InsuranceAUM.com

Episode 30: Real Estate Investing in the Wake of COVID-19

In this episode of the InsuranceAUM.com Podcast, host Stewart Foley sits down with David Roth, Head of U.S. Real Estate Private Equity at Ares Real Estate Group, to discuss how the real estate market has been reshaped by the pandemic. While some sectors, like industrial and residential, have thrived, others, such as hospitality and retail, continue to face significant challenges. David shares insights on market trends, geographic shifts, and the evolving role of real estate in insurance company portfolios.

As insurers continue their search for yield in a low-rate environment, real estate offers unique opportunities—but selecting the right assets and strategies is critical. David also shares his perspective on why Ares' collaborative approach to real estate debt and equity provides valuable insights and opportunities for investors navigating today’s market.

Disclaimer

These materials are neither an offer to sell, nor the solicitation of an offer to purchase, any security, the offer and/or sale of which can only be made by definitive offering documentation. Any offer or solicitation with respect to any securities that may be issued by any investment vehicle (each, an “Ares Fund”) managed or sponsored by Ares Management LLC or any of its subsidiary or other affiliated entities (collectively, “Ares Management”) will be made only by means of definitive offering memoranda, which will be provided to prospective investors and will contain material information that is not set forth herein, including risk factors relating to any such investment.  Any such offering memoranda will supersede these materials and any other marketing materials (in whatever form) provided by Ares Management to prospective investors. In addition, these materials are not an offer to sell, or the solicitation of an offer to purchase securities of Ares Management Corporation (“Ares Corp”), the parent of Ares Management. An investment in Ares Corp is discrete from an investment in any fund directly or indirectly managed by Ares Corp. Collectively, Ares Corp, its affiliated entities, all underlying subsidiary entities shall be referred to as “Ares” unless specifically noted otherwise. Certain Ares Fund securities may be offered through our affiliate, Ares Investor Services LLC (“AIS”), a broker-dealer registered with the SEC,  and a member of FINRA and SIPC.

In making a decision to invest in any securities of an Ares Fund, prospective investors should rely only on the offering memorandum for such securities and not on these materials, which contain preliminary information that is subject to change and that is not intended to be complete or to constitute all the information necessary to adequately evaluate the consequences of investing in such securities. Ares makes no representation or warranty (express or implied) with respect to the information contained herein (including, without limitation, information obtained from third parties) and expressly disclaims any and all liability based on or relating to the information contained in, or errors or omissions from, these materials; or based on or relating to the recipient’s use (or the use by any of its affiliates or representatives) of these materials; or any other written or oral communications transmitted to the recipient or any of its affiliates or representatives in the course of its evaluation of Ares or any of its business activities. Ares undertakes no duty or obligation to update or revise the information contained in these materials.

The recipient should conduct its own investigations and analyses of Ares and the relevant Ares Fund and the information set forth in these materials. Nothing in these materials should be construed as a recommendation to invest in any securities that may be issued by Ares Corp or an Ares Fund or as legal, accounting or tax advice. Before making a decision to invest in any Ares Fund, a prospective investor should carefully review information respecting Ares and such Ares Fund and consult with its own legal, accounting, tax and other advisors in order to independently assess the merits of such an investment.

These materials are not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.

These materials contain confidential and proprietary information, and their distribution or the divulgence of any of their contents to any person, other than the person to whom they were originally delivered and such person's advisors, without the prior consent of Ares is prohibited. The recipient is advised that United States securities laws restrict any person who has material, nonpublic information about a company from purchasing or selling securities of such company (and options, warrants and rights relating thereto) and from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities. The recipient agrees not to purchase or sell such securities in violation of any such laws, including of Ares Corp or a publicly traded Ares Fund.

These materials may contain “forward-looking” information that is not purely historical in nature, and such information may include, among other things, projections, forecasts or estimates of cash flows, yields or returns, scenario analyses and proposed or expected portfolio composition. The forward-looking information contained herein is based upon certain assumptions about future events or conditions and is intended only to illustrate hypothetical results under those assumptions (not all of which will be specified herein). Not all relevant events or conditions may have been considered in developing such assumptions. The success or achievement of various results and objectives is dependent upon a multitude of factors, many of which are beyond the control of Ares. No representations are made as to the accuracy of such estimates or projections or that such projections will be realized. Actual events or conditions are unlikely to be consistent with, and may differ materially from, those assumed. Prospective investors should not view the past performance of Ares as indicative of future results. Ares does not undertake any obligation to publicly update or review any forward-looking information, whether as a result of new information, future developments or otherwise.

