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Aflac Turns to KKR as Kirsch Diversifies $120 Billion Portfolio

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Aflac Inc. has turned to KKR & Co. for a push into private equity as Chief Investment Officer Eric Kirsch diversifies the insurer’s portfolio of almost $120 billion.

The buyout firm is developing and managing a customized private equity portfolio for the insurer, a spokeswoman for New York-based KKR said Tuesday.

(Related: Money Manager Predicts Japan Wil Restructure Its Debt)

Kirsch, who joined Aflac in 2011 from Goldman Sachs Group Inc., has been expanding the insurer’s holdings of corporate bonds and loans to offset pressure from low interest rates on government securities in the United States and Japan, its largest markets. He has also been working with fund managers including Acore Capital LP and NXT Capital and said in May that he would be further diversifying the portfolio.

“We are going to initiate growth assets, alternatives,” in the second half of this year, he said in May.

He struck a deal with NXT in March to fund a $500 million portfolio for commercial loans to middle-market borrowers, while also taking a minority stake in the firm. The insurer also works with Goldman Sachs’ asset manager as well as Voya Financial Inc.’s investing arm, according to regulatory filings.

The investing results have helped Columbus, Georgia-based Aflac’s stock. The company is up 17% this year after advancing 16% in 2016.

Increasing Investment

KKR, one of the oldest buyout firms, gained 21% this year through Monday in New York trading. The company, led by billionaire cousins Henry Kravis and George Roberts, continues to break fundraising records, closing on the largest ever buyout funds focused on North America and Asia this year.

Aflac disclosed the tie by adding KKR to a list of investment managers in a quarterly filing with state regulators. The document doesn’t list the amount of money being invested with KKR.

“Aflac is increasing its investment in private equity over the next few years,” Jon Sullivan, a spokesman for the insurer, said by email. “KKR was just hired, and we will fund them gradually so their mandate will increase with us.”

— Read Aflac Triples Japan Equity Wagers to Counter Low Interest Rates on ThinkAdvisor.