Recap of the 2023 Fall Annual Meeting and Education Conference
Authored by Amy Hong (Greenberg Traurig) and Jeremy Fernando (Greenberg Traurig)
While this year’s theme for the Fall Conference, Navigating Uncharted Waters, emphasized both the uncertainty the industry has faced over the past year and the unpredictable road ahead, for many attendees, the trip to The Westin New York Grand Central in New York was a familiar and welcome opportunity to meet with friends, colleagues, and new members in person.
The Forum was organized by co-Chairs Margaret G. Parker-Yavuz (Akin Gump Strauss Hauer & Feld LLP) and Thomas J. Pasuit (Kuvare Insurance Services), together with the Education Committee, Development Committee, and ACIC staff CJ Marchain, Caitlin Watson and Jody Henry.
Ten sessions over two days were presented in person with over 150 people in attendance, and interactive polling kept things interesting. And, as always at ACIC sessions, the written materials were top rate and provide much more detail than there is room for in this summary.
Welcome / Introduction / Announcements: CJ Marchain started off the introductory Session with a warm welcome to everyone in the Ballroom. Participants were encouraged to collect stickers as they sailed through the sessions and participate online through the Whova app for prizes.
Session 1: Market And Economic Update: Between Inflation and Recession
The substantive portion of the Forum was kicked off as moderator Matthew J. DelRosso (New York Life Insurance Company) and panelists Jamie Egbert (J.P. Morgan), Jessica Maizel (Goldman Sachs), Miguel Picache (Citigroup Global Markets Inc.) and Jonathan Basile (Corebridge Financial), took us through recent trends in the market and provided us with an outlook for 2024. After a review of 2023 market data to date, they discussed the macroeconomic environment along with the impact on the private placement market and potential for uncertainty with the conflicts in Ukraine and the Middle East. The panel discussed, among other things, the FED policy to interest rates, general market U.S. private placement (including the impact of rates on certain sections such a REITs) and provided an analysis of the increased movement in the market to the non-investment grade space.
Session 2: Artificial Intelligence & The Legal Profession – Ethics
After a quick break, Jack Chen (Kuvare Insurance Services) moderated a discussion with Scott T. Loughlin (Hogan Lovells), Tina Smith (Moxie Consulting Group) and Aniket Kesari (Fordham School of Law) on the impact of artificial intelligence (AI) on the legal profession. The group started us off with an introduction into how the Generative AI was the latest wave of technology that was pushing the practice of law forward. The group discussed the increased legal challenges that AI presents to the legal profession, including the potential negative impact it has on maintaining confidentiality, retaining intellectual property rights and potential breaches of cybersecurity and data privacy. Lastly, the panel touched on the regulatory efforts made by both the U.S. and the European Union to provide a functional regulatory regime to combat these challenges.
Session 3: Lending to Private Equity: Opportunities and Challenges
Moderator Melody Cross (Prudential Financial Inc.) and speakers Chaz Cocuzza (Apogem Capital), Carolyn Alford (King & Spalding LLP), John McCally (Churchill Asset Management LLC) and Ben Leese (ArentFox Schiff LLP), walked us through the expectations when engaging in lending transactions with private equity sponsors. The panelists started by noting that lending to private equity is one of several strategies of an asset manager and continued by comparing the terms of, and the difference in negotiating and documents, a U.S. private placement and a leveraged loan. The panel provided keen insight into expected terms and provisions in a broadly syndicated loan deal and the most heavily negotiated key issues in these transactions. Lastly, the group provided guidance for strategies to get the deal done, with an emphasis on the instances when it is best to engage in a drafting battle as opposed to other times when it is best to be passive.
Session 4: Regulatory Update: NAIC & Investment Adviser Custody Rule Developments
After lunch, moderator Aaron Wernick (MetLife) introduced panelists Brian E. Keating (The Guardian Life Insurance Company of America), Lawrence R. Hamilton (Mayer Brown LLP), Terri Maxwell (Voya Investment Management) and Adam D. Kanter (Mayer Brown LLP) spoke about the recent NAIC developments and the SEC Custody Rule proposals. Brian and Lawrence began by discussing the structure of the NAIC and the Securities Valuation Office (SVO) proposal to retain the ability to provide NAIC designations on debt instruments which have a private debt rating. The two discussed the impact these proposed changes would have on the U.S. private placement market, particularly if these changes apply to existing debt instruments and are not prospective in nature only. Then, Adam and Terri gave their insight into the SEC Custody Rule proposal. The duo fielded questions from the group that pertained to the definition of “custody,” the difference between “possession” and “control,” and the potential impact this would have in certain real estate transactions. Lastly, the group provided a general discussion as to strategies investment managers may enact to address these various proposals.