Some funds managed by Ares or its affiliates may be unregistered private investment partnerships, funds or pools that may invest and trade in many different markets, strategies and instruments and are not subject to the same regulatory requirements as mutual funds, including mutual fund requirements to provide certain periodic and standardized pricing and valuation information to investors.  Fees vary and may potentially be high.

These materials also contain information about Ares and certain of its personnel and affiliates whose portfolios are managed by Ares or its affiliates. This information has been supplied by Ares to provide prospective investors with information as to its general portfolio management experience. Information of a particular fund or investment strategy is not and should not be interpreted as a guaranty of future performance. Moreover, no assurance can be given that unrealized, targeted or projected valuations or returns will be achieved. Future results are subject to any number of risks and factors, many of which are beyond the control of Ares. In addition, an investment in one Ares Fund will be discrete from an investment in any other Ares Fund and will not be an investment in Ares Corp. As such, neither the realized returns nor the unrealized values attributable to one Ares Fund are directly applicable to an investment in any other Ares Fund. An investment in an Ares Fund (other than in publicly traded securities) is illiquid and its value is volatile and can suffer from adverse or unexpected market moves or other adverse events. Funds may engage in speculative investment practices such as leverage, short-selling, arbitrage, hedging, derivatives, and other strategies that may increase investment loss.  Investors may suffer the loss of their entire investment. In addition, in light of the various investment strategies of such other investment partnerships, funds and/or pools, it is noted that such other investment programs may have portfolio investments inconsistent with those of the strategy or investment vehicle proposed herein.

This may contain information obtained from third parties, including ratings from credit ratings agencies such as Standard & Poor’s.  Reproduction and distribution of third party content in any form is prohibited except with the prior written permission of the related third party.  Third party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content.  THIRD PARTY CONTENT PROVIDERS GIVE NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. THIRD PARTY CONTENT PROVIDERS SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, EXEMPLARY, COMPENSATORY, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, COSTS, EXPENSES, LEGAL FEES, OR LOSSES (INCLUDING LOST INCOME OR PROFITS AND OPPORTUNITY COSTS OR LOSSES CAUSED BY NEGLIGENCE) IN CONNECTION WITH ANY USE OF THEIR CONTENT, INCLUDING RATINGS. Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not address the suitability of securities or the suitability of securities for investment purposes, and should not be relied on as investment advice.

Coronavirus and Public Health Emergency Risks

As of March 17, 2020, there is an outbreak of a novel and highly contagious form of coronavirus (“COVID-19”), which the World Health Organization has declared to constitute a pandemic.  The outbreak of COVID-19 has resulted in numerous deaths, adversely impacted global commercial activity, and contributed to significant volatility in certain equity and debt markets.  The global impact of the outbreak is rapidly evolving, and many countries have reacted by instituting quarantines, prohibitions on travel and the closure of offices, businesses, schools, retail stores, and other public venues.  Businesses are also implementing similar precautionary measures.  Such measures, as well as the general uncertainty surrounding the dangers and impact of COVID-19, are creating significant disruption in supply chains and economic activity and are having a particularly adverse impact on transportation, hospitality, tourism, entertainment and other industries. The impact of COVID-19 has led to significant volatility and declines in the global public equity markets and it is uncertain how long this volatility will continue.  As COVID-19 continues to spread, the potential impacts, including a global, regional or other economic recession, are increasingly uncertain and difficult to assess.

Any public health emergency, including any outbreak of COVID-19 or other existing or new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on the Fund, the pricing and fair value of its investments and real estate assets and its subsidiaries, and could adversely affect the Fund’s ability to fulfill its investment objectives.

