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Lotte Insurance

Lotte Insurance Co. manages 15 trillion won in assets as of end-2022, with alternative investments accounting for one-third at 5.2 trillion won. The Lotte Group unit plans to maintain the current portion of alternative investment as a whole, while expanding the portion of infrastructure to 20% by next year from the current 15%. It plans to select more than four infrastructure funds within one year. It prefers project-based investment rather than blind pool funds. It targets a 6% return from alternative investments (The firm didn't update its 2022 performance via our survey).

  • Overview
  • Private Equity
  • Private Debt
  • Real Estate
  • Infrastructure
  • Absolute Return Strategies
Current Proportion of alternative assets
26.7%

Alternative asset (amount)

￦4 tn

Total AUM (amount)

￦15 tn

Whether to increase proportion of alternative assets?

Increase

Hold

Decrease

Target proportion of alternative assets in 3 years
27.8%

Alternative asset (amount)

￦5 tn

Total AUM (amount)

￦18 tn

Current proportion of overseas assets among alternative assets
50%

Overseas asset (amount)

￦2 tn

Alternative total (amount)

￦4 tn

Target proportion of overseas alternative assets in 3 years
40%

Overseas asset (amount)

￦2 tn

Alternative total (amount)

￦5 tn

Target return from alternative investment

Total

4%

Overseas

5%

Domestic

4%

Benchmark for alternative investment? (IF ANY)
Korean treasury bond yield spread
Perspective on current valuations of alternative assets
　 Highly
overvalued		 Overvalued Fairly valued Undervalued Highly
undervalued
Private Equity O O O O O
Private Debt O O O O O
Real Estate O O O O O
Infrastructure O O O O O
To which asset classes your institution needs to increase exposure the most?

(Multiple choices, up to two)

Private Equity
O
Private Debt
O
Real Estate
O
Infrastructure
O
Hedge Fund
O
Multi Asset
O
Others
O

Manager Selection

How important is each item below when selecting asset managers?

Asset under management

Very important
O
important
O
Less important
O
not important
O
not at all
O

If important, minumum AUM?￦Number

Size of the fund being raised

Very important
O
important
O
Less important
O
not important
O
not at all
O

If important, minimum size?￦Number

Track record (years of experience ·Execution capability ·Past performance)

Very important
O
important
O
Less important
O
not important
O
not at all
O

If important, minimum size?￦Number

Risk management (Performance during 2001 bubble bust and 2008 GFC)

Very important
O
important
O
Less important
O
not important
O
not at all
O

Co-investment opportunity

Very important
O
important
O
Less important
O
not important
O
not at all
O

GP commitment

Very important
O
important
O
Less important
O
not important
O
not at all
O

Transparency - Underlying asset and portfolio

Very important
O
important
O
Less important
O
not important
O
not at all
O

Knowledge transfer (Portfolio∙Investment∙advisory∙Training opportunity)

Very important
O
important
O
Less important
O
not important
O
not at all
O

Fee level

Very important
O
important
O
Less important
O
not important
O
not at all
O

Presence of Seoul office

Very important
O
important
O
Less important
O
not important
O
not at all
O

Other LPs in the fund

Very important
O
important
O
Less important
O
not important
O
not at all
O

Speed of capital deployment

Very important
O
important
O
Less important
O
not important
O
not at all
O

Deal pipeline

Very important
O
important
O
Less important
O
not important
O
not at all
O

Clawback clause

Very important
O
important
O
Less important
O
not important
O
not at all
O
Perspective on inhouse Korean IR at an asset management firm

Presence of Korean IR

Very important
O
important
O
Less important
O
not important
O
not at all
O

Service of Korean IR

Very important
O
important
O
Less important
O
not important
O
not at all
O

Value you expect from inhouse IR (Mutiple choice)

Product
understanding
O
Influence within
the organization
O
Communication
skill
O
Think in the
shoes of LPs
O
Integrity/
trust
O
Perspective on local FoF asset manager

Presence of local FoF manager

Very important
O
important
O
Less important
O
not important
O
not at all
O

Quality of local FoF manager

Very important
O
important
O
Less important
O
not important
O
not at all
O

Value you expect from local FoF (Mutiple choice)

Product
understanding
O
Think in the
shoes of LPs
O
Communication
skill
O
Experience
in the strategy
O
Resonable fee
structure
O
Perspecitve on Placement agents

Quality of placement agent

Very important
O
important
O
Less important
O
not important
O
not at all
O

Value you expect from a placement agent (Mutiple choice)

Product
pipeline
O
Product
understanding
O
Communication
skill
O
Negotiation
skill
O
Others
(etc)
O
More questions

Currency hedge needed when investing in a fund?

Yes

No

It Depends

Able to invest in first-time fund?

Yes

No

It Depends

Able to invest in emerging market fund?

Yes

No

It Depends

How many months needed to decide on commitment?

