The trend of outsourcing insurance assets has led some insurers to buy money management firms to not only serve their internal investment needs, but also sell outsourced investment services to other insurance companies, said Sunny Patpatia, president and CEO of Patpatia & Associates, Berkeley, Calif., a consultant that tracks insurance outsourcing.
Insurers have announced several deals in the past year. Toronto-based Sun Life Financial acquired fixed-income manager Prime Advisors Inc. in July and Ryan Labs Asset Management in April. Sun Life Financial also announced June 15 that it plans to acquire real estate manager Bentall Kennedy Group, but has yet to close on the deal.
Cathay Financial Holding Co. Ltd., a Taiwanese life insurance company, announced in November that it was purchasing insurance asset management specialist Conning Holdings Corp., but has yet to close the deal.
In addition, a majority stake in fixed-income manager Asset Allocation & Management Co. LLC was acquired in December by life insurance company Securian Financial Group Inc., St. Paul, Minn.
David Sun, executive vice president of Cathay Financial, said acquiring Hartford, Conn.-based Conning will enable his company to work directly with a money manager on U.S. and overseas investments.
Mr. Sun said it also would enable his company to diversify beyond insurance and banking.
“Building up our asset management business also allows us to further diversify our sources of earnings and benefit from a business with attractive returns on capital,” he said in an interview.