New York Life Insurance Co., the largest U.S. life insurer owned by policyholders, said it agreed to take a stake in Cornerstone Capital Management Inc. to add about $2.7 billion in assets under management.
The insurer will acquire a minority stake and then increase its ownership over seven years to a majority holding, New York Life said today in a statement.
New York Life is among insurers seeking to boost income from managing clients’ money as low yields pressure returns from life insurance and annuities. The firm managed more than $345 billion in assets as of July 31. Principal Financial Group Inc. (PFG) has said it is seeking to generate more revenue from fees as interest rates near record lows pressure life insurance profit.
“It complements the suite of investment capabilities we have across our different boutiques,” Yie-Hsin Hung, a senior managing director in New York Life’s investments group, said in an interview. “It really comes down to their investment capability and process, which we found to be very strong.”
Cornerstone, led by Andrew Wyatt and Thomas Kamp, manages the Keystone Large Cap Growth Fund (KLGAX), which has beaten 68 percent of similar funds over the past five years, according to data compiled by Bloomberg. The firm also invests in equities for pension funds and endowments and has about $2.7 billion in assets under management, Kamp said. That compares with $2.2 billion as of July 31.
The Keystone fund’s largest holding is Apple Inc. (AAPL), the maker of iPads and iPhones.
“What really sets us apart is we actively trade around a core position in a given name,” Kamp said by phone. “We actually increase the weighting in a given name as the reward- to-risk ratio becomes more attractive.”
As part of the deal, New York Life’s MainStay Investments will distribute the fund, and Minneapolis-based Cornerstone will continue to manage investments, pending shareholder approval.
“We will see significant growth in assets over the coming years, filling a need in their product portfolio,” Kamp said.
He said the New York-based insurer ultimately will own 80 percent of Cornerstone and the purchase price will be based on the success of the firm.
MainStay, New York Life’s mutual fund business, had more than $63.5 billion in assets under management as of July 31. The investment manager said in July it reached a deal to add Michael Shaoul’s Marketfield Fund (MFLDX), with about $2 billion in assets under management, pending shareholder approval.
John Brine, a New York Life spokesman, declined to discuss the terms of today’s deal.
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