A Wilton-based nonprofit that manages a multi-billion investment fund used by hundreds of academic institutions nationwide, including 46 in Connecticut, says it has returned about 80 percent of the money to investors after abruptly restricting withdrawals late last year.
The $9.3 billion portfolio, known as the Short Term Fund, held $116 million from 46 Connecticut academic institutions including Fairfield University and Miss Porter’s School in Farmington.
The fund was founded in 1974 by Commonfund, a Wilton-based nonprofit that serves hundreds of academic institutions nationwide. Schools routinely invested and drew from the fund to pay day-to-day operating expenses such as payroll.
Last September, however, the fund began having problems because 12 percent of its assets were in mortgage-backed securities, instruments whose value plunged as the financial crisis began stewing last fall.
As a result, N.C.-based banking company Wachovia Corp., which acted as the fund’s trustee, did not allow investors to take out more than 10 percent of their assets to avoid the risk of massive withdrawals.
In December, the Law Debenture Trust Company of New York replaced Wachovia as trustee of the Short Term Fund and has since returned 82 percent or $95 million in cash to Connecticut investors, said Keith Luke, managing director of the Commonfund.
“Over the last few months the markets have been behaving,” Luke said. “As prices improve we are selectively selling assets. We are still optimistic we will be able to return all of the money to investors.”
The list of Connecticut schools with money in the Short Term Fund was not made public, but Moody’s Investors Service reviewed about 242 schools nationwide that had money in it, including Fairfield University, Connecticut College, Yale University and Quinnipiac University. The report also listed three private schools in Connecticut — Choate Rosemary Hall in Wallingford, Loomis Chaffee School in Windsor, and Miss Porter’s School in Farmington — as fund investors.
Fairfield University had about $10 million to $11 million still frozen in the Short Term Fund late last year and Miss Porter’s had just over $1 million in the fund when withdrawals were restricted.
Luke said the timing on the full repayment of the money to investors “is contingent on the market.”
Annuity Sales Increase
U.S. individual annuity sales increased nearly 5 percent during the first quarter of 2009, despite a dramatic decline in variable annuity sales, according to LIMRA, a worldwide association of insurance and financial services companies based in Windsor.
Overall annuity sales reached $66 billion during the first quarter, spurred mostly by a 67 percent increase in the sale of fixed annuities, the more conservative investment option that guarantees a minimum rate of interest and does not depend as heavily on the stock market.
Fixed annuity sales reached $35.6 billion during the first quarter up from $21.3 billion in 2008.
Conversely variable annuity sales fell 37 percent from the year ago period to $30.7 billion from $42.1 billion.
Variable annuity products have traditionally been more popular because they allow customers to invest their purchase payments in stocks or mutual funds. But the current market volatility has made investors skittish about the retirement product.
There was also a shakeup of the top U.S. sellers of annuity products. Simsbury-based Hartford Life, for example, which has been plagued with bad news from its variable annuity business, sold $1.5 billion in annuity products during the first quarter, down from $2.9 billion in the year ago period. MetLife, which has operations in Bloomfield, was the top annuity seller with $7.6 billion in total sales, up from $3.6 billion in 2008, replacing AIG in the top spot which fell to fifth in overall sales with $3.3 billion.
Merger Approved
Banking Commissioner Howard Pitkin has approved the merger of Meriden-based Castle Bank & Trust Company, with and into Naugatuck Savings Bank, both wholly-owned subsidiaries of Nutmeg Financial Mutual Holding Company.
The resultant bank will operate under the name Naugatuck Savings Bank.
At the end of the first quarter of 2009 Castle Bank had $72 million in assets, compared the Naugatuck Savings’ $758 million.
Greg Bordonaro is a Hartford Business Journal staff writer.
