BestWeek: Northwestern Mutual’s $2.7B Russell Sale Helps Avoid Potential Enhanced Regulation, Capital Rules
July 3, 2014 by Rick Cornejo
OLDWICK, N.J. – Northwestern Mutual Life Insurance Co. has agreed to sell Russell Investments, its global asset-management subsidiary, to the London Stock Exchange Group plc for $2.7 billion. The move will help the mutual avoid potential enhanced regulation and more restrictive capital rules, an equity analyst says in this week’s BestWeek.
With the sale of Russell, “that greatly diminishes the possibility that Northwestern Mutual would be designated as one of those” insurers that could face enhanced regulation or more restrictive capital rules, said Colin Devine, a New York-based life insurance industry analyst. The Seattle-based Russell oversees nearly $260 billion in assets, primarily for large, institutional investors such as pension funds. The firm also maintains stock indices, such as the Russell 2000. Its mutual funds also are available to retail investors.
Also in this week’s issue:
— The U.S. Supreme Court ruled on June 30 that closely held, for-profit companies cannot be required to cover contraception services that run afoul of the religious beliefs of the company’s owners. The highly anticipated decision in Burwell v. Hobby Lobby Stores Inc. garnered widespread media coverage because of the constitutional questions it raised. But insurance industry experts said the Supreme Court’s ruling will not be difficult for carriers to implement.
— Total premiums in the London company insurance market increased by 8.6% in 2013 to £24.2 billion (US$41.1 million), the International Underwriting Association said in its annual report. “There are many reasons to feel positive about London’s continued ability to meet the complex coverage requirements of insurance clients around the world,” IUA Chairman Malcolm Newman said in a statement accompanying the report. “Its services complement, as much as compete against, other business centers, and without it the industry would struggle to adequately fulfill those client demands.”
BestWeek is published by A.M. Best Co. for insurance professionals. To subscribe, visit www.ambest.com/sales/BestWeek. Go to www.bestweek.com on your iPad or mobile device, click on the BestWeek edition.
Founded in 1899, A.M. Best Co. is the world’s oldest and most authoritative insurance rating and information source.
(By Rick Cornejo, managing editor, BestWeek: rick.cornejo@ambest.com)
