has essentially sold its fund business to Waddell & Reed Financial
in a deal that will open each firm's distribution channel to the others'.
Kansas City-based Waddell & Reed will pay Securian $26 million to take over roughly $2.1 billion of equity assets currently managed by Securian's Advantus Capital Management arm. Meanwhile, Advantus said it will continue to manage fixed income and real estate assets held mostly in the insurer's general accounts and to build those capabilities.
"This alliance will offer many benefits to both Waddell & Reed and Securian," said Keith A. Tucker
, chairman and CEO of Waddell & Reed Financial, in a statement. "Waddell & Reed benefits from increased assets under management, and Securian, its advisors and fund shareholders benefit from Waddell & Reed's equity management expertise. In addition, both parties benefit from their access to each other's distribution."
Waddell and Reed is paying 105 basis points to take over as subadvisor to approximately $525 million held in the 11 Advantus Funds
. It then plans to fold them into its Ivy Funds
retail fund family by next September. Advantus will continue to act as a subadvisor to three Ivy Funds on the fixed income and real estate assets it currently advises.
It will also pay 180 basis points for the actively managed equity series funds of eight Advantus Series Funds
, which are primarily used in Minnesota Life insurance products. Those funds hold some $1.2 billion in assets and will be mostly integrated into the W&R Target Funds
. Also $150 million of unregistered separate accounts held by Securian administered retirement plans will be mapped into Ivy Funds and $200 million of actively managed equities in the Minnesota Life and Securian Holding Company general accounts will be managed as separate accounts at Waddell.
Beginning in mid-2004, Waddell & Reed will make a customized individual annuity manufactured by Minnesota Life available through its network of 3,200 financial advisors while Minnesota Life will offer mutual funds Waddell & Reed's Ivy funds and the W&R Target equity funds 1,800-member Securian Financial Network and distribution system. Waddell be will labeled as a "Premier Strategic Partner" in Securian's distribution system.
Securian officials said the deal reflects the high priority of the individual annuity market at Minnesota Life. Over the past 16 months the insurer's distribution created an annuity-wholesaling unit and introduced MultiOption Advisor variable annuity. Sales of its VAs were up 57 percent during the first quarter of 2003 from a year ago. By cutting the agreement to gain access to the Waddell & Reed advisor network it will nearly triple Minnesota Life annuity distribution.
"The combination of Waddell & Reed's equity capabilities and Advantus' fixed income capabilities creates a powerful investment line-up for all of Minnesota Life's markets," said Robert L. Senkler
, chairman, president, and chief executive officer.
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