Monday, November 16, 2009

New York Life on the prowl to buy mutual fund companies

life insurance

New York Life Insurance Co. is looking to acquire one or more fund companies, according to one of the company's top executives.

“We are looking for a firm with about $15 [billion] to $25 billion with funds that have strong track records,” said Chris Blunt, executive vice president in charge of retirement income security.

“There are a few good institutional boutiques that would be great.”

The goal of the purchase would be to boost the assets the firm's MainStay Funds, which now hold $25 billion, Mr. Blunt added.

Since the economic downturn began last year, a number of distressed financial institutions have sold off portions — or in some cases all — of their money management operations.Even though asset valuations have come up, many boards still want to sell their funds and focus on their core businesses, Mr. Blunt said.

“Our fund complex makes very little money,” he said, explaining why buying another firm would make sense. “We are right at the break-even point and buying a fund business would contribute to our bottom line.”

The firm has no timetable for when it would make an acquisition, but Mr. Blunt says it is in talks with a number of firms.

New York Life, he said, is also in discussions to team up with another fund company to help with distribution or product development.

“The advantage of partnering with a big money manager is speed to market,” Mr. Blunt said.

On the distribution side, New York Life would benefit from working with a firm that has more of a presence in the independent broker-dealer market, he said. “Right now our fund business is wirehouse-oriented and we could use more on the independent side of the business,” he said.

The firm is also planning to roll out a couple of new variable annuities in 2010, although Mr. Blunt wouldn't elaborate on those plans.