New York (HedgeCo.net) – Two of the largest insurance companies in the country are taking different routes when it comes to investing in hedge funds. American International Group (NYSE: AIG) intends to reduce its hedge fund investments while MetLife (NYSE: MET) plans to stick to the plan.

In a recent Bloomberg report, Peter Hancock, AIG’s Chief Executive Officer reported that the company intended to lower the company’s allocation to hedge funds. The initial report was issued in January, but it didn’t say how many hedge funds the company would cut ties with. The most recent report states that the company will exit at least half of the funds with which it is invested with currently. The Bloomberg article included this quote:
“We had a very negative experience in hedge funds,” Hancock said in the presentation. Shifting the allocations will “lead to a much better return on risk and especially return on capital.”

While AIG is looking to lower its allocation to hedge funds, MetLife acknowledged in a statement last week that the fourth quarter was disappointing, but that they were sticking with the strategy as private equity and hedge fund investing has proven effective over the long-term. Chief Investment Officer Steve Goulart stated that the largest U.S life insurer plans to be “really concentrating on the managers and strategies that have been the longer-term stronger performers for us.”

Rick Pendergraft
Research Analyst
HedgeCoVest