Life Insurer Targets 10% PE Allocation By 2013

Skandia Life Insurance Company is looking to reach its target allocation to the private equity asset class, which amounts to 10 percent of its total assets, by 2013. This suggests the firm will commit some $400 million to $800 million per year to buyout funds.

The actual allocation at the Nordic life insurance company, which manages $35 billion in assets, stands at 3.7 percent, or $1.3 billion, well under the $3.5 billion target. The business has a target allocation of 8 percent, or $2.8 billion, to buyouts, and, in a normal year, would expect to commit between $400 million and $800 million to the sub-asset class. By region, Europe accounts for nearly half (46 percent) of fund commitments, followed by the United States with 43 percent, the Nordic market with 8 percent and Asia with 3 percent.

Within its buyout portfolio, Skandia Life seeks to maintain between 20 and 25 core relationships active in developed markets. Existing U.S. relationships include Lindsay Goldberg, Madison Dearborn Partners and Sun Capital. In Europe, its GPs include Altor Equity Partners, IK Investment Partners, Lion Capital and Triton. Skandia Life is also committed to global funds managed by Kohlberg Kravis Roberts & Co. and TPG.

The private equity team at Skandia Life has eight professionals. Three are focused on buyout fund commitments, led by Adalbjorn Stefansson, and three are focused on venture and growth capital funds, led by Roger Johanson. Two back-office managers handle the administration for the 103 private equity funds (including venture, growth capital and buyout) in the portfolio.

Skandia Life is headquartered in Stockholm, Sweden, and has no offices in the United States. In an interview with Buyouts, Johanson explained that the team travels a lot in order to manage the diverse geographical spread of its investments. He added that the team has not yet invested in Eastern Europe, Brazil or Africa.

Owned by the Old Mutual Group, Skandia Life has been a limited partner in private equity funds since the late 1970s, when it focused mainly on Swedish funds.