UK - Axial Investment Management looks set to share its asset liability investment skills with Resolution Asset Management for the benefit of the institutional market, once the two firms are merged by their parent Pearl Group.
A statement issued today by Pearl, which is buying Resolution Asset Management, reveals a review of both operations found the retail and institutional services RAM provides and Pearl's in-house operation, which is currently responsible for managing the UK life insurance firm's funds, are "complementary with limited overlap".
A steering group has been formed of officials from key shareholders and the CEOs of both businesses to decide the future of Pearl's asset management division, as it is anticipated this will operate as a "separately capitalised business in which employees will have long-term equity participation".
Axial is currently headed by chief investment officer Jan Straatman, formerly head of capital markets at the ABP pension fund, and is largely responsible for managing the asset liability status of Pearl's internal insurance £30bn (€41.7bn) funds, by improving poorly allocated capital through asset liability models and investing the surplus capital generated in third-party traditional and absolute return funds.
Straatman moved to Axial last year and implemented a multiple assets, multiple layer investment strategy similar to the one he introduced at ABP in 2002, and which he suggests substantially reduces correlation risk.
Indications from the statement issued are RAM will take on the asset management of those funds going to third-party firms as Pearl said "there is also a substantial opportunity for RAM to increase its assets under management by taking on life company assets within the existing Pearl Group together with those of future Pearl acquisitions".
According to the group owned by entrepreneur Hugh Osmond, the firm is committed to RAM's long-term third party business and sees "significant opportunities" to grow this business through its existing funds and boutique operations. RAM is largely retail focused at this stage, with some institutional business, but has acquired assets under management of around £85bn through organic growth and through deals to manage closed book life funds.
"Pearl is committed to making this asset manager both the best-in-class provider of asset/liability and investment management services to its own in-house life funds and also to third party institutional and retail clients," said the firm in a statement.
Pearl's acquisition of London-listed Resolution plc - owner of Resolution Asset Management - follows a fierce battle with rival life insurance groups Standard Life and Friends Provident. (See earlier IPE story: Standard Life leaves Pearl to pursue Resolution)