Aflac picks Chicago-based NXT Capital to manage new $500 million portfolio

Columbus, Ga.-based Aflac Inc. (NYSE: AFL) tapped Chicago-based NXT Capital to manage Aflac's new $500 million portfolio focused on investments related to middle-market private debt.

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Aflac Global Investments, the asset management division of Aflac, 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 about $50 million, which will be funded from Aflac's insurance general account for a minority stake in NXT Capital.

Aflac Executive Vice President and Global Chief Investment Officer Eric M. Kirschsaid 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 as noted in Aflac’s 2017 outlook call.

“The floating rate coupons and short duration of middle-market loans provide a good match against short duration currency hedges,” Kirsch said in a statement.

Aflac Chief Financial Officer Frederick J. Crawford said the partnership reflects the commitment Aflac has to maintaining an investment platform that will generate sustainable risk-adjusted net investment income despite the headwinds of very low interest rates impacting its general account.

"We are pleased that we will be investing in assets that will provide solid margins and less volatility after accounting for hedge costs for our Aflac Japan dollar program," Crawford said in a statement.

"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."

Aflac is the leading provider of voluntary insurance at the worksite in the United States and is the leading provider of medical and cancer insurance in Japan where it insures 1 in 4 households. Aflac covers more than 50 million people through its individual and group insurance products.

Aflac Global Investments has more than 100 professionals managing more than $110 billion.

NXT Capital has originated more than $15 billion in total financing volume and currently has $8.8 billion of capital at its disposal.

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