2017 ACIC Annual Meeting and Educational Conference · October 19-20
Broadway Nights- Curtains Up with Life Performances & Market Updates
By Richard Rejino
This year’s Annual Meeting and Educational Conference was an auspicious combination of investment law and Broadway. At first, it seems an unlikely pairing, but a closer look shows, at least in proximity, how the two are related. Take, for example, the iconic corner of 42nd St. and Lexington, where the ACIC returned to the familiar Grand Hyatt New York. Broadway buffs no doubt made the instant connection between it and the famous musical 42nd Street, which debuted in New York at the Garden Theatre in 1980, and before that in 1933 as a musical film. Thus, the Broadway theme was born. No one broke into song in the middle of a presentation, but
this year’s Broadway theme proved to be the perfect combination creating a light-hearted and entertaining backdrop for the ACIC annual meeting.
A total of nine CLE sessions were presented in the Manhattan Room where a record-breaking 194 attendees filled it to near capacity. Much of the credit goes to meeting co-chairs, Daniel J. Favero of Mayer Brown LLP and Deborah K. Hayes of Lincoln Financial Group, the Education and Development Committees, and the many speakers and moderators who deserve much credit for orchestrating an outstanding program.
Thursday, Day One
Adding continuity to the program, each session included a Broadway reference, and the popular real-time audience polling feature returned for a repeat performance, enabling attendees to react to and answer questions posed by the speakers. The results were projected on a screen, and audience members watched their responses recorded instantaneously.
Act 1: After a breakfast buffet, introductions and announcements, Act 1 of the annual meeting began with the session The Hudson Transmission Project: The Lights are Back on Broadway. The session was one of the highlights of the conference, in that it was timely and showcased business people who were representatives from the principals and how they found a workable transaction. The session was led by moderator Patti Boss of Voya Investment Management, with panelists, Matthew J. Del Rosso, New York Life Insurance Company, Jonathan J. Green, Milbank, Tweed, Hadley & McCloy LLP, Fitz Wickham, Voya Investment Management, and Jeffrey T. Wood, PowerBridge, LLC. The discussion began with an overview of the Hudson Transmission project, which interconnects NYC with the PJM regional transmission network in New Jersey, and examined its original 2011 financing, the Cable Faults in 2016 and how the Hudson tapped into the institutional market for restructuring and new financing to enable repairs. The panel discussed various legal issues, including restructuring and new financing agreements and intercreditor terms.
Act 2: Setting the stage for Act 2, the annual Market Update: General State of the Market Place, Global Developments, the Issuers Perspective, kicked off the 10 AM hour. Using the Off-Broadway musical reference Bring in da Noise, Bring in da Fun, this session featured a particularly insightful overview of US and European private placement markets in 2017. Topics included investor views on European Markets: what’s important in decision making and documentation influences for the Investor and Issuer; competing products in the private placement space, particularly in Europe; changes specific to the NPA and ways to make the document more efficient through standardization; how the NPA helped in the context of European deals; and a legal review of what lawyers in other countries look for and how they view the NPA. The session was ably moderated by Angus Whelchel, Barclays Bank, who presided over panelists, Tim Conduit, Allen & Overy LLP, Michael Gustafson, Pricoa Capital Group, and Shawn Robinson, Barings LLC.
Act 3: After lunch, Paul A. Jorissen, Mayer Brown LLP led panelists, Drew Flahive, Amherst, Matthew Porter, AIG Investments, and T. Michael Johnson, Pretium Partners, LLC in the session Private Equity 201 – Funds Like it Hot. Putting the “hot” in equity funds, panelists discussed current trends in the Private Equity, Direct Equity, and Co-investments markets. The conversation centered on topics relating to transactions such as management fee and fee income, GP sales of a non-controlling stake in a firm, lines of credits, GP clawback and others. Rounding out the session was an update on recent market developments and structures and what to expect, including an introduction to the single-family rental market, institutional ownership, and potential, increasing participation of institutional investments and alternative types of structures for institutional investment.
Act 4: Starring in the next production, What’s New with the Securities Valuation Office of the NAIC? – Newsies vs. Oldsies, panelists Eric R. Dinallo, Debevoise & Plimpton LLP, Brian Keating, The Guardian Life Insurance Company of America, John Petchler, Conning, and Charles Therriault, National Association of Insurance Commissioners, astutely moderated by leading man, Charles Calloway, Chapman & Cutler LLP presented an introduction to the organizational structure and purpose of the Securities Valuation Office, the Valuation of Securities Task Force and insurance as it relates to private placements. The group analyzed new private letter regulation, potential benefits, and pitfalls of new regulation, market reactions, potentially uncooperative rating agencies, uncertainty as to potential FE status of bonds and other implications of new regulation. The panel answered the inevitable question: “what needs to be done” by offering perspectives on new and old deals, the legal implications of new regulations and closed with a brief overview of the proposed new SVO designations.
