U. of Texas Endowment Chief Zimmerman Exits

BruceZimmerman_ChrisBuzelli Bruce Zimmerman (Art by Chris Buzelli)The University of Texas Investment Management Company (UTIMCO) has lost its investment chief.

Bruce Zimmerman, who has been CEO and CIO of the $37 billion endowment since 2007, has resigned, the fund confirmed to CIO.

“It has been my extraordinary honor to lead UTIMCO and I am so proud of the results the team has delivered,” he said in a statement.

Under Zimmerman’s nearly decade-long tenure, the fund added $4.25 billion of value, the University of Texas System said in a release. Total assets also grew more than $13 billion from $23.5 billion in 2007.

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In a separate interview with Bloomberg, Zimmerman said his resignation was a “mutual” decision between him and the university. “There had been discussions going on for some time,” he continued, “It felt like the best thing for everybody.”

The UTIMCO board said it will immediately appoint an interim CEO and CIO and also launch a national search for Zimmerman’s successor.

“Bruce earned his reputation as a strong, skilled investment manager and we are grateful for the excellent work he has done for public higher education in Texas,” said board of regents Chairman and former UTIMCO Chairman Paul Foster.

Previously, Zimmerman was CIO and global head of pension investments at Citigroup, as well as CFO and chief administrative officer for Citigroup’s alternatives arm. He also spent 13 years at Texas Commerce Bank/JP Morgan Chase in a variety of executive positions.

The outgoing chief is vice chairman of the nonprofit asset management firm Commonfund and a member of Houston Endowment’s investment committee.

United Technologies (UTC) has announced two moves intended to reduce its pension liabilities by $1.77 billion.

The Hartford, Connecticut-based company said Thursday that it had agreed to transfer approximately $775 million of outstanding benefit obligations to Prudential. The deal, expected to close on October 12, covers roughly 36,000 retirees and beneficiaries currently receiving $300 per month or less from UTC’s pension plans.

“This transaction is an important part of United Technologies’ long-term strategy to reduce future pension risk and expense,” said CIO Robin Diamonte. “It will not affect participants remaining in the plans and entrusts the assets leaving the plans to a highly rated insurance company whose core business is retirement security and administration of pension benefits.”

The second piece of the de-risking initiative is a program offering certain former US employees and beneficiaries the option to take a one-time lump sum instead of future monthly pension payments.

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UTC said it expected about 10,000 plan participants to take the offer, which will be paid out late this year. According to this estimation, the lump sum program will reduce UTC’s pension benefit obligations by $995 million by the year’s end.

Both pension-risk transfers and lump sums have become more common among corporate pensions as Pension Benefit Guarantee Corporation premiums skyrocket, making underfunded pensions costlier than ever.

According to an NEPC poll earlier this year, 32% of plan sponsors were considering lump sum payouts, while 17% cited interest in a partial risk transfer.

Most recently, packaging company WestRock transferred $2.5 billion in pension obligations, also to Prudential.