Allstate Corp. Chief Executive Officer Tom Wilson is looking for more than a bond buyer as he seeks an investment manager to run the insurer’s $79 billion portfolio.
“We need somebody who knows deals,” Wilson, who is also chairman of the largest publicly traded U.S. home and auto insurer, said in an interview at the company’s headquarters in Northbrook, Ill. “You’ve got to know which way the market is moving, fund flows and deals. So you have to be both a macro- and micro-investor, but you don’t necessarily need to be an insurance investor.”
Wilson, 58, is working to fill the chief investment officer seat vacated by Judy Greffin, who was promoted to the post in 2008 and departed the firm this year after overseeing about 300 professionals. To diversify the portfolio, Allstate this year hired Mick Solimene from Macquarie Group Ltd. for opportunistic investments and ex-UBS Group AG banker Russ Mayerfeld in 2014 to concentrate on alternatives.
Allstate’s portfolio mostly focuses on credit, with $5.1 billion in limited-partnership interests as of March 31. The insurer has been seeking to co-invest in private-equity deals to help reduce fees paid to buyout firms. Allstate and its peers have for years been shifting toward private equity and real estate bets as bond yields hover near record lows.
Idiosyncratic Risk
“I don’t want us to be Carlyle or KKR. On the other hand, I don’t want us to buy everything through a limited-partnership vehicle,” Wilson said, referring to two buyout firms. “We wanted more idiosyncratic risk in longer-term investments which may have more short-term volatility but higher returns.”
Wilson said such risks could include distressed debt holdings that can be turned into equity or a lending venture focused on middle-market companies. Allstate has invested in holdings including timber and a large organic food company, he said, and also helped form a rail-car leasing company with a group of investors this year.