More money managers that started life as insurance-company investment units are making a concerted effort to grow their in-house capabilities to increase the ratio of third-party assets.
These firms “are trying to structure themselves as professional asset managers, becoming players as well,” said Ben Phillips, New York-based partner at Casey, Quirk & Associates LLC.
“Insurers across the world are also trying to augment third-party assets. Publicly traded insurers with strong asset management capabilities tend to trade at about nine times EBITDA (earnings before interest, taxes, depreciation, and amortization), while those that do not trade around six or seven times,” he said.
In July, Euan Munro, who has been at the helm of Aviva Investors Global Services Ltd. since the start of the year, said he is keen to grow third-party assets under management at the £240.1 billion ($412.1 billion) money manager.
At a presentation in London, the London-based CEO said he has been reshaping the business. One part is launching multiasset funds — something he knows from his time as global head of multiasset investing and fixed-income teams at rival Standard Life Investments. There, he also was the architect of the popular global absolute-return strategy, known as GARS.
Mr. Munro said he thinks this will be “transformational” for Aviva Investors, which has been “largely focused on the insurance assets of Aviva.”
Mr. Munro was not available for a further interview, and other spokesmen for the institutional side of the business were not available to comment by press time.
However, looking at 2013 preliminary results of parent Aviva PLC published in March, the need to grow third-party assets is clear to management itself. “Aviva Investors grew its fund management contribution 74%, but at around 3% of group operating profit and with assets under management of £241 billion, this remains inadequate,” wrote Mark Wilson, CEO of Aviva Group PLC, in a note detailing the group's operating profits for the year. “Plans are in place to address these issues over the coming years, and Euan Munro brings much needed leadership and impetus to Aviva Investors.”
As of Dec. 31, total group operating profit before tax was £2 billion, with Aviva Investors contributing £68 million. External assets accounted for £48.1 billion, about 20%, of the total £241 billion. Aviva Investors was created following the merger of Morley Fund Management Ltd. and Norwich Union Investment Management Ltd. in July 2000.