BlackRock Takes Over Equitable Life Mandate to Manage Risk

Equitable Life's new outsourcing deal with BlackRock is one of the largest European asset management mandates of the year.

(July 19, 2010) — Equitable Life Assurance Society appointed BlackRock Inc. to manage its 5.7 billion-pound ($8.7 billion) fund and provide investment and risk management services for its 400,000 policyholders.

The deal highlights how insurance funds are following the lead of pensions in their outsourcing push as funds rethink how they manage capital and risk following the credit crunch in 2007. Other large asset management deals signed so far this year include Franklin Templeton’s mandate, announced in February, to manage $3.4 billion of assets from the Fondul Proprietatea, a Romanian sovereign wealth fund, along with the $1 billion mandate awarded to hedge fund manager Man Group by the Universities Superannuation Scheme.

The appointment by the London-based life-insurer marks the beginning of a multi-billion deal with BlackRock, which beat three rivals to take on one of the largest European asset management mandates of the year, and the end of a decade-long relationship with Insight Investment, which managed the assets since March 2001, according to Equitable Life’s web site.

Under the deal, according to a statement issued by Equitable, BlackRock will assume the management of assets for the life insurer’s policyholders and group plan members starting in October. BlackRock will take on $8.9 billion (€6.9 billion) of assets, a majority of which are invested in fixed-income, with the goal of maximizing returns while staying within Equitable Life’s regulatory solvency ratios.

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“Maximising returns on policyholder investments is one of the Society’s three key strategic priorities,” said Chris Wiscarson, Equitable Life’s chief executive, in a statement. “Today, we have taken another important step forward by appointing BlackRock, a great new partner by any standard.”

As of March 31, 2010, BlackRock’s assets under management totalled $3.36 trillion across equity, fixed income, cash management, alternative investment, real estate and advisory strategies.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

AIMCo's Leo de Bever Cautions Against Infrastructure

With investors chasing limited opportunities, have we reached an infrastructure bubble and is there light at the end of the tunnel?

(July 19, 2010) — While Leo de Bever, the CEO of Canada’s Alberta Investment Management Corporation (AIMco) often regarded as the king of infrastructure investment, once championed the asset class as a prized source of investment, he’s since changed his mindset.

“The time to be in infrastructure is not now,” De Bever told CTV News in Canada. “It’s too expensive, everyone’s in it. Whenever everyone’s in it, you want to back off.”

De Bever’s dismal outlook on infrastructure contrasts with the growth of infrastructure investment among pensions, insurers, and banks that are funneling resources into the space as they seek long-term stable cash flows. The Canada Pension Plan Investment Board’s $3.4 billion takeover bid last week for Macquarie Group Ltd.-backed Intoll Group, a Sydney-based owner of infrastructure assets, marks the perceived attractiveness of infrastructure assets, such as toll-roads and airports, for the world’s pension funds.

“The promise of infrastructure is that investors can get long-duration, low volatility, inflation-protected, low-correlated and attractive returns,” said Kevin Greene, the ex-CEO and chairman of pensions consultant Rogerscasey, to ai5000 previously.

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However, De Bever told CTV News that one of the problems with infrastructure, especially during tight fiscal periods, is encountering regulatory risk. “…You have to be absolutely sure…that the government sticks to the original deal and doesn’t try to change it after the fact,” he said.

De Bever, the head of AIMCo, the corporation created to manage Alberta’s pension and sovereign wealth capital, has not completely dismissed the asset class. “In most places, water and sewage are going to take an enormous amount of capital because everything is starting to leak,” he told CTV News. “Given that the fiscal positions of a lot of these governments are pretty weak, private capital has to come in at some point, and that’s when I think infrastructure will become attractive again.”



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

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