this year, when Zarqawi asked al Qaeda for assistance in fomenting civil war in Iraq, al Qaeda, according to US intelligence officers, rejected his request. Also, the Ansar al-Islam band that Zarqawi worked with was based in northern Iraq, in territory not controlled by Baghdad. (Its leader also has said that this fundamentalist group was opposed to Hussein.) Northern Iraq was a “safe harbor” (as Cheney put it) for Ansar al-Islam in part because it was a US-enforced no-fly zone. Again as I previously noted, NBC reported that in 2002 and 2003, the Pentagon wanted to attack Zarqawi’s camp in northern Iraq, and the White House said no. If Zarqawi was indeed an al Qaeda partner and in league with Hussein, why not?
This is not to say that there was no relationship at any time between Zarqawi and al Qaeda or that Zarqawi had no contacts with the Iraqi regime. The key issue is whether there was, as Bush melodramatically claimed, a working relationship between al Qaeda and Iraq before the invasion. The Zarqawi story–murky as it is– does not prove Bush’s assertion that al Qaeda and Hussein’s government were operational allies.
So after the CIA, the FBI and 9/11 commission conclude there is no evidence to back up this charge, how responsible is it for Cheney to continue to insist this matter remains an open question? Such stubbornness (to be polite about it) does not inspire confidence in the other arguments he puts forward regarding the purported al Qaeda-Iraq connection.
This is a major discrepancy. And Lee Hamilton, the Democratic vice-chairman of the commission, seems confused by it. On June 17, he remarked, “I must say I have trouble understanding the flap over this [the purported al Qaeda-Iraq relationship]. The Vice President is saying, I think, that there were connections between al Qaeda and Saddam Hussein’s government. We don’t disagree with that, so it seems to me the sharp differences that the press has drawn — the media has drawn are not that apparent to me.” But Cheney–who does see a “sharp difference” between his position and the commission’s–has said these connections led to Iraq providing operational assistance; the commission concludes they did not.
Given Cheney’s prewar record of accuracy–he claimed Hussein had amassed WMDs to use against the United States, that Hussein had revived his nuclear weapons program–his statements on the contacts between al Qaeda and Iraq (and what came of them) cannot be accepted at face value. If the administration has evidence that Iraq did assist al Qaeda, it should produce it and resolve the question–especially because Bush, before the war, used this particular allegation to drum up support for the invasion of Iraq. He said, “Iraq has sent bombmaking and document forgery experts to work with al Qaeda. Iraq has also provided al Qaeda with chemical and biological weapons training.” He did not say that this had happened eight years earlier. But the administration owes it to the public to clear up this issue.
After you read this article, check out David Corn’s NEW WEBLOG on the Bushlies.com site.
The best spin so far has come from Andrew McCarthy, a former assistant US attorney who led the 1995 terrorism prosecution against Sheik Omar Abdel Rahman and eleven others. Writing for National Review Online McCarthy argues that the commission’s report does not say what the media reported it says. What the commission really meant to say, McCarthy claims, is, “We have no credible evidence that Iraq and al Qaeda cooperated on attacks against the United States.” (Emphasis his.) Go back and read the paragraph in dispute. (Find it here.) It is quite hard to come up with McCarthy’s interpretation. Even Cheney noted that the commission had concluded there was no “general relationship”; he just happened to disagree with the finding. And yesterday, as a full dustup was under way, Philip Zelikow, the executive director of the commission (and a former Bush I National Security Council staffer who later cowrote a book with Condoleezza Rice and served on the Bush II transition team), observed that the report was referring to a lack of evidence of “operational” ties between Hussein and al Qaeda. The commission has not said it was only considering a relationship focused on anti-American attacks.
McCarthy also–breathlessly–points to a line that appeared in a 1998 indictment of bin Laden to disprove the 9/11 commission. It reads, “Al Qaeda reached an understanding with the government of Iraq that al Qaeda would not work against that government and that on particular projects, specifically including weapons development, al Qaeda would work cooperatively with the Government of Iraq.” Conservative and neocon promoters of an al Qaeda-Iraq connection repeatedly wave this sentence in public.
