Blackstone Is Building Risk Analytics as Part of Insurance Push

Insurance is a logical place to start. Years of low yields in the fixed-income market have insurers looking for higher returns to match their policyholder obligations. With more than $20 trillion of insurance assets potentially up for grabs, alternative asset managers such as Blackstone and Apollo Global Management LLC are eagerly structuring longer duration, yield-oriented products that meet insurers' demand.

Whereas the average junk bond yields about 6 percent, Goodman said Blackstone can originate senior loans to mid-size companies at yields of 8% or more.

Goodman mentioned the risk-analytics initiative as part of "an array of things" Blackstone envisions doing with its new insurance-solutions business. The group, which launched in January with more than $22 billion of assets under the leadership of former New York Life Insurance Co. executive Chris Blunt, will offer insurers investment-grade credit products that may include corporate loans, acquisition finance or slices of structured-debt securitizations.

The business could generate $500 million a year in management fees once it scales to at least $100 billion in assets, Goodman said, and is seeking to add 10 to 15 people over the next few years to the 25 it employs now. New York-based Blackstone recently created a committee across its various businesses to meet regularly and discuss ways to create products that meet the capital, duration, liquidity and asset-liability needs of insurers. Goodman described that structure as "very different" from the way Blackstone was organized previously.

"Now we have a new LP — the insurance community — so we need to get people focused on how does that create a situation where we can redesign the capital structures or our financing activities for what we're trying to accomplish," he said.

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