“Organic growth and putting capital to work at attractive returns is harder and harder,” Fels said Monday at a conference held by the American Council of Life Insurers in Washington. “I think it’s forced everybody to look at M&A differently, including mutuals.”
Massachusetts Mutual Life Insurance Co., Pacific Life Insurance Co. and TIAA are among companies that have been pursuing deals to diversify operations and gain market share from publicly traded rivals, which tend to have lower credit ratings. MassMutual’s OppenheimerFunds struck a deal in 2015 to purchase VTL Associates LLC, pushing into smart-beta exchange-traded funds. And the insurer’s Cornerstone Real Estate Advisers announced an agreement this year to buy ACRE Capital Holdings LLC in a bet on multifamily loans.
TIAA Chief Executive Officer Roger Ferguson, the former Federal Reserve vice chairman, announced a deal this year to buy EverBank Financial Corp. to add online banking capabilities to a company better known as the provider of retirement products and insurance to teachers. TIAA agreed in 2014 to buy Nuveen Investments for more than $6 billion to expand in mutual funds.
“Look at what TIAA has done,” Fels said. “Look at what MassMutual’s doing in its asset-management business.”