It appears that Nationwide Insurance Co. might ramp up its asset-backed purchases if a new buying strategy can get through the company's investment committee.
After remaining a small "but consistent player" in asset-backed bonds since entering the market in 1996, the Columbus, Ohio-based insurance outfit has determined it is time to reexamine its investment strategy when it comes to ABS, a source said.
Through 1997, Nationwide held less than $350 million in ABS in the public and private sectors. Now the company holds "$1.5 billion in public securities and approximately $750 million in privates," the source said. The question, according to the source, is whether or not to accelerate the rate of growth in the ABS portfolio or keep it at current levels.
"We really just want to stack our portfolio up against other insurance companies out there, and decide whether we should continue to expand," the source added.
Teachers Insurance & Annuity Association was a company that the source mentioned Nationwide would compare itself with and possibly emulate to some extent. Recent data on Teachers showed the company heavily invested in asset-backeds, with close to $6 billion in ABS.
Both the public and private sectors are well represented in the Teachers portfolio, which holds bonds derived from aircraft leases, auto loans, commercial loans, credit cards, equipment leases, home-equity loans, manufactured housing, rail cars and trade receivables.
Nationwide buys from the aircraft lease, auto loan, commercial loan, equipment lease, manufactured housing and rail car sectors. The source confirmed that the company was looking for potential opportunity outside of these sectors in addition to pushing for an increase in ABS volume.
