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Insurance Companies and Asset Management

October 12th, 2009

Many large insurers over the years have tried their hand at asset management. With significant in-house investment capabilities and resources, on the surface it seems like a natural fit. However, the results of these efforts have been mixed at best. Having been directly involved in a couple of these situations, and having seen many more from the outside in serving them as clients, I know first hand what it takes to be successful and the pitfalls to avoid.

While many of these firms invest their own assets quite well, the business of managing money for outside clients requires additional skills and resources. Investment capabilities that were built for the insurer’s needs must align with the needs of other clients or be augmented. Other requirements include reporting, client servicing, and marketing.

In addition, outside clients need to feel that the organization values their investment needs as much as it values its own. Conflicts must be anticipated and addressed. Finally, many firms simply give up on the business too early. They underestimate how long it takes to build an asset management business. If they do not commit to the business for the long term, other priorities may crowd it out.

Filed under: General

Tags: business, insurance, investment