McCarthy did not mention this exchange or note that the Justice Department dropped that language apparently because it was unsure of the material. He does write, “I am not suggesting that bin Laden’s ties to Iraq were as extensive as his connections to Afghanistan. But as is the case with Iraq, no one has yet tied the Taliban to a direct attack on the United States, although no one doubts for a moment that deposing the Taliban post-9/11 was absolutely the right thing to do.” Yes it was– because the Taliban had a close partnership with al Qaeda and was permitting bin Laden and his murderers to operate from its territory.
The issue stirred up by the 9/11 commission is whether Bush overstated the threat from Iraq prior to the war. He claimed Hussein had WMDs and was at that moment in league (“dealing with”) al Qaeda. (In his May 1 speech aboard the USS Abraham Lincoln, he called Hussein an “ally” of al Qaeda.) Challenged on this, the Bush administration and its allies point to “contacts” that occurred in the mid-1990s (which may or may not have led to anything), to an allegation dismissed by the CIA and the FBI about a single meeting in Prague (and unless one knows what was said in such a conversation, its relevance cannot be judged), and to an A-to-B-to-C connection supposedly involving Zarqawi as the missing, middle link.
All of this possible evidence–call them hints, clues, indications, unconnected dots–was reason to worry about al Qaeda and Iraq hooking up. But it does not prove the two were operational allies, as Bush suggested. He could have argued for war by saying that the prospect of an al Qaeda-Iraq alliance was too frightening and dangerous. That Hussein, who had WMDs in the past, might have some left over or might be developing new ones. That Hussein’s regime, which once had contacts with bin Laden, might forge an anti-American partnership with bin Laden. And that if this were to happen and Hussein did come to possess WMDs, the threat to the United States would be deadly serious. If Bush had presented this sort of case, then the public could have had an honest debate on the merits of going to war at that particular time.
This is not what Bush did. He misrepresented the known facts and used exaggerations to support his argument for war. And now he and his cheerleaders have to make the case for war with whatever bits of information (or misinformation) they can dig up. Isn’t that doing things backward?
For more information and a sample, go to the official website: www.bushlies.com. And check out Corn’s blog on the site.
TWO Sydney radio disc jockeys have apologised after impersonating Queen Elizabeth II and Prince Charles in a prank call to get a London hospital to tell them all about Kate Middleton's condition.
The King Edward VII hospital in London confirmed the hoax call - and that the hospital fell for it.
The 30-year-old Duchess of Cambridge is pregnant and is being treated at the hospital for severe morning sickness.
A woman using the often-mimicked voice of Britain's monarch asked after the duchess' health - and was told by a nurse that Kate "hasn't had any retching with me and she's been sleeping on and off".
"She's sleeping at the moment and she has had an uneventful night. She's been given some fluids. She's stable at the moment," the kindly nurse informed the supposed queen and prince on the station's recording.
A dog yaps in the background during the recording while the alleged queen and prince talk about travelling to the hospital to check in on Kate.
"I would suggest that any time after 9 o'clock will be suitable to visit," the nurse said. "We'll be getting her freshened up."
2DayFM hosts Mel Greig and Michael Christian later apologisd for the hoax - along with their station.
"We were very surprised that our call was put through. We thought we'd be hung up on as soon as they heard our terrible accents," they said in a statement.
"We're very sorry if we've caused any issues and we're glad to hear that Kate is doing well."
The hospital is now reviewing its protocols.
Kate, I'm so feeling your pain!
Question: Can you hide on the Internet?
Many people have the opposite concern. Wired magazine devotes this month's cover to an attractive young woman named Julia Allison who set out to achieve Internet fame by targeting a few key online "choke points" - widely read gossip blogs - for exposure. She must be famous. She is on the cover of a national magazine!
Wired understands the Allison-in-Wonderland nature of genuine Web fame: Allison is a "celebrity," and she is "nobody." Welcome to the Web.