Insurance Investment Outsourcing Is Growing. The Bigger Story Is Why.

Stewart J. Foley, CFA
Founder and Senior Advisor, InsuranceAUM

The NAIC’s latest data shows more insurers turning to outside managers, but the real story is the changing nature of insurance asset management itself.

The NAIC recently published its latest review of investment management outsourcing by U.S. insurers, and the headline is straightforward enough: outsourcing continues to grow. At year-end 2025, about 54% of U.S. insurers reported using an unaffiliated investment manager, up from almost 53% a year earlier and roughly 50% in 2021. The number of insurers outsourcing rose to 2,460 from 2,415 in 2024.

Those numbers matter, but I don’t think they are the most interesting part of the report. What caught my attention is what sits underneath them, because the data says quite a bit about where insurance asset management is headed. Two-thirds of the insurers that outsource have less than $250 million in assets under management. About 75% of insurers outsource more than half of their assets with a single unaffiliated manager. And, according to the Clearwater Analytics survey cited by the NAIC, outsourced AUM among its U.S. insurance respondents reached $5.5 trillion in 2025, more than triple the $1.7 trillion reported a decade earlier.

Taken together, those figures describe something much more important than a gradual increase in outsourcing penetration. They describe a market in which outside managers are increasingly functioning as an extension of the insurance company itself.

That distinction is important. Insurance companies do not hire an asset manager in the same way an endowment hires a manager for a sleeve of a diversified pool. General account assets exist to support liabilities. They sit inside a regulatory, accounting, and capital framework that affects virtually every investment decision. Liquidity matters differently. Downgrades matter differently. Realized gains and losses can matter differently. The portfolio is inseparable from the business that sits behind it.

For a large insurer, there may be enough scale to build much of that expertise internally. For a $150 million P&C carrier, a regional health plan or a smaller life company, the economics are entirely different. Those companies still need asset-liability management, regulatory expertise, portfolio construction, credit underwriting, reporting, accounting support and access to investment opportunities, but it rarely makes sense to build every one of those capabilities in-house.

That is why the small-insurer number in the NAIC report matters. About two-thirds of insurers outsource AUM below $250 million. The insurance asset management industry naturally spends an enormous amount of time pursuing very large mandates, and for understandable reasons. But there is a broad universe of smaller insurers that have the same fiduciary obligation to manage their general account well and nowhere near the same internal resources.

For those companies, outsourcing is not simply a way to buy a bond portfolio. A strong insurance asset manager can effectively become the investment department: helping establish strategy, implement the investment policy, manage liquidity, evaluate risk, navigate regulatory constraints and increasingly provide access to asset classes that would otherwise be difficult to source or manage internally.

That last point is becoming more important as the opportunity set expands. The NAIC links the increase in outsourcing in part to insurers’ growing exposure to nontraditional assets, including structured finance and private credit. That makes sense. Sourcing and underwriting private assets require people, systems, and infrastructure that are expensive to replicate. For many insurers, particularly smaller ones, partnering with an outside manager is simply the more efficient answer.

At the same time, it is worth keeping the private markets story in perspective. The Clearwater survey cited by the NAIC found that roughly 80% of outsourced AUM was still in public fixed income and equities. Private credit may get attention, but traditional assets remain the foundation of the outsourced insurance portfolio. The opportunity for managers is therefore not simply to bring an insurer to another private credit product. It is to understand how public and private assets work together inside the total general account.

The concentration of these relationships is equally notable. Close to 90% of insurers outsource at least 10% of their assets to a single unaffiliated manager, and roughly 75% place more than half of their assets with one manager. In raw numbers, approximately 1,830 insurers had more than half of their assets managed by a single unaffiliated firm at year-end 2025.

That is a remarkable level of responsibility. When a manager has more than half of an insurer’s assets, the relationship cannot be built around a product pitch. The manager needs to understand the company’s liabilities, capital position, liquidity profile, accounting considerations, board expectations, and business objectives. Performance still matters, obviously, but insurance expertise and trust become just as important.

This also helps explain why the names at the top of the NAIC list do not change very much. BlackRock remained the most frequently named unaffiliated manager in 2025, followed by NEAM, Wellington and Conning, with Goldman Sachs Asset Management, J.P. Morgan Asset Management, AAM, PIMCO and DWS also among the leaders. Apollo and Sun Life Capital Management tied for tenth. These are not relationships insurers tend to change casually, particularly when an outside manager is handling a meaningful percentage of the general account.

There is another part of the report that deserves more attention: the divergence between smaller insurers and the largest life companies. Only 1% of large life insurers outsourced more than half of their investment management to a single unaffiliated manager in 2025. That does not mean those firms are becoming less dependent on external investment capabilities. In many cases, the structure has simply changed.

The NAIC points specifically to acquisitions and joint ventures involving life insurers and private-equity-owned asset management firms. When an insurer has access to an affiliated asset manager with private credit, alternatives and origination capabilities, those assets no longer appear in the same way in the unaffiliated outsourcing statistics. The economic relationship may look very much like outsourcing, but the organizational chart says something different.

That distinction is increasingly important for anyone trying to understand the insurance asset management market. Competition for insurance AUM is no longer limited to winning a traditional third-party mandate. It includes affiliated asset management platforms, strategic partnerships, joint ventures, acquisitions, and reinsurance structures. In other words, managers are not just competing for mandates. In some cases, they are competing for the entire relationship.

The sleeper statistics in the report may be the growth of investment consulting. According to the Clearwater data cited by the NAIC, insurer assets under advisement by investment consultants reached approximately $1.8 trillion at year-end 2025, double the level reported at year-end 2023.

That growth makes perfect sense to me because the questions insurers are asking to have become broader. The conversation is no longer only “Who should manage our core bonds?” It is increasingly: How much liquidity do we actually need? Where should we take credit risks? How much private credit can the balance sheet support? Which assets provide the best return on capital? What should be managed internally, what should be outsourced, and where do specialist managers fit? Those are enterprise-level portfolio questions, and they require advice that sits above any individual product.

That may ultimately be the most important message in the NAIC’s latest report. Insurance investment outsourcing is growing, but the market is also becoming more sophisticated. Smaller insurers are using outside managers to access institutional capabilities they cannot efficiently build themselves. Larger insurers are developing increasingly complex affiliated platforms. Private markets are broadening the opportunity set, even as public fixed income remains the core of most portfolios. Consultants are taking on a larger role as portfolio construction becomes more complicated.

For asset managers, the implication is fairly clear. Having insurance clients is not the same thing as having an insurance asset management business. The firms that succeed in this market will be the firms that can understand the whole insurer, not simply the portfolio they would like to manage.

That has always been true to some degree. The NAIC data suggests it becomes truer every year.

Source: National Association of Insurance Commissioners, Capital Markets Bureau, “Increase Continues for U.S. Insurers’ Outsourcing Investment Management in 2025,” 2026. The report also cites Clearwater Analytics’ 2026 Insurance Investment Outsourcing Report.