Capital Gains to Assets Ratio at its Lowest in 20 Years

February 20, 2002, 1:00 a.m. EST 2 Min Read

Northwestern Mutual has created Mason Street Advisors, LLC, a wholly owned subsidiary that is intended to boost the companys image in the investment management arena. Mark Doll, senior VP of the public markets division at Northwestern Mutual, has assumed the post of president of Mason Street Advisors.

Mason Street Advisors has 50 employees, mostly from Northwestern Mutual Investment Company, LLCs public markets department. NMIC has served as the advisor to the Mason Street Funds and variable product sub-accounts, but will pass that mantle to Mason Street Advisors.

"One of the objectives was to provide a separate and distinct identity for the investment services that we provide as opposed to having the same identity as the insurance company," said Patti Van Kampen, managing director of common stock at Northwestern.

Allstate Financial performed a similar maneuver late last year, pulling its investment product-oriented asset management staff into a separate subsidiary to offer external institutional money management. Like Allstate, legal, regulatory, and marketing considerations drove the decision to create a clearly defined money management subsidiary at Northwestern.

"It does help create an identity that highlights the investment advisory part of our business and separates it out from life insurance and risk-based products. It puts a structure in place that gives us flexibility and allows us to grow our investment products," said Northwestern spokesperson Jean Towell.

Insurance carriers investment management teams often carry a stodgy and conservative image, even when used to manage more aggressive portfolios. Changing carriers aversion to risk and their tradition of bond-oriented investing can benefit the marketing of third-party asset management, retail sales, and general cachet, important in attracting and retaining investment professionals.

However, Northwestern is not looking to shake off insurance companys reputation for conservative investing, said Van Kampen. "We actually see that as a positive, particularly with our field force that is familiar with the job that we do managing the general account portfolios," she said.

Mason Street Advisors manages approximately $40 billion in general account assets for NMIC. Although Mason Street Advisors will focus on servicing existing clients, Northwestern has an eye to using the subsidiary to expand its third-party money management business, it said.

As of year-end 2001, Mason Street Funds had $690 million in assets under management, while variable products held over $9 billion, according to Northwestern.