UBS Launches Another OCIO Program | Chief Investment Officer

UBS Group has launched a new outsourced-CIO (OCIO) service, targeting clients with $10 million to $250 million in assets, the firm announced Thursday.

The Swiss bank’s asset management division will partner with its wealth management Americas unit to offer discretionary services as “an extension of the OCIO service that has been offered until now,” Charlie Service, managing director of investment solutions at UBS Asset Management, told CIO.

UBS has been offering OCIO services since 2007, and counts Delta Air Lines as a major client. The new program will “combine UBS’ consulting experience and investment heritage,” the firm continued. The clients will be able to retain portfolio oversight while delegating investment decisions to UBS.

“We have complemented the institutional offering of a global asset management organization with the accessibility of a local financial advisor who understands each particular client’s needs,” said Frank van Etten, head of client solutions for UBS Asset Management.

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The new OCIO platform will take advantage of UBS’ 97 institutional consultants across the US to engage with prospective clients and handle day-to-day operations, said Peter Prunty, head of the consulting division.

Service added that the new initiative is an open-architecture third-party platform.

UBS Asset Management has been offering OCIO services since 2007, and counts Delta Air Lines as one of its major clients. The firm had $12.2 billion in discretionary assets under management and five clients as of January 2016.

The majority of UBS’ discretionary assets ($11.3 billion) were from corporate pension clients, according to CIO’s OCIO Vendor Ratings. It managed all OCIO assets in separate accounts.

OCIO clients said they chose UBS because of its reputation and track record (75%), management experience (50%), and client service (25%).

Legal & General (L&G) has secured a £230 million ($325 million) medically underwritten bulk annuity deal with the Kingfisher Pension Scheme, the largest deal of its kind in the UK.

Medical underwriting involves gathering data on individual members’ health, which “allows the insurer to form a more robust view on life expectancy and to price the risk with more certainty,” L&G said in a statement.

The insurer employed “several innovative features” for the transaction, it said. These included “top slicing”—targeting a small number of members that account for a disproportionate part of the fund’s liabilities—and pricing linked to a basket of government bonds.

“We believe the growth in the top slicing approach is set to continue and, for many schemes, will be the first step on a journey to full buyout,” said Cheryl Agius, head of strategic business for pension risk transfer at Legal & General. “Medically underwritten bulk annuities were traditionally viewed as a solution for smaller schemes, and the emergence of top slicing helps open up medical underwriting to medium and larger schemes as well.”

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The transaction secures benefits for 149 members of the £3.1 billion pension for former employees of the UK home improvement retailer.

The buy-in was “another important step” towards the pension fund’s goal of self-sufficiency by 2030, said Clive Gilchrist, independent trustee and chair of the Kingfisher Pension Scheme trustee board.

Late last year L&G entered the Dutch de-risking market for the first time, re-insuring €200 million from ASR Nederland. The group has also been shortlisted in CIO’s forthcoming European Innovation Awards.