Oak Hill Advisors, a T. Rowe Price unit, is getting a chance to show what it can do for investment returns at Aspida Holdings, a midsize indexed annuity issuer.
Ares Management, Aspida's owner, agreed last week to let Oak Hill Advisors manage some of Aspida's assets and work with Aspida to try to develop new types of products.
Michael Arougheti, the CEO of Ares Management, and Rob Sharps, the CEO of T. Rowe Price, talked about the new relationship last week, during conference calls with securities analysts.
"T. Rowe gets to demonstrate its capability and capacity to create insurance solutions," Arougheti said.
Sharps said the relationship could involve private credit assets as well as other types of assets.
What it means: Aspida may be about to become a higher-profile company.
Aspida reported in January that it had raised $3 billion in new capital that it could use to write more annuities.
If the new relationship with Oak Hill Advisors goes well, Aspida could become friends with T. Rowe Price's friends.
The players: T. Rowe Price is a Baltimore-based asset management giant with $1.6 trillion of assets under management.
Oak Hill Advisors manages $71 billion in "alternative credit" assets, including private credit assets and high-yield bonds.
Ares, a firm with $484 billion in assets under management, acquired Aspida in 2021. Aspida now has $19 billion in assets. It generated $1.9 billion on non-variable indexed annuity sales in the first three quarters of 2024.
Private credit: For Aspida, teaming with Oak Hill Advisors could help it tap the private credit market.
Life insurers have always made some loans to small and midsize businesses, but banks dominated commercial lending. Life insurers tended to focus on buying bonds issued by large companies with high credit ratings.
In recent years, regulatory shifts have pushed banks to cut back on commercial lending. Life insurers have been looking for ways to invest in private credit firms to increase their returns by filling the commercial lending void.
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