Administration May 13, 2008

BOLI Assets Increase Nearly 16% in 2007

May 13, 2008 (PLANSPONSOR.com) - Large bank holding companies (BHCs) and stand-alone banks reported bank-owned life insurance (BOLI) assets of $120.4 billion in 2007, reflecting a 15.9% increase from $103.9 billion in 2006, according to the 2008 edition of the Michael White-MullinTBG BOLI Holdings Report.
Reported by

According to a press release on the data, large top-tier BHCs increased their 2007 BOLI holdings by 16.4% from $101 billion in 2006 to $117.5 billion in 2007. Stand-alone banks, those without BHCs, recorded an added $2.5 billion in BOLI holdings. BOLI is used to recover the costs of supplemental employee health and retirement benefit plans.

Other report findings, according to the press release, included:

Get more!  Sign up for PLANSPONSOR newsletters.

  • Another 56 BHCs with assets between $300 million and $500 million reported $340.8 million in BOLI assets.
  • Of the 857 large top-tier BHCs (assets greater than $500 million), 696 or 81.2% reported holding BOLI assets in 2007, representing a 1.3% increase from 687 in 2006.
  • BHCs with assets between $1 billion and $10 billion reported the highest incidence of BOLI ownership, as 315 of 375 BHCs, or 84.0%, reported having BOLI assets.
  • The largest BHCs, those over $10 billion in assets, accounted for the largest dollar and percentage increase – $16 billion or 18.1% – in their combined BOLI assets.
  • BHCs with assets between $500 million to $1 billion registered the second largest percentage increase in total BOLI assets, rising 4.5% from $2.86 billion in 2006 to $3.03 billion in 2007.
  • The largest by-category increase in BHCs reporting BOLI assets occurred among BHCs with $1 billion to $10 billion in assets.  Their number increased by nine from 306 BHCs in 2006 to 315 in 2007.
  • The largest BHCs, those over $10 billion in assets, recorded the highest mean BOLI assets as a percent (16.6%) of total capital in 2007.
  • Nationally, mean BOLI assets as a percent of total capital increased from 13.3% in 2006 to 13.7% in 2007.

The announcement noted that the Federal Reserve recommends it is generally not prudent for a BHC to hold BOLI assets with an aggregate cash surrender value (CSV) that exceeds 25% of the sum of the institution’s Tier 1 capital and the allowance for loan and lease losses.

The data was reported by 857 large BHCs and over 7,700 commercial banks and FDIC-supervised savings banks operating on December 31, 2007.

For more information, visit www.MullinTBG.com .

Administration May 12, 2008

CalSTRS Names Fixed Income Developing Manager Firms

May 12, 2008 (PLANSPONSOR.com) - The California State Teachers' Retirement System (CalSTRS) has announced its intent to award contracts to three investment management firms that will implement a developing manager program in its fixed income portfolio.
Reported by

CalSTRS named San Francisco-based Leading Edge Investment Advisors, LLC, as a fund-of-funds manager. The two direct management firms selected were Access Capital Strategies, LLC, of Boston and Community Capital Management, Inc., of Weston, Florida. Dollar amounts have not been established for each contract.

According to the announcement, the three firms will be CalSTRS fiduciaries and have discretionary authority over CalSTRS assets with investment mandates focusing on core plus and high yield bond strategies. Their mandates will also include special situations in the mortgage and municipal markets related to housing investments in California.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

“These firms will help us find the emerging stars in fixed income and focus on the smaller firms that will add value to the teachers’ retirement portfolio,” said CalSTRS Chief Investment Officer Christopher J. Ailman. “This strategy is part of our commitment to look for value everywhere we can find it to strengthen the financial security of our members and their families.”

CalSTRS defines a developing manager as any investment management firm with less than $2 billion under management.

The Developing Manager Program in fixed income is a new direction for CalSTRS’ oldest asset class, which until 1966 comprised the entire CalSTRS investment portfolio.

The first phase of the Opportunistic Portfolio was funded with almost $6 billion going to nine core plus and high yield managers. The Developing Manager Program, the second phase of this opportunistic strategy, will be funded at $300 million to $500 million and is designed to complement the existing lineup of external managers, according to CalSTRS.

Fixed Income holdings are currently valued at $32.7 billion and are targeted at 20% of the $164 billion CalSTRS investment portfolio.

CalSTRS recently put in place emerging manager programs in two of its other asset classes:  In February 2008, CalSTRS named four firms to its $1.8 billion U.S. Equities Developing Manager Program (see  CalSTRS Taps Four for Developing Manager Program ). One month later, CalSTRS announced a $200 million effort to find private equity partners seeking to raise their first, second or third fund (see  CalSTRS Expands PE Program ).

Developing managers interested in working with CalSTRS in fixed income can contact:  Clayton C. Jue, President and CIO of Leading Edge, 415-217-7030.

«