Loomis Sayles's $34.3bn in structured assets is looked after by 19 team members investing across the capital stack. The focus for insurance clients has been in the BBB-rated area of the market.
The structured team has worked closely with insurance clients to design mandates that utilise the full research capabilities of the team across esoteric ABS, CLOs, CMBS, and RMBS—credit intensive mandates which are comprised of illiquid securities. The aim is to offer a superior level of yield per unit of capital consumption.
In today's environment, the team has preserved a sizable cash position so that they can be a provider of liquidity during periods of further market stress.
The last year saw several notable examples of the company's work. Loomis was employed by one large mortgage insurer to diversify its exposure to core fixed income and pick up some incremental yield. Additionally, it was looking to minimise additional exposure to mortgages given the business model risk. Loomis' securitised team analysed the underlying sectors and recommended a portfolio with a focus on esoteric ABS while achieving a similar risk level to the standard strategy. The client ended up with a diversified portfolio of deep value securitised credit with minimal exposure to the real estate markets and gained a healthy yield pick-up from the allocation.
Another client, a health insurer, originally hired Loomis Sayles right before March 2020. Given the stress to the client's business model, they paused the allocation. During this period, the team continued to provide updates on the dislocation, market dynamics, and potential opportunities. As liquidity returned to the market and the company's business model solidified, it allocated a significant amount of assets to the strategy, benefiting from the return to normal yield levels. The client has continued to allocate meaningful incremental dollars to the strategy to take advantage of the meaningful yield premium.
The client wins win the company the award for structured debt manager of the year.
