Zurich Financial Services has formed a new alternative investment division called Zurich Alternative Asset Management, to manage the capital of the global insurance group.
In addition, the new division has named James Kester as head of private equity. Kester joins Zurich Alternative from Allianz Private Equity Partners (APEP), where he was co-CEO and influential among limited partners. Prior to joining APEP, Kester led Aurora Ventures, which advised growth companies in Poland. The remaining co-CEO of APEP is Wanching Ang, who is based in Munich.
The new alternatives group at Zurich will pursue commitments to real estate, private equity and hedge funds, according to several market sources. Zurich Alternative is being led by its chief executive officer David Wasserman, who in January stepped down as chief investment officer of Zurich Financial. The alternative division’s CIO is Ronald Cacciola, the former head of group investment at Zurich.
A source familiar with Zurich Financial’s plans said the company would initially manage roughly $2 billion through its new alternatives group. In the future, the alternatives group may seek to raise third-party capital, but currently has no plans to do so.
Zurich’s creation of an in-house alternatives platform marks a further step away from Capital Z, a New York alternative investment firm through which Zurich Financial has deployed billions in direct and “sponsorship” partnership investments. The sponsorship programme, called Capital Z Investment Partners, seeds the creation of new hedge funds and private equity funds. That group is run by Lawrence Cheng, a veteran Zurich executive who formed the sponsorship business in 1998. Cheng’s group manages roughly $2.25 billion.
Capital Z also includes Capital Z Financial Services Partners, led by Bradley Cooper and Robert Spass, which invests directly in financial services companies.
Capital Z has seen significant turnover in recent years. On the direct investment side, founding partner Mark Gormley recently left to join Thomas H. Lee’s new private equity firm, Lee Equity Partners. In 2004, Scott Delman, who had led the sponsorship group, left. Delman is now a research fellow at the Belfer Center for Science and International Affairs at Harvard University’s John F. Kennedy School of Government.
A source close to the situation said Zurich would oversee “certain assets” now managed by Capital Z, but he declined to give further details.
A separate source said Capital Z’s Cooper and Spass may continue to pursue investments as a team. Zurich Financial does not own the “Capital Z” brand, the source said.
Until now, the new Zurich alternatives group has maintained a very low profile. Last week, the group announced that it advised its parent company on its involved in a $10 million round of financing in Octagon Research Solutions, a research services company.