(Bloomberg) — Apollo International Administration Inc. Chief Govt Officer Marc Rowan rejected the notion that including personal property to retirement and insurance coverage portfolios can pose a systemic threat, calling considerations about such holdings overblown.
Most personal credit score held by insurers and pension fund patrons is rated funding grade, the CEO instructed traders Monday, pushing again on the concept that the asset class is much less clear than conventional loans. Lenders can get direct entry to debtors’ administration, he stated.
And Apollo’s exchange-traded personal credit score fund with State Avenue Corp., for instance, offers value updates every day. Elsewhere at Apollo, he stated, the agency has traded $6 billion in its investment-grade personal credit score enterprise.
“Folks have actually simply misplaced their minds, and the headlines get an increasing number of hysterical and have virtually nothing to do with the substance,” Rowan stated as a part of a presentation on Apollo’s retirement companies enterprise.
Different asset managers have been snapping up insurers lately, having access to a secure supply of long-term capital to gasoline their investments. Apollo pioneered the mannequin, with its insurance coverage arm, Athene, investing in monetary merchandise created by its asset-management division. Rowan identified Monday that Apollo has a first-mover benefit on this space.
Not too long ago, although, the shut ties between personal fairness and insurers have drawn scrutiny, because the latter had historically put their cash in probably the most liquid components of the market like high-grade bonds and shares. The latest blow-ups of auto-parts agency First Manufacturers Group and subprime auto lender Tricolor Holdings have exacerbated fears about credit score losses throughout the monetary trade.
Final month, economists on the Financial institution for Worldwide Settlements took a broad take a look at how practices have modified throughout the trade and estimated that publicly traded North American life insurers would face a capital shortfall of about $150 billion within the occasion of a extreme financial downturn. That’s greater than triple the determine 20 years in the past.
“If we take a look at the insurance coverage enterprise, to me, there’s a looming systemic threat coming by,” UBS Group AG Chairman Colm Kelleher stated at a world summit in Hong Kong earlier this month.
Rowan addressed these feedback throughout Apollo’s third-quarter earnings name, telling analysts that Athene doesn’t use Egan-Jones Rankings Co., whose enterprise practices are being scrutinized by the US Securities and Change Fee.
“Colm is simply improper,” he stated earlier this month, referring to the UBS chair’s feedback.
