BlackRock Takes Over Equitable Life Mandate to Manage Risk

Equitable Life's new outsourcing deal with BlackRock is one of the largest European asset management mandates of the year.

(July 19, 2010) — Equitable Life Assurance Society appointed BlackRock Inc. to manage its 5.7 billion-pound ($8.7 billion) fund and provide investment and risk management services for its 400,000 policyholders.

The deal highlights how insurance funds are following the lead of pensions in their outsourcing push as funds rethink how they manage capital and risk following the credit crunch in 2007. Other large asset management deals signed so far this year include Franklin Templeton’s mandate, announced in February, to manage $3.4 billion of assets from the Fondul Proprietatea, a Romanian sovereign wealth fund, along with the $1 billion mandate awarded to hedge fund manager Man Group by the Universities Superannuation Scheme.

The appointment by the London-based life-insurer marks the beginning of a multi-billion deal with BlackRock, which beat three rivals to take on one of the largest European asset management mandates of the year, and the end of a decade-long relationship with Insight Investment, which managed the assets since March 2001, according to Equitable Life’s web site.

Under the deal, according to a statement issued by Equitable, BlackRock will assume the management of assets for the life insurer’s policyholders and group plan members starting in October. BlackRock will take on $8.9 billion (€6.9 billion) of assets, a majority of which are invested in fixed-income, with the goal of maximizing returns while staying within Equitable Life’s regulatory solvency ratios.

“Maximising returns on policyholder investments is one of the Society’s three key strategic priorities,” said Chris Wiscarson, Equitable Life’s chief executive, in a statement. “Today, we have taken another important step forward by appointing BlackRock, a great new partner by any standard.”

As of March 31, 2010, BlackRock’s assets under management totalled $3.36 trillion across equity, fixed income, cash management, alternative investment, real estate and advisory strategies.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href=''></a>; 646-308-2742