OCIO for insurers: a partner to your portfolio  

However, they should also integrate seamlessly with regulatory capital constraints, business objectives, and rating agency requirements that could be distracting them from investments results. 

The growing complexity of balancing these requirements is leading insurers from across the spectrum to re-examine how they govern, execute, and adapt their investment strategies as opportunities, risks, and enterprise strategies shift.

Amid this shift, the Outsourced Chief Investment Officer (OCIO) investment governance model is gaining traction, not as a commoditized operational solution, but as a potential strategic lever for managing both sides of the balance sheet. OCIO is an investment model where institutional investors may delegate part or all of its investment decision making and execution to an investment provider after agreeing upon overall investment objectives.  It can represent a broader rethink of how insurers implement investments, manage investment risk, and respond to market complexity with the potential to bring greater flexibility and discipline.

Typically, when insurers consider different governance models for managing their investment portfolio, particularly outsourcing, a central challenge is in managing the specific complexities found in insurance firms. Varying degrees of operational and investment activities should be evaluated based on their financial impact vs time spent so as to determine which tasks are retained in-house or outsourced to third party providers.

In 2024, more than 43% of life and health insurers relied on a single third-party investment manager to actively manage at least 10% of their assets, compared with 32% in 2016, according to a recent AM Best’s Special Report¹. 

¹ AM Best, Trend Review, Growing Number of Insurers Outsourcing Their Investment Management Needs, August 2025

Many of these organizations cite people talent, competitive edge, technology spend, performance and core business focus as top-of-mind when considering the right balance between retention vs. outsourcing, or some combination in between.

For example, while balancing resources between business objectives, strategic initiatives, and daily management of an investment program, many firms can potentially stretch resources and divert focus from primary goals. Leadership may frequently face challenges in prioritizing initiatives that influence growth, underwriting, and other critical areas, while investment management demands ongoing oversight, adjustments, and risk assessment. These competing priorities can split the focus of management and impact productivity, with key personnel spending more time on operational tasks rather than actively advancing the company's highest value strategic priorities.

The OCIO model allows insurers to delegate the design, implementation, execution and oversight of their portfolios to an experienced investment partner. But this is not merely about outsourcing. For many insurers, particularly those with lean internal resources, OCIO can be a way to gain access to robust capabilities and broader investments, more sophisticated tools, stronger technology, it may also support faster decision-making, and deeper insight into manager selection and market trends as well as potentially lower fees. As a result, many insurers are evaluating the business case for OCIO and seeking to achieve operational / financial advantages that could have a meaningful impact on the business. 

For small to mid-sized insurers (less than $15b in general account assets), OCIO can help level the playing field compared to their much larger peers. This is often a result of smaller budgets, lack of resources, challenges in talent acquisition and retention and the lack of scale. OCIO is designed to help address constraints and expand the range of managers, strategies and investment infostructure available (people, technology/systems, process, manager relationships) which may otherwise be out of reach. Properly implemented, it can mean an OCIO acts as an extension of your team potentially saving you time, money and allowing you to execute efficiently and help improve outcomes.

Asset allocation decisions are among the most critical responsibilities of an investment committee. As market conditions change, the committee may need to assess short-term opportunities and implement rebalancing actions. These decisions, some requiring prompt action, are often only addressed during quarterly meetings. This infrequent meeting schedule can hinder the speed and efficiency of decision-making. Timely execution is essential for seeking to achieve investment success, making rapid response capabilities a key factor.

OCIO solutions for insurers should go beyond a one-size-fits-all approach and be purpose-built around the unique characteristics of insurance portfolios. They should be tailored to each insurance portfolio at a granular level, matched to a company’s unique business objectives, competitive environment, capital and rating agency considerations, and regulatory constraints. It is important to take a dedicated insurance centric lens when structuring and managing investment portfolios in alignment with capital requirements, liability characteristics, and long-term surplus objectives.

This means partnering with the right investment partners that can take a “whole of balance sheet” approach to your investment portfolio. The right partner should be able to take an enterprise-based approach, helping insurers align investment strategy with broader risk and capital considerations. This collaboration can potentially improve financial goals and inform better decision-making amongst stakeholders.

In our view, improving investment outcomes can be aided by access to robust institutional investment managers specializing in insurance, leveraging scale and resources to operate more efficiently and lowering expenses by seeking to reduce manager fees. Further, eliminating unforced errors and missed opportunities may require a dedicated investment focus.

OCIO may remove bottlenecks without sacrificing governance and company specific factors and leverages scale and resources to potentially enhance operational and financial efficiency. This approach can allows boards and committees to maintain full strategic control while confidently delegating implementation tasks. The goal is execution with institutional rigor, operational excellence, and agility, enabling the organization to to be more responsive to opportunities and to manage risks effectively.