Act 5: The next session, aptly predicated on “That’s Yours, This is Mine,” The 4 Cs Facing Registered Investment Advisers: Custody, Cross-Trades, Conflicts and Compliance, delved into common challenges facing registered investment advisers in considering appropriate compliance strategies. Topical discussions included Custody under the Advisers Act, including basic requirements, assets covered by the custody rule, client relationships with a qualified custodian and compliance violations, and a discussion on Cross Trades and Principal Trades, which examined corrective actions available, self-reporting and repercussions when violations of trade occur. The session was moderated by Stephanie M. Monaco, Mayer Brown LLP with panelists, David Doherty, LaSalle Investment Management, Steven Kapiloff, UBS Real Estate Investors LLC, and Richard Wirth, AEGON Asset Management.
ACT 6: The last session of the day ended with the well-received: Make Whole: Reflections from the Front Lines – War Painted. Presented by moderator Chip Fisher, Morgan, Lewis, & Bockius LLP, and panelists, Evan Fleck, Milbank, Tweed, Hadley & McCloy LLP, Stefanie Greer, Prudential Financial Inc., and Amelia Joiner, Morgan, Lewis, Bockius LLP, the panel’s perspective on the arguments of the Ultra Petroleum case included a brief overview of the substantial debt at Holdco and Opco, private placement notes not accelerated prior to filing, debtor group insolvency/solvency that amounted to a solvent debtor case, and other relevant facts with the case. After discussing Make-Whole basics, the group delved into arguments for and against unmatured interest scenarios associated with the case, exploring them in great detail. The session proved timely on the heels of a favorable bankruptcy decision.
The day ended with the traditional evening cocktail reception in the Museum room, which was elegantly appointed with mood lighting, food presentation, and cocktail piano music.
Friday, Day Two
Act 7: Following breakfast, attendees began the second day with a session on Special Considerations for Investments in REITs – Rent Credit. With moderator Mark Sternberg, Schiff Hardin LLP, and panelists, Aron Davidowitz, NYL Investors LLC, Rachel Jaffe Mauceri, Morgan, Lewis & Bockius LLP, and Carl Riley, Greenberg Traurig LLP, the group described the different legal structures employed by U.S. REITs by comparing and contrasting the covenant packages found in private placements, bank loans and public debt issuances. Specific discussions probed the understanding of REIT issuers in the private placement market, the nature of REIT issuers, structuring of REIT financial covenant packages, the impact of REIT’s structure on how a bankruptcy is conducted and the size of recoveries, general bankruptcy considerations, and lessons learned from recent REIT bankruptcies.
Act 8: Environmental, Social, and Governance (ESG) Factors in Investments: Sustainability in the Mainstream was the subject of the next session. Moderator Jennifer K. Anderson, Sustrana Consulting and panelists, Jonathan Bailey, Neuberger Berman, Chris Fowle, UNPRI, and Elizabeth Seeger, KKR, delivered an impressive session on the manner and extent to which institutional investors and asset managers incorporate ESG factors into investment decisions. The panel examined the background and context on ESG investments, including definitions and evolution of the concept, growth in market adoption and market drivers. They discussed addressing portfolio risks and opportunities, frameworks, and tools for investment managers, how ESG investment impacts performance, and concluded with a glimpse into the future by examining global regulatory developments, its potential implications, and how insurers can prepare.
Act 9: The ACIC fall meeting concluded with an entertaining ethics session, Presentation on the Updated Guidelines for Pre-designated Counsel - Ain’t Been Misbehavin’. Led by moderator Allison Rhodes, Holland & Knight LLP and panelists Melody Cross, Schiff Hardin LLP, David LaSota, Greenberg Traurig, LLP, Brenda Page, The Hartford Financial Services Group Inc., and Christopher P. Tucker, Lincoln Financial Group, the panel summarized the ACIC study on the practices of Pre-designated Counsel. For the purposes of this particular presentation, attendees were updated on the ethics memorandum, addressing changes in the law and new challenges as the practice has evolved. The session addressed topics such as: when does pre-designated counsel’s relationship with investor clients begin and end; representation terms when the PDC represents multiple clients who are aligned, but also competitors, in a single matter; foreign law issues; new mechanics for a streamlined engagement, joint representation, and conflict waiver process, among others.
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