Florida-based Bayview Asset Management LLC has launched an insurance asset management arm that will seek to expand the range of investable assets available to insurers, according to a statement from the company.
The new business will take money from insurance companies and invest in mortgages and private structured credit. It will look to acquire business from an insurance industry that is “looking to diversify and expand beyond its traditional corporate credit focus,” the company said in the statement.
Bayview, headquartered in Coral Gables, has approximately $17.3 billion in assets under management and more than 1,400 employees, and focuses on residential, commercial, and consumer credit, including the entire loans, asset-backed securities, mortgage servicing rights, and other credit-related assets. The new business will be led by Nancy Mueller Handal, who was previously head of private fixed income and alternatives at MetLife Inc., where she oversaw a 150-person team managing about $150 billion in investments, the statement said. .
Bayview says it will help insurance companies seeking higher returns gain exposure to a segment of the mortgage market that can be difficult to invest in, at least for non-banks and companies without expertise. : residential mortgages that are not packaged, or securitized, into bonds.
Most residential mortgage loans in the US today meet guidelines set by the government-sponsored entity Freddie Mac. 
and Fannie Mae and wrapped in bonds known as agency mortgage-backed securities, or agency MBS. Debts that fall outside the guidelines can also be securitized, into non-agency MBS. Both types of securities are standard investments for insurance companies and other large money managers.
But that still leaves a large amount of debt that isn’t wrapped in bonds and isn’t easy for investors to buy. There are $3.4 trillion in first-lien mortgages outstanding in the US single-family housing market, compared to nearly $400 billion in non-agency residential mortgage-backed securities, according to a May report by the Urban Institute.
“There is very little production of non-agency mortgage securitizations in the US,” Mueller Handal said in an interview. “That makes it difficult for insurance companies to get exposure to mortgage credit, which is a nice diversifying asset.”
The company has discussions with interested investors to raise money for the new division, Mueller Handal said.
In addition to investing in home loans, it also invests in private structured credit. Structured credit typically refers to bonds backed by various forms of consumer debt, such as auto loans or credit cards. Private deals are those where important details are not made public and the number of investors is limited.
In June, Bayview sold a $4.6 billion bond offering backed by auto loans, one of its largest deals. The sale is one of several securitized auto loans originated by US Bank.
Alex Latella, formerly a member of BlackRock’s Financial Institutions Group, also joins the newly formed division as senior vice president responsible for business development.
Copyright 2023 Bloomberg.
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