JPMorgan Chase & Co. (JPM) won a contract to help manage about $12 billion in bonds for Resolution Life Holdings Inc., a startup insurer that plans to acquire policies from other U.S. carriers.
“The partnership represents a comprehensive investment management relationship that includes fixed-income portfolio management, asset-liability management and product hedging,” according to a statement today from Resolution. It will also cover “asset-allocation strategy and investment accounting and reporting support.”
Resolution said last month that it plans to initially invest $2 billion to build a "lasting, sizable and differentiated" insurance company in the U.S. comprised of businesses that are no longer adding new clients. The announcement followed its agreement to buy Lincoln Benefit Life from Allstate Corp. (ALL) in July. Insurers including Hartford Financial Services Group Inc. have been looking to sell U.S. life operations as low interest rates pinch profit.
Resolution Chairman Clive Cowdery pursued a similar strategy in the U.K., where he amassed a personal fortune consolidating the industry. Over the last decade, his Resolution Group bought 25 insurers, comprising more than 10 million policyholders and $200 billion in policy assets.
Money managers including New York-based JPMorgan, BlackRock Inc. and Goldman Sachs Group Inc. have been vying to win contracts with insurance clients to boost fee income. Insurers have sought Wall Street investment expertise to diversify their portfolios and meet regulatory requirements. Outsourcing also allows the insurers to focus on underwriting.
JPMorgan said March 31 that its Highbridge Principal Strategies LLC will manage funds for Watford Re Ltd., a Bermuda-based reinsurer.
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