As insurance companies gain more appetite for alternatives, primarily private credit, OCIOs see an opportunity. Sona Menon, head of OCIO for Morgan Stanley’s wealth management business, said that more carriers want to include alternative strategies in their portfolios, such as “absolute return hedge fund strategies that are lower on the risk return profile.” Menon and her team manage the vast majority of Morgan Stanley’s $247 billion OCIO assets.
“We'll be looking later this year to hire some talent in the insurance space,” Menon told Institutional Investor. “We’ve been seeing more interest in insurance entities wanting to look to outsource again.”
Menon’s plan to cater to more insurers is part of her larger remit to build out her team across all channels — endowments and foundations, retirement, and ultra-high net worth individuals. “Part of my mandate is to grow our team in the pockets where we're seeing the most amount of growth, which turns out to be everywhere,” she said.
Morgan Stanley’s $5 billion in insurance assets is currently the smallest segment of its OCIO business (private wealth is its largest, at nearly $87 billion).
Asset managers have long managed insurance assets, but the business got a huge boost when Apollo proved just how profitable it could be. When the 2008 financial crisis drove interest rates to near zero, traditional insurers couldn't generate enough yield to meet their annuity obligations. In 2009 Apollo co-founded Athene to acquire discounted blocks of those liabilities and back them with higher-yielding private credit. After Apollo’s model found success, KKR, Blackstone, and Brookfield soon followed.
There are still relatively few OCIOs catering to insurers. Even with more in alternatives, fixed income still makes up the majority of insurance company portfolios. Insurers also have far more regulatory hurdles and capital requirements than pension funds and endowments — OCIO’s core business.
“It’s difficult for new entrants like OCIOs to gain traction in managing insurance company portfolios, primarily because of the capital, accounting, ALM, liquidity, and regulatory considerations and expertise required in managing insurance assets,” said Joe Eppers, CIO for Selective Insurance (a particularly cautious investor). “Insurance companies tend to be high-touch investors, with unique needs that are very distinct from traditional OCIO clients.”
‘We’re Trying to Grow Our Insurance Assets’
Menon joins other OCIOs going after the rapidly growing insurance market. While AllianceBernstein had already been managing insurer assets in 2024, the $870 billion investment firm made a concerted effort that year to expand its insurance business by hiring former AIG CIO Geoff Cornell as its first-ever insurance investment chief.
“We’re trying to grow our insurance assets under management,” Cornell told II over video before adding: “That’s one large part of my mandate.”
AllianceBernstein currently has about $200 billion in insurance assets, half of which come from its parent company Equitable, the other half split between roughly $35 billion in general accounts and $65 billion in separate accounts for products like variable annuities. Cornell noted that the general account figure has grown from about $23 billion at the end of 2024.
More insurance companies are looking to outsource: Data from Clearwater show that outsourced insurance AUM reached about $4.5 trillion in 2024, up from $2.9 trillion in 2020. According to BlackRock’s 2025 Global Insurance Report, 87 percent of respondents plan to change their asset management operating model, including 53 percent moving to a hybrid model from fully in-house. More than half have already shifted to a hybrid model.
“As investment complexity rises, insurers are fundamentally rethinking how they manage portfolios,” said Mark Erickson, global insurance strategist in BlackRock’s Financial Institutions Group.
Cornell sees the insurance space becoming an increasingly competitive market for OCIOs as more entrants like private equity firms and asset managers flood the space. However, he shared Eppers’ sentiment that OCIOs still face significant hurdles in serving insurers. Specialists will be required.
“There's a lot of intricacies that go into insurance company investing … that don't really exist in endowments and pensions,” he said. "It would take some time to build that capability.”
