Insurer Legal & General Group PLC and Blackstone Inc. announced Thursday a strategic partnership to give L&G clients access to Blackstone’s private credit funds.
London-based L&G’s 92-billion-pound ($122.5 billion) annuities business will leverage Blackstone’s private credit origination platform to provide clients with diversified investment-grade assets. The insurer, one of the largest pension risk transfer providers in the U.K., will also invest up to 10% of its anticipated new business flows in its annuities business.
The asset management business of L&G, which manages 1.1 trillion pounds ($1.4 billion) in assets, will also develop public/private credit solutions that combine its own active fixed-income capabilities with Blackstone’s credit offerings.
L&G expects these offerings to help accelerate its plans to expand into the global wealth and investment wholesaling businesses.
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“Our partnership with Blackstone will further cement our market leading position in pension risk transfer, and enable us to address growing demand for public-private hybrid investment products,” said António Simões, L&G’s group CEO, in a statement. “L&G will benefit from a more diverse pipeline of assets for our annuity book, and growth in asset management as we develop more sophisticated investment solutions for clients around the world.”
Blackstone’s credit platform, Blackstone Credit and Insurance, manages $465 billion in assets. BXCI currently manages $237 billion in third-party insurance assets, as of March 31.
“We believe this partnership shows the best of what Blackstone can offer to our insurance company clients,” said Philip Sherrill, global head of insurance at Blackstone, in a statement. “The breadth of our capabilities allows us to support our partners across their businesses—originating assets, working together to identify investment opportunities, and designing products that meet the needs of both institutional clients and individual investors.”
BXCI invests in private, investment grade credit, asset-based loans, public, investment grade and high-yield credit, sustainable resources, infrastructure debt, collateralized loan obligations, direct lending and opportunistic credit.
Legal & General’s U.S. pension risk transfer business was bolstered earlier this year by a 400-million-pound investment from Japanese insurer Meiji Yasuda after the latter purchased L&G’s U.S. insurance business.
According to a December 2024 report from L&G, it expects 2025 to be its largest year yet for PRT volume in the U.S. and Canada, with plans to write 10.5 billion pounds worth of PRT volume in the U.K. and another 2.1 billion pounds globally.
L&G had previously estimated 2024 PRT volume in the U.S. to exceed $50 billion.
Large alternative investment managers are increasingly acquiring insurance and annuity companies and also increasingly managing assets for insurers, as these investors’ long-duration portfolios and low legacy allocations to alts make them ripe for asset managers to attract inflows at a time when fundraising from traditional clients like pension funds and endowments has slowed down.
Apollo Global Management’s Athene business is one of the most notable annuity providers. KKR fully acquired annuity and insurance provider Global Atlantic in 2023, and Blue Owl Capital is expanding its insurance offerings through its 2024 acquisition of Kuvare. Ares Management has announced plans to significantly grow its annuity business, Aspida Holdings Ltd.
Insurers, especially life and annuity providers, are also increasingly finding a role for alternative investments, like private equity and private credit, in their portfolios as they diversify away from asset allocations that have traditionally been fixed-income heavy.
According to Goldman Sachs Asset Management, 62% of insurance investors plan to increase their private markets allocations this year. According to Mercer, only 26% of insurer respondents to its 2024 global insurance investment survey do not or do not plan to invest in private markets, with the most common reasons being liquidity concerns, resource constraints and the complexity of manager selection.
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Apollo, Athene Backed Athora to Acquire PRT Provider Pension Insurance Corp.
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Tags: Blackstone, insurance, Legal & General Investment Management (LGIM), Pension Risk Transfer
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