JPMorgan Chase & Co. (JPM), the largest U.S. bank by assets, hired Douglas Niemann to be a managing director as it builds a group to oversee about $39.5 billion in general account assets for insurance clients.
Niemann, who previously worked at American International Group Inc. (AIG), joined JPMorgan this month to lead the unit’s strategy and analytics, according to Matt Malloy, head of global insurance solutions at the New York-based bank’s asset- management arm. Malloy has made at least four other senior hires since the beginning of the year, bringing his team to more than 30 people globally.
“We continue to see a lot of opportunity to partner with insurance companies,” Malloy said in a phone interview yesterday. “We’ve invested in people, and a lot of that has culminated over the last several months.”
JPMorgan, Goldman Sachs Group Inc. (GS) and BlackRock Inc. (BLK) are among firms vying to manage money for insurers facing pressure from low interest rates and new regulations. General-account assets overseen by the largest fund managers surged by about 20 percent annually from 2001 to 2009, to more than $1 trillion, according to a report by Swiss Re Ltd.
That trend will probably continue, said Malloy. Mandates from insurers in the U.S. and developed parts of Asia have been driving growth while outsourcing from European insurers will increase, he said. JPMorgan has boosted its number of insurance asset-management clients by about 40 percent since the end of 2010.
Plunging bond yields have put pressure on insurers’ income as they’re forced to reinvest proceeds from maturing securities at lower rates. That’s made it more difficult for life insurers to meet returns they’ve guaranteed customers on retirement products and for property-casualty insurers to post a profit when they lose money on underwriting.
Part of Niemann’s job will be to advise insurance clients on investments, said Malloy. Niemann has worked at Zurich Insurance Group AG, where he managed the market risk for investment portfolios worldwide. He holds an MBA from the University of Wisconsin-Madison School of Business and a bachelor’s degree from Northwestern University.
Other recent hires in the group include managing directors Greg Tell, who joined this month from MetLife Inc. (MET) to oversee fixed-income investments in New York, and Pat Tuttle in Chicago. Neil Moge was hired as an executive director in London in January, while Jeffrey Xia joined the group as a vice president in the first quarter. JPMorgan has also been investing in its technology to support its insurance clients, Malloy said.
Deutsche Bank AG (DBK) and BlackRock had the most insurer general account assets under management at the end of last year, with more than $200 billion apiece, according to a preliminary survey by Insurance Asset Manager, a trade publication. Conning was the third-largest with $86 billion.
Goldman Sachs, with $59.5 billion in general account assets under management, has boosted investment in its business that oversees insurer funds, Chief Executive Officer Lloyd Blankfein and President Gary Cohn wrote in the bank’s most recent annual report. Outsourcing has been accelerated by “new capital regimes, greater demand as a result of the financial crisis and a sustained low interest rate environment,” they wrote.
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