Session 5: The 2023 Banking Crisis
Led by Michael H.M. Brown (Cigna Investment Management), this panel included Luigi L. De Ghenghi (Davis Polk & Wardwell), John Bovenzi (The Bovenzi Group) and James Harasimowicz (Keefe, Bruyette & Woods). This panel set sail with a detailed timeline of the events leading up to the banking crisis in March 2023 with a focus on Silicon Valley Bank, Signature Bank New York and First Republic Bank and the impact on market. The group discussed the management of these institutions and key factors which resulted in their failure, including their rapid growth, lending to technology companies and the impact of rising interest rates on their balance sheets. The panel then segued to discuss the immediate steps that the government took to address these failures and to provide stability to the financial system. This dialogue was amplified with unique perspectives and practical insight given from both John and James, the former having held experience as a principal adviser to nine FDIC chairmen. Lastly, the group explained the impact that these failures had on other banks and a provided a glimpse into the likely regulatory changes that the industry should expect moving forward.
Session 6: Real Estate Investments in a Post-Pandemic World: Structures & Current Issues
Moderator Ruining Ma (The Guardian Life Insurance Company of America) introduced panelists Christopher S. Dallas (Pacific Life Insurance Company), Peter J. Mignone (Hunton Andrews Kurth LLP) and Philip M.J. Edison (Chapman and Cutler LLP) who provided insight into the current misfortunes being seen in the commercial real estate industry. The session began by discussing the impact that “work from home” has had on office buildings and the commercial real estate market generally, including nearby retail facilities. The panel explained how rising interest rates along with tighter credit supply were beginning to squeeze landlords. The group touched on the rapidly approaching maturity wave that was headed for both landlords and lenders. Lastly, the panel advised how lenders should approach loans that are in distress along with tips for how to address issues in foreclosures and deeds-in-lieu of foreclosures.
Session 7: The U.S. Clean Energy Gold Rush: Regulatory Rollouts, Emerging Trends and the Response Abroad
In the last panel of the day, Chiraag Kumar (MetLife Investment Management) led Ike Emehelu (Akin Gump Strauss Hauer & Feld LLP), Tim Conduit (Allen & Overy), William H. Bulmer (Prudential Private Capital) and Sarah W. O’Malley (Nuveen) in an informative dialogue on the U.S. clean energy transition. The group discussed the Inflation Reduction Act of 2022 (IRA), the impact the IRA has had on new investments and structures, and the responses from the rest of the world. Then, the panel dove into the tax credits that were available under the IRA that have led to new investments in technologies in renewables as well as the transferability of these tax credits. The group provided informative insights into the European Union’s Green Deal Industrial Plan and the potential impact on investments moving forward. Lastly, the panel alerted attendees to potential hazards under the IRA such as intercreditor issues between debt and tax equity investors.
Reception
Following seven hours of presentations, mixing (drinks) and mingling (people) at the reception was a treat for the New York attendees. Attendees were able to enjoy heavy hors d’ouevres and a taco station while catching up with old and new friends. It was a great way of winding down after the informative sessions presented during the course of the day.
Session 8: Workouts of Deeply Distressed Investments
After a few ambitious souls joined the Move Crew in a run around New York City on Friday morning, the conference reconvened to listen to a panel consisting of James Balcom (FTI Consulting), David Lawton, and Colin Pennycooke (Principal Financial Group) and led by Nathaniel I. Margolis. The session offered practical insights for significantly troubled investments. The panel first surveyed key considerations for lenders navigating treacherous waters and deeply distressed credits. Nathaniel then provided a significantly distressed scenario, and each panelist gave turns providing their unique perspectives on how best to address the situation, proving there’s never a set course in open waters (or in this case, workouts). Lastly, the group discussed the different options available to lenders in distressed situations including bankruptcy, sale or taking control.
Session 9: Private Equity Owned Insurers
Richard E. Buckley (Fortitude Re) moderated panelists Matt Hargrafen (Kuvare Holdings), Marilyn A. Lion (Debevoise & Plimpton LLP) and Kevin Relihan (Pretium Partners, LLC), who gave insight into the emergence of private equity owned insurers. The presentation began with a brief history of private equity’s attraction to the life insurance industry. The panel discussed the reasons why private equity firms are pursuing ownership in insurance companies and the renewed focus by the NAIC to address the arrival of private equity firms into the insurance industry. The session concluded with a discussion on NAIC reaction to CLOs and other assets, and regulatory approvals.
Session 10: Antitrust Issues in New Financings and Amendments
The final session of the Fall Conference was led by Tammy Lam (Greenberg Traurig, LLP) who was joined by Davina Garrod (Akin Gump Strauss Hauer & Feld LLP), Alicia Batts (Faegre Drinker Biddle & Reath LLP) and Ann King (SLC Management). The session began with a look into the marketing/pre-circle phase of a U.S. private placement transaction where antitrust issues tend to be the most sensitive and transitioned into how antitrust issues can arise in amendments and workouts. Davina and Alicia provided their expertise on the differences in antitrust law between the U.S., U.K. and European Union. Ann posed thoughtful questions to Davina and Alicia on how best to address antitrust issues from an in-house counsel perspective. Lastly, the presentation ended with a discussion on how antitrust issues can arise in conferences (such as this one).
Don’t forget to save the date for the Spring Investment Forum to be held next year in Chicago! We’re looking forward to seeing everyone Thursday and Friday, April 11 & 12, 2024!