The extent of the impact of any public health emergency on the Fund’s and its subsidiaries’ operational and financial performance will depend on many factors, including the duration and scope of such public health emergency, the extent of any related travel advisories and restrictions implemented, the impact of such public health emergency on overall supply and demand, goods and services, investor liquidity, consumer confidence and levels of economic activity and the extent of its disruption to important global, regional and local supply chains and economic markets, all of which are highly uncertain and cannot be predicted.  The effects of a public health emergency may materially and adversely impact (i) the value and performance of the Fund and its investments, (ii) the ability of the Fund and/or its subsidiaries to continue to meet loan covenants or repay loans on a timely basis or at all, (iii) the ability of the Fund and/or its subsidiaries to repay their debt obligations, on a timely basis or at all or (iv) the Fund’s ability to source, manage and divest investments and the Fund’s ability to achieve its investment objectives, all of which could result in significant losses to the Fund. 

All unrealized performance information, investment strategy, and targeted returns presented throughout this presentation were prepared as of the dates indicated.  Such information was prepared at such times in good faith based on a number of fundamental assumptions as of such dates, including assumptions relating to the broader economy, macro and applicable micro economic conditions, the geopolitical landscape, interest rates, availability and pricing of credit, liquidity and depth of transactional markets, health, population, and the environment, etc.  With the unprecedented (and to date uncurable) advancement of COVID-19, most of those assumptions at the current time appear to be materially off or in a state of suspension.  Consequently, all unrealized performance information, the portions of the investment strategy which related to targeted returns, and valuations of current investments held within or warehoused for the Fund are at the time of this writing indeterminate, but presumed to be materially lower than those last presented.  While in the medium to longer term the Manager believes the Fund should see attractive opportunities consistent with its larger investment themes and strategy, it will likely take some time for the markets to recover.

In addition, the operations of the Fund, its subsidiaries and investments, the General Partner and the Manager may be significantly impacted, or even temporarily or permanently halted, as a result of government quarantine measures, voluntary and precautionary restrictions on travel or meetings and other factors related to a public health emergency, including its potential adverse impact on the health of any such entity’s personnel.

REF: RE-01551

Episode 29: Putting COVID-19 in the Rearview Mirror: Outlook for Insurance Industry

In this episode of the InsuranceAUM.com Podcast, host Stewart Foley explores the evolving credit landscape for insurers, the impact of COVID-19 on different insurance sectors, and the growing role of ESG in credit ratings. With continued low interest rates, shifting risk dynamics, and regulatory developments, insurers are adapting their investment strategies to meet new challenges.

How are insurance companies positioning themselves in this environment? What trends in asset allocation, fund financing, and reinsurance are emerging? This discussion offers key insights into what insurance investors should be watching as they navigate the road ahead.

Episode 28: The balancing act of managing equity risk with Securian Asset Management’s Craig Stapleton

Craig Stapleton makes the case for a permanent allocation to an equity stabilization strategy using hard data to challenge traditional views of the relationship between risk and return.  Craig’s is part of a growing body of work that makes a strong case for re-considering our default asset allocation methodologies. 

Episode 27: Multi-Asset Solutions from a Recovering Actuary with T. Rowe Price’s Lowell Yura

The term “solutions” can mean a lot of things to a lot of different people. In this podcast, Lowell Yura, Head of Multi-Asset Solutions at T. Rowe Price, explores what makes their solutions both unique and effective. Yura’s team, built of backgrounds ranging from actuaries to risk managers, is fully equipped to design solutions, perform diagnostics, and provide insights for a wide range of clients. Listen to learn more about this diverse team and their iterative approach.

Episode 26: Exploring Opportunities in Emerging Markets

In this episode of the InsuranceAUM.com Podcast, host Stewart Foley explores the evolving opportunities in emerging market debt and what insurance investors should consider when allocating to this asset class. With global interest rates at historic lows, insurers are seeking income enhancement and diversification—but does the risk-reward profile of emerging markets make sense?

How have EM fundamentals evolved over the past two decades? What role does proximity to issuers play in risk assessment? And how did EM corporates and sovereigns navigate the COVID-19 crisis? This discussion provides insights on why more insurers are allocating to EM debt and how a total return mindset can help investors navigate cycles.

