Friends Life, the UK-based insurance and pensions provider has announced a new £500 million infrastructure mandate, which the company has awarded to MetLife Investment Management, LLC, the US-based asset management arm of MetLife has approximately US$1.3 billion in infrastructure investments in 10 airports spread across Europe, Australia and the Americas. Infrastructure financing provides MetLife with investment opportunities that match its long-term liabilities..
Friends Life is a life assurance company formed in 2011, comprising the merged UK operations of Friends Provident and the life assurance businesses acquired from Bupa and AXA UK. The new company began trading in March 2011 with over 5 million customers worldwide.
The mandate relates to the investment in infrastructure loans within Friends Life's annuity funds and follows the announcement in July that the company had secured a separate £500 million commercial real estate loan mandate with Pricoa Mortgage Capital, the commercial mortgage business of Pramerica Investment Management Ltd. The infrastructure assets will be UK-based, senior secured, long-term loans.
Friends Life commented in a press release that the firm believes an allocation to infrastructure loans will increase returns and sustainable cash generation, by delivering more value in the annuity book. In April of this year, Friends Life agreed a £75 million amortising loan facility with Drax Group Plc, a British electrical power generation company. The loan will mature in June 2018 and is underpinned by a guarantee from HM Treasury issued under the Infrastructure UK Guarantee Scheme.
Mark Versey, Chief Investment Officer at Friends Life, commented:
John Tanyeri, Managing Director and Head of MetLife Investment Management's Infrastructure group, commented:
"We are very pleased to begin this new agreement with MetLife Investment Management. Following extensive analysis of our annuity fund portfolios, we identified infrastructure loans as an attractive alternative credit asset that would effectively meet the ongoing needs of the funds. Infrastructure loans fulfil our desire for increased diversification of assets within the annuity book, while facilitating further investment into current UK development opportunities. MetLife Investment Management demonstrated specific expertise in investing in this asset class and we look forward to building our relationship together."
"We are extremely pleased to be working with Friends Life through a custom-tailored solution to meet their needs. Because MetLife and Friends Life will invest in each transaction, this is an agreement with a consistent approach, parallel objectives and aligned interests."