Aflac, a provider of voluntary insurance at the worksite, reached an agreement with NXT Capital to manage Aflac’s new portfolio, which will focus on investments related to middle-market private debt.
Aflac Global Investments, the asset management division of Aflac Incorporated, will initially fund a $500 million portfolio consisting of direct investments in floating rate, senior secured loans to middle-market companies on behalf of Aflac’s general account. Aflac will also invest approximately $50 million, which will be funded from Aflac’s insurance general account for a minority stake in NXT Capital, demonstrating the mutual commitment to a long-term relationship and the benefits that can be derived over time by partnering together in the asset class.
”As noted on our 2017 outlook call, Aflac made a strategic asset allocation decision to utilize floating rate assets as a core part of its hedged U.S. dollar program for Aflac Japan. The floating rate coupons and short duration of middle-market loans provide a good match against short duration currency hedges,” said Aflac Executive Vice President and Global Chief Investment Officer Eric M. Kirsch.
“After an extensive search of middle-market managers, we found NXT Capital to be an excellent strategic fit, matching our culture of disciplined credit underwriting, risk management and a team-oriented approach to investment management. We are excited to partner with a market leader that has a management team with more than 25 years of experience investing in the asset class.”
“NXT Capital is very pleased to partner with Aflac and to offer Aflac access to the diversification benefits and attractive risk-adjusted returns that middle market private debt provides,” said Robert Radway, NXT Capital’s chairman and CEO. “We appreciate Aflac’s recognition of NXT’s expertise as an asset manager, our proven, broad-based direct origination capability and rigorous underwriting process for proprietary middle market loans.”
NXT Capital is a provider of structured financing to the U.S. middle market.