Investment firm sees openings as insurers seek alternatives to bonds
Angel Oak Capital Advisors has launched an initiative offering insurance companies access to newly originated and secondary residential mortgage loans through customized separately managed accounts (SMAs).
The expansion comes as insurance companies seek higher-yielding alternatives to traditional corporate bonds and commercial real estate holdings. Angel Oak believes the timing is ideal, as insurers have been underinvesting in the residential mortgage market for over a decade, it claimed.
The firm said it has already secured a $200 million commitment from an unnamed insurance institution for this initiative. Across its various private debt strategies, Angel Oak can deploy approximately $5 billion in non-qualified, second-lien, HELOC, and agency mortgage purchases. The firm also plans a securitization focused primarily on HELOC loans later this year.
“Since inception, Angel Oak has served many insurance companies, identifying and addressing the specific challenges they encounter,” said Sreeni Prabhu, co-CEO and managing partner of Angel Oak. “Our bespoke whole loan SMAs, in tandem with our securitization-focused private strategies, have significantly fortified our relationships with institutional clients. We see immense opportunity to deliver attractive risk-adjusted returns for a larger insurance client base with this dedicated effort.”
Angel Oak said its ability to source loans through its affiliate lender, Angel Oak Mortgage Solutions, sets it apart from other investment managers in this space.
The firm’s recent expansion into commercial lending, led by industry veteran Sumit Sasidharan, also allows Angel Oak to offer insurance companies access to commercial mortgages.
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Manish Valecha, head of client solutions, and Bernard Dzata, managing director of institutional business development, will lead the insurance initiative.
“We are just scratching the surface in terms of providing capital-efficient solutions for insurance companies on the whole loan front,” Manish said in the company’s press release. “Our institutional team has dedicated substantial resources to underscoring the advantages of our vertically integrated model, fostering partnerships with insurance companies. Furthermore, we believe our long track record in mortgage origination, going back more than 10 years, is a key differentiating factor in an uncertain economic environment.”
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