ING surgically removed as Medical's manager

The Medical Assurance Society (MAS) has sacked ING as investment manager of its KiwiSaver and superannuation funds with Goldman Sachs tipped to pick up the $180 million mandate.

Tuesday, February 24th 2009, 5:25AM

by David Chaplin

Martin Stokes, MAS chief executive, confirmed ING has been dumped but said its replacement was “subject to a confidentiality agreement”.

“No-one has been appointed yet,” Stokes said. “We are a long way down the road to naming a replacement but that has to be confirmed by the board – which should be before the end of this week.”

He said the decision to replace ING was made after an extensive review process, which determined a “different model” of management was appropriate for the MAS funds.

On the MAS website it says ING would be replaced by “a multi-manager model using the services of independent advisers”, however, Stokes said the 'multi-manager' tag was a “little misleading”.

“This is more about finding a team of advisers to advise on our investment strategy and assist with monitoring rather than replacing with the same type of manager,” Stokes said. “This was not a beauty parade of traditional managers.”

He said under the new arrangements MAS would invest directly into assets rather than into underlying pools allowing for greater transparency and control.

“Previously we were not sure of everything the large underlying pools were invested in,” Stokes said. “We will also have more direct influence on the investment strategy - for example, with strategic tilts.”

It is understood ING has come under increasing pressure from superannuation consultants after one of the group's wholesale fixed interest funds suffered from its exposure to collateralised debt obligation instruments. However, a spokesperson for ING said MAS had indicated the move was “a decision about the model, rather than decision about the manager”.

Stokes said MAS hired “a number of different organisations” during the consultation process.

MAS has had a long-standing agreement with ING to manage its superannuation assets, dating back to at least 2000 when the manager was operating as Armstrong Jones, extending the arrangement when the group launched its KiwiSaver fund in 2007.

According to the latest MAS accounts, as at March 31 last year the group's superannuation plan held about $155 million while the KiwiSaver fund topped $10 million. In the year to March 31, 2008, ING collected about $500,000 in fees for managing both funds.

Actuarial firm Melville Jessup Weaver reported ING NZ has about $7.6 billion in total funds under management.

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