Metlife Inc said Tuesday it will build an asset-management business for outside investors focusing on investments in real estate equity, commercial mortgages and debt private placement.
"Asset management is a capital-efficient business with attractive returns on equity," Steven Goulart, MetLife's chief investment officer, said in a statement. "The strong demand for high-quality private assets among institutional investors makes this an attractive time for market entry."
MetLife, the largest U.S. life insurer, which manages some $500 billion in general account assets for policyholders, currently has a small third-party management business focusing on index funds.
MetLife is reorganizing its real estate and private placement groups to facilitate the expansion.
Robert Merck, global head of real estate investments, will continue to run the group which has been renamed MetLife Real Estate Investors. It currently manages about $43 billion of commercial mortgages and $10 billion in direct real estate investments. Merck will oversee both the internal and external businesses.
The new equity strategies group will be run by Mark Wilsmann, who has led MetLife's commercial mortgage business since 2003.
The new debt strategies group, which will raise funds for real estate projects from institutional investors that include other insurance companies, pension plans and sovereign wealth funds, will be run by Brian Casey. He has been heading MetLife's Washington, D.C., real estate office.
The company, which says it is the largest life insurance lender, currently manages about $50 billion of privately placed debt.
MetLife, which does not break out its individual portfolio investment returns, has no immediate plans to acquire asset-management companies. It expects to make new hires in marketing and other areas for the new business over the next year.
"Right now our focus is building on the great strength we have in-house," said Christopher Breslin, a company spokesman.
Shares of MetLife were up 0.4 percent at $35.38 on Tuesday morning on the New York Stock Exchange.
(Reporting by Jed Horowitz; editing by Leslie Adler and Matthew Lewis)