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NXT Capital Teams Up With Aflac on Middle-Market Lending Initiative

April 03, 2017, 07:20 AM
Filed Under: New Venture

Aflac, the leading provider of voluntary insurance at the worksite in the United States, announced that it has reached an agreement with NXT Capital to manage Aflac’s new portfolio, which will focus on investments related to middle-market private debt. Aflac Global Investments, the asset management division of Aflac Incorporated, 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 approximately $50 million, which will be funded from Aflac’s insurance general account for a minority stake in NXT Capital, demonstrating the mutual commitment to a long-term relationship and the benefits that can be derived over time by partnering together in the asset class.

Executive Vice President and Global Chief Investment Officer Eric M. Kirsch commented, ”As noted on our 2017 outlook call, 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. The floating rate coupons and short duration of middle-market loans provide a good match against short duration currency hedges,” commented Aflac Executive Vice President and Global Chief Investment Officer Eric M. Kirsch. “After an extensive search of middle-market managers, we found NXT Capital to be an excellent strategic fit, matching our culture of disciplined credit underwriting, risk management and a team-oriented approach to investment management. We are excited to partner with a market leader that has a management team with more than 25 years of experience investing in the asset class.”

“This partnership reflects the significant commitment Aflac has to maintaining a world-class investment platform that will generate sustainable risk-adjusted net investment income despite the headwinds of very low interest rates impacting our general account,” Executive Vice President and Chief Financial Officer of Aflac Incorporated Frederick J. Crawford said. “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.”

“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.”

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