 

Disclosure

This article has been prepared in conjunction with MetLife Investment Management (“MIM”)¹ solely for informational purposes and does not constitute a recommendation regarding any investments or the provision of any investment advice, or constitute or form part of any advertisement of, offer for sale or subscription of, solicitation or invitation of any offer or recommendation to purchase or subscribe for any investments or investment advisory services. The views expressed herein do not necessarily reflect, nor are they necessarily consistent with, the views held by, or the forecasts utilized by, the entities within the MetLife enterprise that provide insurance products, annuities and employee benefit programs. Subsequent developments may materially affect the information contained in this article. Affiliates of MIM may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives) of any company mentioned herein. This article may contain forward-looking statements, as well as predictions, projections and forecasts of the economy or economic trends of the markets, which are not necessarily indicative of the future. Any or all forward-looking statements may turn out to be wrong. All investments involve risks including the potential for loss of principle.

 ¹ MIM is MetLife, Inc.’s (“MetLife”) institutional management business and the marketing name for subsidiaries of MetLife that provide investment management services to MetLife’s general account, separate accounts and/or unaffiliated/third party investors, including: Metropolitan Life Insurance Company, MetLife Investment Management, LLC, MetLife Investment Management Limited, MetLife Investments Limited, MetLife Investments Asia Limited, MetLife Latin America Asesorias e Inversiones Limitada, MetLife Asset Management Corp. (Japan), and MIM I LLC.

Episode 25: On the Mind: Thoughts On Topical Investment Issues Across the Industry

In this episode of the InsuranceAUM.com Podcast, host Stewart Foley explores the evolving landscape of insurance investing with a focus on asset allocation, private markets, structured securities, and the growing role of OCIOs. As insurers navigate a prolonged low-rate environment, how are they adjusting their risk profiles while maintaining discipline? What trends are shaping the way asset managers and consultants work with insurance clients?

With deep industry expertise, this discussion sheds light on the strategic considerations insurers face, from regulatory challenges to the complexities of private ABS and alternative investments. Don't miss this insightful conversation on the shifting dynamics of insurance asset management.

Episode 24: An Entirely New Risk Paradigm - Northern Trust Asset Management Presents The Risk Report

In this episode of the InsuranceAUM.com Podcast, host Stewart Foley explores key findings from The Risk Report, a study analyzing more than 200 institutional portfolios representing over $200 billion in assets. The research uncovers surprising insights that challenge conventional investment wisdom, including why many portfolios contain twice as much uncompensated risk as compensated risk, how diversification strategies may unintentionally dilute returns, and the hidden risks that can cause unintended outcomes. With insurers facing a prolonged low-rate environment and increased volatility, these findings offer critical guidance for optimizing risk-adjusted performance.

We also discuss why traditional style investing often leads to index-like performance with higher fees, how over-diversification can erode alpha, and the importance of precision in portfolio construction. As insurers rethink their investment strategies, this conversation highlights the need for a data-driven approach to risk management and asset allocation. If you’re looking to enhance portfolio efficiency in today’s evolving market, this episode is a must-listen.

Episode 23: Managing in a Pandemic: Lessons Learned & Next Steps

Cindy Beaulieu, a Managing Director and Portfolio Manager at Conning where she is responsible for managing large life insurance general account portfolios as well as pension assets for institutional clients.  She shares her experience in managing insurance assets from the smooth waters of Q4 into the pandemic outbreak and market disruptions that followed.  She is both knowledgeable and straightforward in her approach which makes this interview one you won't want to miss! 

Episode 22: CIO Viewpoint: Nico Santini of ProSight Specialty Insurance

In this episode of the InsuranceAUM.com Podcast, host Stewart Foley sits down to discuss the shift from managing multiple client portfolios at an asset manager to overseeing a single insurance investment portfolio as CIO. The conversation explores the decision-making process behind internal versus external asset management, the growing role of private markets, and how insurers are adjusting to a rapidly changing investment landscape.

With market volatility, low yields, and evolving risk profiles, insurers are rethinking their approaches to strategic and tactical asset allocation. This discussion highlights the use of ETFs for flexibility, the increasing focus on ESG, and how insurers can balance liquidity with the need for enhanced returns. Tune in for insights on managing insurance assets in today’s challenging environment.

Episode 21: Does Equity Have a Place in Your Portfolio? With T. Rowe Price’s John Linehan

Assets under management quoted are as of 6/30/20