The Role of Insurance Companies in Initiating a Significant Shortage of Investment Talent

The Role of Insurance Companies in Initiating a Significant Shortage of Investment Talent

Bayview Asset Management’s Achievement in Securing an Outstanding Hire

Bayview Asset Management has achieved a remarkable milestone by successfully recruiting Nancy Mueller Handal, the former head of private fixed income and alternatives at MetLife Investment Management. After an impressive 23-year tenure at the insurer, Handal’s transition to Bayview was officially announced on Monday. In her new capacity, she will assume the crucial role of Chief Investment Officer for the recently established insurance companies focused unit.

Expressing his enthusiasm, Bayview CEO David Ertel stated, “I consider myself fortunate to have the opportunity to collaborate with Nancy, a leader I have long admired in the realm of residential loan and structured products investing.” Ertel further highlighted, “Nancy possesses a unique blend of qualities, occupying a distinct position as one of the industry’s most astute mortgage whole loan investors, combined with the insights of a senior executive within the insurance sector. Her alignment makes her the ideal leader for this organic expansion of Bayview’s operations.”

Increasing Demand for Investment Experts with Insurance Companies Insight

As the industry witnesses an escalating demand for professionals who possess expertise in collaborating with insurance entities and navigating intricate asset classes, individuals with skills similar to Mueller Handal’s are in great demand.

Over a span of 15 years, insurance companies have grappled with the persistent challenge posed by low interest rates. This issue was further compounded by the substantial portion of their reserve assets allocated to investment grade fixed income. However, the rapid surge in interest rates has introduced a new set of complexities, prompting insurers to make informed decisions encompassing equity beta volatility, potential fixed income losses, optimal reinvestment strategies, and avenues for income enhancement.

In addition to this, insurance companies are exhibiting a strong inclination towards private markets, particularly strategies that generate income. These strategies encompass a range of private credit categories. While insurers have historically leaned towards direct lending, a newfound appetite has emerged to diversify their exposure across various subcategories, encompassing specialty finance and opportunities within asset-backed credit.

The Role of Insurance Companies in Initiating a Significant Shortage of Investment Talent

Chris Tschida, co-Head of U.S. insurance at Mercer, emphasized, “The heightened complexity of these dynamics is motivating investment advisors and asset managers to capitalize on the immense potential within this substantial asset pool, while also addressing the evolving needs and expectations of insurance companies.”

Challenges in Talent Acquisition and Fierce Competition

However, the expansion of insurance divisions within consulting firms and asset management organizations comes with its own set of challenges. Tschida pointed out the intensified competition for talent among individuals possessing an in-depth understanding of the insurance sector. The departure of Greg Halagan, co-head of U.S. insurance, to oversee the insurance business at Oaktree Capital Management has exposed Mercer to this competitive environment.

While Mercer’s insurance group is making diligent efforts to expand and cater to a broader spectrum of insurance companies, the sector’s continuous demand for specialized solutions remains steadfast. Tschida noted, “We are fortunate in that we have been consistently adding to our team over the past few years and currently have two or three outstanding job openings directly linked to our insurance practice.”

Insurance Companies Evolving Landscape: Outsourcing and Collaborative Endeavors

Insurance firms are considering outsourcing parts of their investment management, following the lead of other institutional investors. Mercer’s outsourced chief investment office group has been significantly bolstered to facilitate seamless implementation for insurers. This approach empowers insurance companies to focus more intently on strategic asset allocation and other core activities. Insurers of medium and small sizes, who often have less financial means to invest, might benefit greatly from these types of services.

Mueller Handal underscored this emerging trend, stating, “Numerous insurers recognize the strategic benefits of outsourcing certain asset classes, particularly in scenarios where scale or expertise might be lacking. This approach enables insurers to direct their attention more deliberately towards their core operational priorities.” Asset managers, she said, play a crucial role as collaborative partners since they provide advising, reporting, and accounting solutions. The emphasis lies in leveraging the expertise of asset managers to optimize asset allocation and conduct precise liability assessments. This concerted effort contributes to an ever-evolving and dynamic landscape within the realm of insurance investments.