LIKE many sophisticated investors, the nation's largest insurers drank the hedge fund Kool-Aid, pouring billions into the high-fee investment funds and helping drive hedge fund assets to more than US$3 trillion.
Now comes the hangover.
Steep losses in hedge fund investments during the last quarter damaged many insurance company earnings, reinforcing decisions to rethink the premises that led them to follow the Pied Pipers of finance in the first place.
American International Group said it would cut its hedge fund exposure in half, to US$5.5 billion by the end of 2017 from US$11 billion at the end of last year. MetLife said it would slash its hedge fund portfolio by two-thirds, to US$600 million...
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