MetLife Asset Manager to Push Into Structured Finance, Junkby
Insurer has `fairly aggressive' hiring plans for asset manager
Investment chief Goulart says he's open to acquisitions
MetLife Inc., the largest U.S. life insurer, plans to expand its third-party asset manager into structured finance and junk bonds, pushing beyond its original focus on real estate and private placement debt.
MetLife Investment Management, or MIM, is planning to bring the new strategies to the market this quarter and could establish an emerging-markets offering in the future, Chief Investment Officer Steven Goulart said in an interview Tuesday at his office in Morristown, New Jersey. Growth is sparking more hiring, with a goal to add more than two dozen staff members for the unit, which serves sovereign wealth funds, pensions and other insurers.
“We’ve shown we can start this business and grow it organically,” Goulart said. “We’re continuing to focus on growth in those sectors, and we’re at a point where we’re now also starting to consider: Should we expand it into different businesses?”
Insurers have been constrained by low interest rates and increased regulation that limits the risks they can take with their own funds. That has helped a push into third-party asset management, which generates fee income. New York-based MetLife, which has more than $500 billion in its own portfolio, started its unit in 2012 and focused on real estate and private-placement debt, areas in which the insurer already had significant investments.
‘Growing the Talent’
MIM oversees about $3 billion in real estate equity, $1.6 billion in commercial mortgages, and $5.6 billion in private placements for third-party clients. It won an agreement last month to manage more than $1 billion for Resolution Life.
MetLife has bolstered MIM’s staff and in January named Joseph Pollaro, who had worked at both Morgan Stanley and Prudential Financial Inc., as head of operations. The insurer hired BlackRock Inc.’s Dhaval Parikh in August as a director in its institutional client group where he’ll work with investors and consultants.
“We have fairly aggressive hiring plans for MetLife Investment Management,” Goulart said. “We need to keep growing the talent.”
Acquisitions may be needed to help build the asset-management unit, Goulart said. Competitors including Principal Financial Group Inc. and New York Life Insurance Co. have pursued deals to bring in talent and add assets under management.
“If you want to grow this business, to really be a material business, we’re probably not going to be able to just do it organically,” Goulart said. “We have looked at acquisitions. We haven’t seen anything that really makes sense, strategically and financially for us. So we haven’t done anything.”
MetLife is fighting a U.S. designation that it’s a systemically important financial institution, a tag that can lead to tighter capital limits. The insurer had declined about 6.1 percent this year through the close of trading Tuesday in New York, compared with the 1.1 percent advance for the Standard & Poor’s 500 Index.
MIM is less capital-intensive than many other insurance operations, Goulart said. Some of the company’s largest deals in recent years include investments with Norway’s sovereign-wealth fund in office properties in cities such as Boston, Washington and San Francisco.
“We’re very pleased with the progress we’ve made” in different asset classes, Goulart said. “Some were probably a little bit slower than we thought, some were faster than we thought, but I think that’s part of starting a new business.”