Less than 1 M

1M ~ 2M

2M ~ 3M

More than 3M

photo

Proportion of overseas private equity among alternative assets
3%

Overseas PE (amount)

￦120 bn

Alternative Total (amount)

￦4 tn

Whether to increase overseas PE exposure

Increase

Hold

Decrease

Target proportion of overseas PE in coming 12 months
6%

Overseas PE (amount)

￦119.7 bn

Overseas alternative total (amount)

￦2 tn

Mid-term target proportion of overseas PE
5%
Target return from PE investment
15%
Benchmark for PE investment
N/A
Exposure by PE strategy below
　 overinvested
(need to decrease)		 as targeted
(no change needed)		 underinvested
(need to increase)
Buyout
(management participation)		 O O O
Buyout
(minority stake)		 O O O
Growth capital O O O
Distressed·Special situation·Opportunistic O O O
(FoF) Primary O O O
Secondary O O O
Co-investment O O O
Venture capital O O O
Exposure to PE by region below
　 overinvested as targeted underinvested
North America O O O
Europe O O O
Asia O O O
Others O O O
Exposure to PE by sector below
　 overinvested as targeted underinvested
Industrial O O O
Consumer·Retail O O O
Tech O O O
Healthcare O O O
Financial service O O O
Business service O O O
Others O O O
Preferred way for PE investment

(Multiple choice)

Blind fund
O
Separate account
O
Joint venture
O
Direct investment
O
Co-investment
O
Listed PE
O
PIPE
O
Questions on manager selection

Number of PE funds you currently committed to

5

Number of PE managers you currently entrusted to

5

Three PE managers you invest through the most

Capital Dynamics

xxx

xxx

Three PE managers you most recently entrusted to

Capital Dynamics

HarbourVest

StepStone

PE investment plan in coming 12 months

one fund

two funds

three funds

four funds or more

Importance of co-investment∙Side car∙collaboration

(acquisition financing)

Very important

Important

Less important

Not important

Not at all

photo

Proportion of overseas private debt among alternative assets
9%

Overseas PD (amount)

￦359.1 bn

Alternative Total (amount)

￦4 tn

Whether to increase overseas PD exposure

Increase

Hold

Decrease

Target proportion of overseas PD in coming 12 months
23.9%

Overseas PD (amount)

￦478.8 bn

Overseas alternative total (amount)

￦2 tn

Mid-term target proportion of overseas PD
5%
Target return from PD investment
6%
Benchmark for PD investment
N/A
What value you expect PD exposure to deliver

Diversification

Stable cashflow

Fixed income substitute

Preferred way for PD investment

(Multiple choice)

Blind Fund

Separate Account

Joint Venture

Direct Investment

Exposure to PD by strategy below
　 overinvested
(need to decrease)		 as targeted
(no change needed)		 underinvested
(need to increase)
Direct lending O O O
Distressed debt O O O
Mezzanine debt O O O
Infra debt O O O
Real estate debt O O O
Special situation∙Opportunistic O O O
Senior secured O O O
Unitranche O O O
Exposure to PD by region below
　 overinvested as targeted underinvested
North America O O O
Europe O O O
Asia O O O
Others O O O
Questions on manager selection

Number of PD funds you currently committed to

7

Number of PD managers you currently entrusted to

6

Three PD managers you invest through the most

CVC

Antares Capital

GoldPoint Partners

Three PD managers you most recently entrusted to

N/A

PD investment plan in coming 12 months

one fund

two funds

three funds

four funds or more

Importance of co-investment∙Side car∙collaboration

(acquisition financing)

Very important

Important

Less important

Not important

Not at all

photo

Proportion of overseas real estate among alternative assets
15%

Overseas RE (amount)

￦598.5 bn

Alternative Total (amount)

￦4 tn

Whether to increase overseas RE exposure

Increase

No change

Decrease

Target proportion of overseas RE in coming 12 months
23.9%

Overseas RE (amount)

￦478.9 bn

Overseas alternative total (amount)

￦2 tn

Mid-term target proportion of overseas RE
10%
Target return from RE investment
7%
Benchmark for RE investment
N/A
Exposure to RE by strategy below
　 overinvested
(need to decrease)		 as targeted
(no change needed)		 underinvested
(need to increase)
Core O O O
Core+ O O O
Value-add O O O
Opportunistic∙
Distressed		 O O O
Development O O O
Secondary O O O
Exposure to RE by strategy below
　 overinvested as targeted underinvested
Office O O O
Hotel O O O
Residential O O O
Retail O O O
Industrial O O O
Logistics O O O
Multifamily O O O
Mixed use O O O
Others
(i.e senior housing, data center)		 O O O
Exposure to RE by tranche below
　 overinvested as targeted underinvested
Senior secured loan O O O
Mezzanine O O O
Subordinate O O O
Equity O O O
Exposure to RE by region below
　 overinvested as targeted underinvested
Global O O O
North America O O O
Europe O O O
Asia O O O
OECD O O O
All O O O
Preferred way for RE investment

