Roundup: Principal Goes Internal for New Life Insurance Chief
May 19, 2017 by Greg Shulas, Alex Padalka, Michael Shagrin
Principal Goes Internal for New Life Insurance Chief
Principal Financial Group has named a new president of its U.S. Insurance Solutions unit, the company says in a press release.
Amy Friedrich succeeds Deanna Strable-Soethout, who was appointed chief financial officer in February, according to Des Moines, Iowa-based Principal. Friedrich had joined the firm in 2000 from Accenture, where she was a change management manager, according to Principal’s press release. She has been in Insurance Solutions’ Specialty Benefits unit since 2004, and was appointed senior vice president of the unit in 2015, Principal says.
In addition, Principal has appointed Gary Scholten as chief digital officer, a new position within the firm, the company says. He will be responsible for building out the digital capabilities firm-wide, according to the press release. Scholten has been with the company since 1980, having started as an assistant planning analyst, Principal says. He was promoted to executive VP and chief information officer in 2014, according to the press release. Scholten also serves on two Principal International Chilean Boards and chairs Principal’s Pune, India-based wholly owned subsidiary Principal Global Services, Private Limited, according to the company.
The U.S. Insurance Solutions boasted $3.637 billion in annual revenue in 2016, an increase from $3.440 billion in 2015. The group contains Principal’s U.S. individual life, group life and disability insurance businesses.
The insurance solutions group’s net income, however, dropped year-over-year, from nearly $430 million to $361 million, mainly due to an unfavorable unlocking of actuarial assumptions, the firm’s regulatory filings show.
Fidelity & Guaranty Draw Interest from Blackstone, Ares
Private equity players Blackstone and Ares Management have emerged as some of the bidders for Fidelity & Guaranty Life. That’s according to a Bloomberg report.
Conglomerate HRG Group put Fidelity & Guaranty on the M&A market after losing money on its investment in RadioShack Corp., which went bankrupt. An earlier attempt to sell it to Anbang Insurance Group, a Chinese holding company, fell apart, resulting in the newest round of bids.
Apollo Global Management-supported Athene was first named as a potential acquirer of Des Moines, Iowa-based Fidelity & Guaranty, but its proposed price was reported to be too low.
Fidelity & Guaranty is said to have a market value of $1.7 billion, and has $20 billion in assets under management, Bloomberg reported.
OneAmerica Tops ‘Voluntary Sales’ Ranking for Small Category
Indianapolis-based OneAmerica was named the insurer with the “fastest growing” voluntary sales in the small category group. That’s according to a new Eastbridge release on 2016 distribution trends.
Of insurers with $10 million to $50 million in voluntary sales, OneAmerica had a 36% uptick in sales in 2016, following a 24% increase in 2015, and 17% in 2014.
“Achieving growth of this level is no small feat,” said Gil Lowerre, president of Eastbridge, in a statement. To be recognized as a small category growth winner, insurers need to surpass the overall industry growth rate for each of the last three years and be a sales leader in the most recent full year. The overall voluntary market witnessed 7% sales growth in 2016, resulting in $7.6 billion in sales.
Voluntary benefits is a small part of OneAmerica’s larger insurance business. The firm had $2.063 billion in annual revenue in 2016, a small increase from $2.029 billion in 2015, its annual report shows.
Aflac Investment Chief to Shun Hedge Funds, Increase PE Exposure
Aflac is shunning hedge funds in favor of private equity as it looks for asset classes that will juice returns for its $110 billion portfolio, according to a report from Bloomberg. CIO Erik Kirsch is committed to investing at least 2.5% of the portfolio in growth assets like equities and alternatives.
“We are going to initiate growth assets, alternatives, [in the] second part of this year, but focused on private equity and real estate, not hedge funds,” Kirsch told Bloomberg. “Three years from now, we’ll reassess. We’ll look at where the [hedge fund] market is, because I think it’s going through a transformation.”
Last month, Aflac made a $500 million commitment to a separate account strategy with direct lending firm NXT Capital. The insurer doubled down by purchasing a $50 million stake into the alternative investment firm.
Aflac first signaled a willingness to increase its exposure to risk assets in 2014 when it announced that it would hike allocations to equities and alternatives to 3% of it’s portfolio. Prior to that, Aflac’s general account had a risk asset target of just 1%.
Indeed, traditionally conservative insurers have shown increased willingness to invest in risk assets in the past few years, though in their judicious approach to their growth buckets, most have cast a wary eye towards hedge funds.
Last year, after a torrent of drawdowns and underwhelming performance by hedge funds, insurers scampered away from the asset class. During earnings calls from Q1 of 2016, the $503 billion MetLife investment portfolio, the $343 billion AIG investment portfolio and the $106 billion Lincoln Financial investment portfolio each made clear to analysts that they would be largely exiting the hedge fund space after it negatively impacted corporate bottom lines.
Though wary of hedge funds, nearly half of insurers globally have said they plan to increase the risk profile of their general account’s investment portfolio. That could mean boom times for asset managers outside of the vanilla bond space — investible assets held by insurance companies is expected to rise by $1.3 trillion to $7 trillion by 2022.
