Analysts: Insurers Might Want Neuberger

Asset management businesses can have returns on equity in the 20% range, compared with ROEs of 11% to 14% for life insurers, Levine notes.

But Levine notes that some insurers, such as Phoenix Companies Inc., Hartford, that once emphasized asset management operations now are streamlining their operations and focusing on their life insurance business.

Under current conditions, owning an asset manager could increase an insurer’s volatility if the asset manager owns products such as foundering asset-backed securities or has to support faltering money market funds, Levine says.

Neuberger Berman has a good performance track record and a strong brand name, and that means keeping the Neuberger Berman brand name would be a good decision for an acquirer to make, according to Fred Townsend, president of the Townsend Independent Actuarial Research Alliance, Wolcott, Conn.

One challenge is that using debt to finance the purchase of a Neuberger Berman stake could hurt an insurer’s ratings, says Doug Meyer, a managing director with Fitch Ratings, Chicago.

“Given the timing of this matter, those companies with ready access to capital will have a leg up on the bidding,” Meyer says.

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CORRECTION: Due to an editing error, an earlier version of this article gave an incorrect description of how much of a Neuberger Berman stake that Lehman wants to sell.