Massachusetts Mutual Life Insurance Company will transfer its direct private investment group and equipment finance company to asset management subsidiary Barings – a deal that will give both organizations an opportunity in the insurance asset management business.
The transaction planned for the second quarter will help develop investment strategies by providing access to more third-party institutional investors through Barings.
Eric Lloyd, president of Barings, which has $347 billion in assets, said Institutional Investors that the move had been discussed for months as part of a larger ongoing effort to maximize the two organisations’ partnership.
Lloyd said he and Phillip Titolo, MassMutual’s head of private direct investment, had talked about how to continue to develop the capability, which has become an important and sizeable part of the general investment account at insurance companies, and how to use it “in that way.” [allows them to continue] to do what they do, without changing business strategy in any way, shape, or form.”
“This only allows him [Titolo] to access a larger capital pool and continue the growth trajectory he has been on,” added Lloyd. Private direct investment groups provide private equity managers with secured secured loans and funds backed by private assets. MassMutual’s asset finance group originates, underwrites, finances, and manages big ticket capital equipment transactions.
Lloyd emphasized that Titolo has built a business with strong origination capabilities that are highly complementary to other areas within it lay down. “Your ability to generate personal assets and access to those borrowers or clients is — and will continue to be — a critical differentiator.”
The Group also generates important assets for insurance investors, which has been a strategic goal for Barings over the past several years.
“We talked about insurance,” Titolo added in the interview. He said, many asset managers do not understand insurance. They come in and say, ‘You have a balance sheet for $200 billion, write me a check for $100 million — that’s no big deal.’” But he explained that only an asset manager who doesn’t understand how regulatory capital works would say a $100 million check from an insurance company isn’t a big deal. big problem.
MassMutual began doing portfolio loans in 2017 and incubated the effort for about two years before putting more capital from insurance companies behind it. Now somewhere, with a team of 30 people, where he can bring in other insurance investors and “maybe some other non-insurance investors,” Titolo said. “This is a natural part of investment-grade personal placement.”