GERMANY – MEAG, the asset management arm of reinsurance giant Munich Re, plans to expand its third-party business by between 25-30% annually, according to Robert Helm, managing director at MEAG responsible for third-party business.
MEAG’s traditional role is managing Munich Re’s insurance assets but it began bidding for business with other institutional clients – particularly pension funds and smaller insurers – some three years ago.
Since then, MEAG has racked up €2.7bn in third-party assets, 80% of which comes from its target clients. These clients typically have between €150m and €1bn to invest and includes traditional pension funds, the Pensionskassen, and the Versorgungswerke, which provide a corporate pension to professional groups.
Growth of the business was primarily a result of its ability to act like an investment consultant, said Helm.
“Performance in portfolio management is undoubtedly important, but that is not what our target clients like insurers and pension funds need,” he told IPE. “They need someone to take control of the entire investment process, including the asset-liability study, the strategic asset allocation, the investing and then the risk control and accounting.”
In all, MEAG has €34.3bn in assets under management, €715m of which are invested in real estate.
“We don’t initially talk about portfolio management with our clients, but rather about such crucial issues as managing liabilities, the impact of regulation and accounting,” Helm said, adding that dealing with these issues was what set MEAG apart from other asset managers.
He said only two other competitors had the same approach: Ampega, the asset management arm of German insurer Talanx, and the relevant body at Cologne Re.
As part of taking control of the investment process, MEAG usually manages some, if not all of the assets. “Of course we are flexible,” Helm said. “If a client wants, we will work together with other asset managers and even an investment consultant.”
“However, we would not consider it to be very helpful if advisory mandates of between €10bn and €15bn were awarded to other asset managers.”
Helm said MEAG’s specialties were European equities and global fixed income, including government debt and spread products.
“In this area we know that we are competing with countless other asset managers and are not one of the big shots,” Helm said.
But he added that MEAG was a leader when it came to acting as an investment consultant to smaller insurers and pension funds.