Northwestern Mutual Agrees To Sell Subsidiary For $2.7B
June 26, 2014 by Paul Gores, Milwaukee Journal Sentinel
June 26–Northwestern Mutual said Thursday it is selling Seattle-based Russell Investments to the London Stock Exchange Group for$2.7 billion.
The Milwaukee-based insurer acquired the asset management company — then called Frank Russell Co. — in 1999 for $1.2 billion.
“The proceeds from the sale will cap off what has proven to be a good investment for Northwestern Mutual,”John Schlifske, chairman and CEO of Northwestern Mutual, said in a statement. “When you look at the income it produced over all that time and this sale price you see a great example of how we build value for policy owners of our mutual company.”
Russell is a global investment services firm that oversees almost$260 billion in assets, primarily for large, institutional investors such as pension funds. The firm also maintains stock indices such as the Russell 2000. It has 1,800 employees worldwide. Russell has about 30 employees inMilwaukee.
Northwestern Mutual said in January is was looking into selling Russell.
The sale will be finalized later this year, pending regulatory and shareholder approvals and other closing conditions.
When it announced in January that it was exploring a sale of Russell, the insurer said Russell’s business was “experiencing dramatic growth and development,” and that it had a strong management team. Northwestern Mutual also said it expected Russell to remain “a preferred fund partner within the company’s retail investment platform.”
Northwestern Mutual manages more than$184 billion in invested assets as part of its general account investment portfolio, which backs its insurance and annuity products
When Northwestern Mutual acquired Russell 15 years ago, it marked the insurer’s entry into the global investment management business and was part of an effort to diversify the insurer’s financial services offerings.
In 2012, Northwestern Mutual sold the 42-story Russell Investments Center inSeattle toCommon-Wealth Partners for$480 million — more than four times what it paid for the building less than three years earlier. Northwestern Mutual bought the 872, 000-square-foot office building in fall 2009 for$115 million after the financial collapse of the previous owner,Washington Mutual Inc. It was largely empty at the time.
The Russell Investments Center, in the heart of the Seattle business district, was constructed in 2006. Russell remained a tenant after Northwestern Mutual’s sale of the skyscraper.
Schlifske temporarily ran Russell after he was appointed Russell CEO when the previous leader left in 2008. Schlifske was an executive vice president of Northwestern Mutual at the time and considered a leading candidate for the insurer’s top position. Schlifske became Northwestern Mutual’s chief executive in 2010.
