Blackstone’s new insurance system targets $100 billion in assets

(Reuters) – Blackstone Group ( BX.N)wishes to quadruple to $100 billion the possessions it handles at its new system for insurers as it seeks to improve returns for companies having a hard time under low rates of interest, the unit’s freshly appointed chief stated on Monday.

Blackstone recruited Chris Blunt, the former president of New York Life’s [NYLIN.UL] investments group, to run Blackstone Insurance coverage Solutions, a brand-new company formed late last year when Blackstone accepted supervise $22 billion from Fidelity & & Warranty Life [FGLH.UL]

“The target (for properties under management) is $100 billion,” Blunt told Reuters in a telephone interview. Blackstone declined to give an amount of time for the target.

At the end of the 3rd quarter, Blackstone’s overall assets totaled $387 billion.

Insurer invest the bulk of their premiums in low-risk financial investments and reserved a smaller portion for higher-return and higher-risk methods, such as hedge funds and personal equity.

Blackstone Insurance Solutions has a dual function, first of all giving insurance coverage clients a more devoted focus to direct their investments throughout Blackstone’s existing services, which include leveraged buyouts, realty, credit and facilities.

It will use brand-new investments at lower returns but at a lower danger in areas like high-grade personal credit.

The brand-new department highlights the willingness amongst significant personal equity firms to tweak their investment offerings in order to draw in huge financier classes.

Years of low rates of interest have actually developed difficulties for insurers by reducing the incomes on their financial investment portfolios, once an essential profits stream for both life and home casualty insurance companies.

“We’re in an environment where insurance companies are finding it extremely hard to obtain quality financial investments into their portfolio,” Blunt said.

“There’s little yield, regardless of the short-term pickup simply put term rates of interest.”

Reporting by Joshua Franklin in New york city; extra reporting by Suzanne Barlyn in New York; Editing by Tom Brown