(multiple choice)

Direct investment

Joint venture

Separate account

Closed-end fund

Open-end fund

Questions on manager selection

Number of RE funds you currently committed to

12

Number of RE managers you currently entrusted to

10

Three RE managers you invest through the most

Angelo Gordon

WWG

AIP

Three RE managers you most recently entrusted to

N/A

RE investment plan in coming 12 months

one fund

two funds

three funds

four funds or more

Importance of co-investment∙Sidecar∙collaboration

(acquisition financing)

Very important

Important

Less important

Not important

Not at all

photo

Proportion of overseas infrastructure among alternative assets
9%

Overseas Infra (amount)

￦359.3 bn

Alternative Total (amount)

￦4 tn

Whether to increase overseas infra exposure

Increase

No change

Decrease

Target proportion of overseas infra in coming 12 months
24%

Overseas Infra (amount)

￦479 bn

Overseas alternative total (amount)

￦2 tn

Target return from infrastructure investment
5%
Benchmark for infrastructure investment
N/A
Exposure to infrastructure by strategy below
　 overinvested
(need to decrease)		 as targeted
(no change needed)		 underinvested
(need to increase)
Core O O O
Core+ O O O
Value-add O O O
Opportunistic O O O
Exposure to infrastructure by sector below
　 overinvested as targeted underinvested
Renewable energy
(water∙wind∙solar)		 O O O
Traditional energy
(Upstream∙Midstream∙Downstream)		 O O O
Real asset
(Aviation∙Ship∙Train) 		O O O
Transportation
(Port∙Airport∙Railroad∙Toll road)		 O O O
Utilities
(power grid∙water & sewage∙telecom)		 O O O
Power plant O O O
PPP O O O
Others O O O
Exposure to infrastructure by tranche below
　 overinvested as targeted underinvested
Primary O O O
Debt/Mezzanine O O O
Fund of funds O O O
Secondaries O O O
Project fund O O O
Exposure to infrastructure by region below
　 overinvested as targeted underinvested
Global O O O
North America O O O
Europe O O O
Asia O O O
OECD O O O
All O O O
Exposure to infrastructure by strategy below
　 overinvested as targeted underinvested
Greenfield O O O
Brownfield O O O
Secondary stage O O O
Questions on manager selection

Number of infrastructure funds you currently committed to

4

Number of infrastructure managers you currently entrusted to

4

Three infrastructure managers you invest through the most

AMP

Capital Dynamics

GIP

Three infrastructure managers you most recently entrusted to

N/A

Infrastructure investment plan in coming 12 months

one fund

two funds

three funds

four funds or more

Importance of co-investment∙Sidecar∙collaboration

(acquisition financing)

Very important

Important

Less important

Not important

Not at all

photo

Proportion of overseas ARS among alternative assets
N/A

Overseas ARS (amount)

N/A

Alternative Total (amount)

￦4 tn

Whether to increase overseas ARS exposure

Increase

No change

Decrease

Target proportion of overseas ARS in coming 12 months
N/A

Overseas ARS (amount)

N/A

Overseas alternative total (amount)

￦2 tn

Target return from ARS investment
N/A
Risk from ARS investment
N/A
Benchmark for ARS investment
N/A
Why do you invest in ARS?

Diversification
(Moderate Return)

Equity Substitute
(High Return)

Substitute for Fixed-income
(Stable Return)

All

Exposure by absolute return strategy below
　 overinvested
(need to decrease)		 as targeted
(no change needed)		 underinvested
(need to increase)
Equity L/S O O O
Event-driven O O O
Relative value O O O
Macro O O O
Multi-Asset O O O
Most preferred Equity L/S strategy

Fundamental

-

Market Neutral

-

Sector/Region Specialist

-

Most preferred Event-driven strategy

Distressed

-

Special Situation

-

Merger Arbitrage

-

Most preferred Relative Value strategy

Fixed Income Arbitrage

-

CB Arbitrage

-

Structured Credit

-

Most preferred Macro strategy

CTA

-

Discretionary

-

Most preferred Multi-Asset strategy

Risk Parity

-

GTAA

-

Risk Premia

-

Preferred way for hedge fund allocation (multiple choices)

FoFs

-

Multi Strategy Single Fund

-

Single Fund

-

Questions on manager selection

ARS fund investement plan in coming 12 months

one fund

two funds

three funds

four funds or more

Importance of co-investment∙Sidecar∙collaboration (acquisition financing)

　 Very important important Less important Not important Not at all
Liquidity - - - - -
Reasonable Fee Level - - - - -
Co-investment opportunity - - - - -
Separately Managed Account - - - - -
Knowledge Transfer - - - - -

photo

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