Ned Cazalet, principle of Cazalet Consulting, said that because of the maturing of with-profits funds and the relatively barren investing environment, insurers would become even more conservative. He cited Scottish Mutual, which has slashed its equity allocation from 78 per cent to 28 per cent in the past couple of years, as a typical example and said that even more dramatic decreases in equities were on the cards.
 Mr Cazalet added that the investing climate also means that volatility was now so pervasive and such a potential source of returns that it should now been viewed as an asset class in its own right.
 Insurers at the conference were divided on whether to run such mandates in-house or to outsource them. Gavin Hill, chief executive of GE Asset Management said his firm outsourced equities because “we didn’t feel we had the knowledge to do as good a job as external parties”. But it runs bonds in-house because this is cheaper and the in-house capabilities are up to scratch.
 Outsourcing enthusiast James Bevan, investment chief at Scottish Mutual and Scottish Provident, countered, “fixed income is a very fast moving world and we need to give it the same (outsourcing) treatment we give every other asset class.”
 See Managing assets for life insurers: pp24-25

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