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Blackstone will merge its insurance and credit businesses, a sign that the world’s largest alternative asset manager sees its growth prospects over the next decade moving away from the traditional private equity buyouts and real estate businesses that have long been its cornerstones.
CEO Steve Schwarzman said Wednesday that the integrated unit, known simply as Blackstone Credit & Insurance, could grow to $1 trillion in assets under management over the next 10 years from $295 billion currently. . That would be the company’s next big goal after revealing in July that its assets hit $1 trillion for the first time.
Combined, these business lines have been Blackstone’s fastest growing over the past three years: The company reported $64 billion in inflows into these business units in the year to June, accounting for two-fifths of the company’s total funding during that period.
Blackstone’s merger of its credit and insurance businesses comes as it and other private equity firms such as Apollo Global Management, KKR and Brookfield prioritize debt investments as a source of asset growth in a rising interest rate environment.
Last year, Apollo completed its acquisition of Athene, a life and annuities insurance company created after the 2008 financial crisis, with CEO Marc Rowan viewing credit investments as a major source of growth for the group. Apollo’s credit arm manages hundreds of billions of insured assets owned directly by the group following the merger.
In recent years, KKR and Brookfield have also acquired large insurance companies to increase their assets.
Blackstone takes a different approach. Rather than buying outright, it has formed partnerships with several large insurance companies, including AIG and Allstate, to provide asset management services for its policies.
With these new credit and insurance assets, private equity firms have begun to position themselves as an alternative to the traditional banking system, with the ability to originate billions of dollars in huge corporate loans and originate securitized assets such as leased equipment and aircraft loans.
The appointment of a new leader for the combined business also underscores Blackstone’s credit unit’s continued move away from its roots in distressed debt investing.
The company said its insurance chief Gilles Dellaert will lead the combined unit. Dellaert joined Blackstone in 2020 from heavyweight reinsurer Global Atlantic, where KKR acquired a majority stake in 2021 to strengthen its insurance business. Prior to that, he worked at Goldman Sachs and JPMorgan Chase.
Dwight Scott, a veteran Blackstone executive in charge of its credit business, was named chairman of the new unit. Scott’s tenure with the division dates back to 2005, when the firm was known as GSO Capital Partners. Blackstone acquired the company in 2008, and the firm was known for its shrewd bets on credit markets.
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