Massachusetts Mutual Life Insurance Company will move its direct investment group and an equipment finance company to its asset management subsidiary Barings – an arrangement that will give the two organizations a head start in the insurance asset management business.
The transaction, planned for the second quarter, will help expand investment strategies by providing access to more third-party institutional investors through Barings.
Eric Lloyd, president of Barings, which has assets of $347 billion, told Institutional Investor that the move has been under discussion for months as part of a larger ongoing effort to make the most of the two organizations’ partnership.
Lloyd said he and Phillip Titolo, MassMutual’s head of direct private investments, discussed how to further develop and leverage the capabilities that have become an important and significant part of the insurance company’s overall investment account. in a way that [allows them to continue] to do what they do without changing the business strategy in any way, shape or form.”
“That just allows him [Titolo] to gain access to larger pools of capital and continue on the growth trajectory we are on,” added Lloyd. The direct investment group provides customized secured equity loans to private money managers and funds backed by a range of private assets. MassMutual’s asset finance group originates, underwrites, finances and manages large capital investment transactions.
Lloyd emphasized that Titolo has built a business with strong origination capabilities that is highly complementary to other areas within Barings. “Their ability to generate personal wealth and access to those borrowers or customers is currently – and will continue to be over time – a very important differentiator.”
The group also generates assets important to insurance investors, which has been a strategic goal for Barings in recent years.
“We’re talking insurance,” Titolo added in the interview. He said many money managers don’t understand insurance. They come in and say, ‘You have $200 billion in assets, write me a check for $100 million — that’s not a big deal.’” But he explained that only wealth managers don’t understand how regulatory capital works would say a $100 million check from an insurance company is no big deal.
MassMutual began lending portfolios in 2017 and ran the effort for about two years before raising more capital from the insurance company behind it. Now, with a 30-strong team, it’s in a place where it can bring in other insurance investors and “maybe some other non-insurance investors,” Titolo said. “This is a natural subset of investment-grade private placements.”